The influence of regulatory inputs into conduct

Ethics involve “doing the right thing, not merely doing what the letter of the law demands”. However, ASIC’s regulatory guidance do provide some direction.

  • For advisers of retail clients, the best interests duty is covered in Subdivision B - Provider must act in the best interests of the client of the Corporations Act, particularly s961B, which also includes coverage of how the best interests duty even applies to advice given by Australian ADIs on basic banking products, general insurance products and/or consumer credit insurance.
  • Additionally, all licensees have an obligation “to act efficiently, honestly and fairly” (s912(1)(a) of the Corporations Act for AFSL holders and s47(1)(a) of the National Credit Act for ACL holders). This is commonly referred to as a ‘fiduciary duty of care’.
  • ASIC guidance includes RG 104 Licensing: Meeting the general obligations (AFSL) and RG 205 Credit licensing: General conduct obligations (ACL), as well as other regulatory documents these guides cross reference.
  • All FASEA-regulated financial advisers will be required to abide by the FASEA Code of Ethics from 1 January 2020 and will need to choose a body to monitor their adherence to the Code. The Code will be enforceable under the Corporations Act, with monitoring bodies having the ability to apply sanctions to an advice provider for breaches of the Code.

 

Getting your head around financial services regulation can be a tricky business. Check out topics on key regulatory areas to help you find your way.