On Monday night, Treasury released the Corporations
Amendment (Streamlining Future of Financial Advice) Regulation
2014, which makes some significant changes to the FOFA reforms
that commenced last year. Some of the most controversial amendments
were to the 'best interest' obligations. So what were the
main changes to the best interest obligations?
Removal of the 'catch-all' provision
The best interest duty established by subsection 961B(1) of the
Corporations Act 2001 remains unaltered in the legislation –
advisers must still act in the best interests of the client in
relation to the advice. However, the regulations remove the
controversial 'catch-all' provision from the list of steps
an advice provider may take to show that they have satisfied the
best interest obligations, also known as the 'safe harbour'
steps (subsection 961B(2)).
