ASIC financial adviser exam, Code of Ethics: values and ethical behaviour (Standards 1–3) question: nothing in the arrangement breaches Chapter

ASIC examCode of Ethics: values and ethical behaviour (Standards 1–3)

An adviser recommends that a client keep an existing retail super fund. The fund's issuer is the licensee's parent company, and the licensee's lawyers say nothing in the arrangement breaches Chapter 7. The fund is suitable, but a cheaper fund with the same features is available. Which statement is MOST accurate?

A It is likely to be consistent with the Code once the ownership link is disclosed in the SOA
B It raises a Code issue for the licensee but generally not for the adviser personally
C It is mainly a matter for the licensee's compliance policy rather than the Code
D It can breach Standards 2 and 3 even though it is lawful under Chapter 7

Show the answer and explanation

Answer: D. It can breach Standards 2 and 3 even though it is lawful under Chapter 7

The Code of Ethics 2019 imposes duties 'that go above the requirements in the law' (cl 5). Standard 2 requires acting in the client's best interests, which a dearer equivalent fund may not serve, and Standard 3 prohibits acting where there is a conflict of interest, here a related-party product. The Code binds the adviser personally (Corporations Act 2001 s921E, compilation 19 Sep 2026), and disclosure does not cure a Standard 3 conflict.

Common mistake

Lawful under Chapter 7 does not mean compliant with the Code.

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Related questions

Which of the following is NOT one of the five values that the Code of Ethics requires relevant providers to demonstrate, realise and promote?Ravi, a provisional relevant provider, gives oral personal advice to a retail client about a managed fund. Under the Corporations Act, who is taken to have provided that advice?Kai is an authorised representative of a licensee. He wants to authorise his new employee, Ben, to provide general advice on the licensee's behalf. What MUST Kai have before he gives Ben a written authorisation?

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