Best interests in practice: applying the law and the Code together
How the statutory best interests obligations and Standards 2, 5, 6 and 7 combine in real advice situations: scope, inquiries, switching, insurance and fees.
Applied ethical and professional reasoning and communication·1 min read·3 sections
✓Checked against: Corporations Act 2001 ss961B-961J (compilation 19 Sep 2026); Financial Planners and Advisers Code of Ethics 2019 (F2019L00117) Standards 2, 5, 6, 7; ASIC RG 175.228-175.297; ASIC RG 244.59-244.93.. Independent prep, not endorsed by ASIC.
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Must-know for the exam
✓The law (s961B, s961G) and the Code (Standards 2, 5 and 6) both apply; meeting the safe harbour is not the end of the analysis.
✓Scope can be limited, but the adviser must consider whether the limited scope is appropriate and in the client's best interests (RG 244).
✓Inquiries scale with the complexity of the client's circumstances (RG 244.71-244.72).
✓A switch must leave the client better off; the SOA must disclose lost benefits and costs (s947D).
✓If the client gives incomplete information, warn them under s961H; do not fill gaps by assumption.
✓Standard 7 requires value for money even where the client has consented to the fee.
▸On this page · 3 sections
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Traps that cost marks
→Clients set the scope, but the adviser cannot ignore a fact that makes the requested advice inappropriate.
→Following an instruction is different from recommending it.
→AFCA determinations bind licensees; regulatory sanctions on advisers come from ASIC and the Panels.
→The Commission tightened conflicts and fees; it did not abolish the best interests duty.
→A signed fact find does not override what the client says in the room.
→Disclosure does not resolve the conflict; giving priority to the client does.
→Speed can feel like good service, but here it can harm a vulnerable client.
→Age-based rules of thumb are not the client's relevant circumstances.
The rule
Ask what the client needs, not only what they asked for. A narrow request is fine, but the adviser must still identify what is relevant within the subject matter and say what is not being covered and why.
Common traps
Trap: Following the client's instruction to buy a named product does not satisfy the duty by itself.
Trap: Scaled advice still requires Standard 6's long-term view.
Trap: Disclosure of a conflict does not resolve it under Standard 3 or s961J.
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