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ARTICLE · 21 MARCH 2024

State Of Play: Taking 'Reasonable Steps' Under Financial Services Law

Herbert Smith Freehills Kramer LLP
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On 29 February, Jackson J handed down the decision in Australian Securities and Investments Commission v R M Capital Pty Ltd [2024] FCA 151 (ASIC v RM Capital).

AustraliaFinance and Banking
Michael Vrisakis
Michael Vrisakis
Tamanna Islam
Tamanna Islam
Shan-Verne Liew
Shan-Verne Liew
Anna Sutherland
Anna Sutherland
Madeline Muddle
Madeline Muddle

On 29 February, Jackson J handed down the decision in Australian Securities and Investments Commission v R M Capital Pty Ltd [2024] FCA 151 (ASIC v RM Capital).

The case concerned whether RM Capital Pty Ltd (RM Capital), a financial services licensee, took reasonable steps to ensure its authorised representative, The SMSF Club Pty Ltd (SMSF Club), did not receive conflicted remuneration, as required under section 963F of the Corporations Act.

This is the first time a court has considered the construction of section 963F.

The decision is also relevant to other Chapter 7 obligations, such as the obligation that requires licensees to "take reasonable steps to ensure" their representatives comply with financial services laws under section 912A(1)(ca) and section 961L, which requires licensees to take reasonable steps to ensure that representatives comply with the best interests duty and other personal advice obligations.

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