The campaign to save the so-called “best interests” duty for financial advisers prompted by the Treasurer’s Quality of Advice Review is surprising. It is hard to imagine anythingOn reading the heading of section 961B of the Corporations Act, you could be forgiven for thinking a financial adviser must act in the best interests of their client. And if you thought that, you might also consider it a reasonable requirement.
It seems to me the best that can be said about the so-called “best interests” duty is that it tends to reduce the incidence of bad advice by reducing the incidence ofadvice – good, bad and indifferent. That, plainly, is not a credible justification for retaining the duty.Paradoxically, the so-called “best interests” duty does not really serve or advance the interests of consumers. As explained, it is a poorly targeted and indirect mechanism for protecting consumers from bad advice.