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ASIC Focus on Client Best Interests

For the third consecutive week, ASIC has announced action against advisers over client best interests failures.

The latest banning involves two Sydney-based operators – Jeffrey Worboys and Matthew Barnett – who were, until February 2018, joint chief executives of AFSL Australian Mutual Holdings. This firm manages a number of managed investment schemes and, according to ASIC, previously managed the Courtenay House Capital Investment Fund.

The regulator found that when establishing the Courtenay House Capital Investment Fund, Worboys and Barnett did not exercise the degree of care and diligence required and failed to act in the best interest of the members of the fund.

ASIC found they:

  • Had not maintained the high standards expected of a financial services adviser
  • Demonstrated a lack of integrity, judgment and professionalism
  • Could not be relied upon to discharge the duties and obligations imposed on a provider of financial services
  • Were not competent to provide a financial service, and were likely to contravene a financial services law

The regulator continues to reference the best interests duty in its findings against advisers, having also taken action on two other ‘best interests’ issues in the last two weeks:

ASIC Bans Adviser Over Client Best Interests Issues

Adviser Banned Over Best Interests Concerns

Serving a client’s best interests became a statute within the Future of Financial Advice (FoFA) reform legislation, which came into binding effect on 1 July 2013.

Guidance on client best interests was outlined in an updated ASIC Regulatory Guidance (RG 175), which covered the following key issues:

  • Acting in the best interests of the client
  • Satisfying the ‘safe harbour’ for the best interests duty
  • Providing appropriate personal advice, and
  • Prioritising the interests of the client

As we reported at the time, ASIC broadly defines advice to be in a client’s ‘best interest’ if the client is left in a better position: ‘When assessing whether an advice provider has complied with the best interests duty, we will consider whether a reasonable advice provider would believe that the client is likely to be in a better position if the client follows the advice.’