Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

First, the question is wrong. The government is not removing the requirement for an adviser to act in the best interests of their client. I refer Senator Tillem to subsection 961B(1), which includes the explicit requirement that an adviser must act in the best interests of their client. That remains unchanged—we are not touching it; we are not amending it. The senator then refers to a catch-all provision, which does not relate to the requirement to act in the best interests of the client—it is part of a safe harbour provision Labor added to the Corporations Act which a financial adviser may want to rely on to prove that they have acted in the best interests of their client. There are six specific steps in that test, as well as a final, as the senator described it, catch-all provision that an adviser should take all other reasonable steps beyond the six very comprehensive steps.

That only goes to the test as to whether an adviser has acted in the best interests of their client; it does not go to the requirement to act in the best interests of their client. As the senator will be aware, the Senate inquiry asked lots of questions in relation to this very technical aspect of the Corporations Act, and when questions were asked, including of the biggest critics of our proposed changes to financial advice laws, as to what other reasonable step a financial adviser should be required to take in order to prove they have acted in the best interests of their client, nobody was able to propose such a reasonable step to us. That is why we say the six specific steps that are in the safe harbour provision, introduced into the Corporations Act by Labor, are sufficient, as a safe harbour provision, but none of that takes away in any way, shape or form the requirement for financial advisers to act in the best interests of their client.