Publication Type
Journal Article
Version
publishedVersion
Publication Date
3-2020
Abstract
Following the Future of Financial Advice reforms, the ‘suitability’ and ‘appropriateness’ focus for financial advice has been relocated and supplemented by a ‘best interests’ focus in s 961B of the Corporations Act 2001 (Cth). Yet, as the Australian Government’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has pointed out, structural issues may often work against best interests being paramount. Further, moves to make the statutory obligation replicate a fiduciary obligation have been resisted in the consultative process that developed s 961B and related obligation sections and any replication is far from clear. Another key issue is the extent to which aspects of the best interests duty are satisfied by a ‘tick a box’ approach. This aspect of s 961B is said to provide ‘safe harbour’ for advisers, yet has been criticised by the Royal Commission as more procedural rather than substantive. However, removing the safe harbour altogether may create more problems than it solves. We argue that a catch-all provision in s 961B(2)(g) preserves substantive flexibility, and caution against any reform that leaves no procedural guidance for financial advisers to anchor their behaviour in fulfilling the best interests duty.
Discipline
Banking and Finance Law | International Law
Research Areas
Asian and Comparative Legal Systems
Publication
Sydney Law Review
Volume
42
Issue
1
First Page
37
Last Page
68
ISSN
0082-0512
Publisher
Sydney Law School
Citation
LIU, Han-wei; LE, Toan; HE, Weiping; and DUFFY, Michael.
In whose best interests? Regulating financial advisers, the Royal Commission, and the dilemma of reform. (2020). Sydney Law Review. 42, (1), 37-68.
Available at: https://ink.library.smu.edu.sg/sol_research/4398
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