Revenue – ifrs 15 handbook

Up-front fees in the funds and insurance industries
In the funds industry, there may be two separate contracts: 
– the first between the investor and the fund’s manager (brokerage or sales 
contract, whereby the fund manager acts as an agent for the fund); and 
– the second between the fund’s manager and the fund itself (investment 
management contract). 

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10 Other application issues | 293
10.6 Non-refundable up-front fees
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The fund manager assesses whether the up-front fee receivable for the 
sale of units of a (retail) fund relates to the transfer of a promised service 
(i.e. a brokerage service) or if it is an advance payment for an investment 
management service to be satisfied in the future. 
By contrast, in the insurance industry it appears that there is generally no 
distinct brokerage service because insurers enter into a single contract with 
policyholders (investors) and the contract is sold as a net package.
 
Additional application examples
Example 2 – Non-refundable up-front fees: Activity does not 
transfer a good or service
IU 01-19
Stock Exchange S enters into a contract with Customer C to be listed on S’s 
exchange. S charges C a non-refundable up-front fee on the initial listing of 50 
and an ongoing annual listing fee of 100. The initial listing fee compensates S for 
activities that it needs to undertake to enable admission to the exchange – e.g. 
due diligence and reviewing the listing application.
S determines that the performance of the activities at contract inception does 
not transfer a good or service to C – i.e. there is no promise in the contract other 
than the service of being listed on the exchange. 
S concludes that the non-refundable up-front fee is an advance payment for the 
ongoing listing service.