Efficiently, Honestly And (still) Fairly Uncertain – The Quest For Certainty

The continuing uncertainty around the provision requiring licensees to provide financial services 'efficiently, honestly and fairly' under section 912A(1)(a) of the Corporations Act (EHF provision) comes into sharpest focus against the backdrop of the new breach reporting regime.

In this article, we examine some common questions and challenges we are seeing emerge in relation to the EHF provision in the context of a licensee's breach reporting obligations.

Does "inefficiency" of itself constitute a breach of the EHF provision or does the inefficiency also have to operate unfairly (or dishonestly)?

We have followed closely the shifting judicial consideration as to whether the phrase 'efficiently, honestly and fairly' must be read compendiously, or whether it should be read as introducing separate standalone obligations. The most recent judicial trend suggests that the phrase may come to be interpreted as imposing three separate but concurrent obligations.¹