The new best interests duty in the Future of Financial Advice (FOFA) amendments to the Corporations Act in 2012 builds on the former know your client statutory duty owed by the financial services licensee (the advice provider) to the client. It co-exists with - and has not replaced - the existing common law and equitable duties of advice providers, underpinned in some circumstances by fiduciary duties in equity. The new statutory duty for an advice provider to act in the best interests of the client is fulfilled by satisfying a six-part checklist including identifying the client s objectives, financial situation and needs and conducting a reasonable investigation into all financial products available to the client. In addition, the new best interest duty confirms the potential professionalism of the advice provider when it includes a catchall which requires the advice provider to take `any other step that ...would reasonably be regarded as being in the best interests of the client in s 961B(2)(g). This catchall has been criticised by some sectors of the financial planning industry as open-ended and allegedly too uncertain because it is said to make the six-part checklist unworkable for advice providers. In the same way that it would not be too uncertain for a medical practitioner to be expected to consider `any other step in the treatment of a patient, FOFA has presented those in the financial planning industry with the opportunity to think outside the checklist when offering advice. The industry has come a long way since the days when many advice providers were commission salesman for product manufacturers, and the financial planning industry should embrace the best interests duty and its catchall as an opportunity to take one more step towards professionalising the industry rather turning back the clock by lobbying for and supporting its `streamlining (reduction) in 2014.
|Pages (from-to)||8 - 22|
|Number of pages||15|
|Journal||Australian Journal of Corporate Law|
|Publication status||Published - 2014|