Acting in a client’s best interests is something we all want – and expect – from our service providers. It underpins good service, professionalism and ethical behaviour. The interplay between those factors is explored in this article, part of the Ethics Series proudly sponsored by GSFM.
According to ASIC, the best interests duty and related obligations are:
“…designed to ensure that retail clients receive advice that meets their objectives, financial situation and needs, and that you act in the best interests of your clients when providing advice.”
In financial planning, it can be distilled into acting in the client’s best interests at all times, acting with competence, honesty, integrity and fairness. In summary, the way any one of us would expect to be treated by a professional service provider, whether they be medical, legal or financial.
The Future of Financial Advice Reforms (FOFA) introduced an amendment to the Corporations Act 2001, one which enshrined the best interest duty into law. It was an extension of the existing fiduciary duty owed to clients by financial advisers, the one which covered the need to ‘know your client’, know the products you recommend and always act with the interests of those clients front and centre. This amendment came with an addition – penalties, including banning and disqualification orders.