The Part 7.7A duties (best interests, appropriate advice, warnings, priority to the client) and the bans and caps on conflicted remuneration and ongoing fees.
Financial advice regulatory and legal obligations·2 min read·4 sections
✓s961B: act in the best interests of the client; s961B(2) is a safe harbour of seven steps, including declining to advise without the expertise (s961B(2)(d)).
✓s961G: the advice must be appropriate; s961H: warn if advice is based on incomplete or inaccurate information; s961J: give priority to the client's interests when there is a conflict.
✓Conflicted remuneration is a benefit that could reasonably be expected to influence the product recommended or the advice given (s963A); licensees and representatives must not accept it (ss963E, 963G).
✓Life risk commissions: up to 60% of first-year policy cost on issue and 20% trailing; clawback 100% in year one and 60% in year two (Instrument 2017/510).
✓Platform operators must not accept volume-based shelf-space fees (s964A); asset-based fees must not be charged on borrowed amounts (s964D).
✓Ongoing fee arrangements need written, signed and dated consent (s962G); a new consent is due between 60 days before and 150 days after the reference day, or the arrangement terminates (ss962H, 962F).
✓The client may terminate an ongoing fee arrangement at any time (s962J).
▸On this page · 4 sections
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Traps that cost marks
→Scaled advice narrows the subject matter, but s961B(2)(c) still applies within that subject matter.
→Warnings and consents feel protective, but the statutory step is to decline.
→The safe harbour covers the duty to act in the client's best interests, not the separate appropriateness test.
→A refusal does not automatically end the engagement; the Act provides a warning mechanism.
→Candidates over-read s961J as a ban. It is a priority rule, and disclosure is not a substitute for it.
→Influence alone is not the test: s963A also asks who gives the benefit.
→Attaching the gift to a presentation does not turn it into an education or training benefit.
→Twenty per cent is the trailing cap, not the upfront cap.
The rule
The duty attaches to the individual giving personal advice to a retail client. Following the safe harbour steps proves the s961B duty only; appropriateness (s961G) is a separate test, and conflicts must be resolved in the client's favour (s961J).
Remuneration
•Disclosure does not make conflicted remuneration acceptable.
•Client consent does not allow asset-based fees on borrowed money or shelf-space fees.
•Life risk commissions need the benefit ratio and clawback requirements, and informed consent (s963BB).
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