The provision of financial services and advice to retail
clients came under scrutiny following the global financial crisis
in 2007/2008. A joint Parliamentary Committee on Corporations and
Financial Services was established in 2009 and its recommendations
have now been introduced in the form of draft amendments to the
Corporations Act 2001.
The draft reforms focus on four main areas:
- Introduction of a duty to act in the best interests of the
client;
- Requirements for annual fee disclosure and 'opt in'
arrangements;
- Extension of the Australian Security and Investment
Commission's (ASIC) powers; and
- Prohibitions against 'conflicted remuneration'.
Under the new provisions, the over-arching duty of financial
advisors will be to act in the "best interests" of the
client. However, the new draft provisions do not contain a
definition of "best interests". Rather, there are a
number of prescribed steps financial advisers are expected to
follow in fulfilment of
