ASIC financial adviser exam, Applying the best interests duty in practice question: share fund to buy

ASIC examApplying the best interests duty in practice

A client asks for advice only on which share fund to buy with $50,000. The adviser learns she has $30,000 of credit card debt at 21% interest. What does acting in her best interests MOST likely require?

A Advising on the share fund as asked: she set the scope and the card debt sits outside it
B Advising on the share fund once she signs an acknowledgement that her debts are outside the scope
C Declining to give investment advice until she has repaid the whole card balance
D Raising the debt: a reasonable adviser would see it as relevant to the subject

Show the answer and explanation

Answer: D. Raising the debt: a reasonable adviser would see it as relevant to the subject

Under s961B(2)(b) of the Corporations Act 2001 (compilation 19 Sep 2026), the adviser must identify the client's relevant circumstances for the subject matter sought, and s961E tests what a reasonably expert adviser would regard as in the client's best interests. Investing while carrying 21% debt is unlikely to be in her interests, so the debt must at least be raised and considered. ASIC's RG 244 says scaled advice still requires the provider to consider whether the scope is appropriate.

Common mistake

Clients set the scope, but the adviser cannot ignore a fact that makes the requested advice inappropriate.

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Study note: Best interests in practice: applying the law and the Code together Financial adviser exam practice and mock exams

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Original practice material mapped to the learning outcomes in ASIC's exam guidance. Independent, not affiliated with or endorsed by ASIC. Verify figures and rules against current guidance before relying on them.