ASIC financial adviser exam, Professional commitment, ethical frameworks and referral question: Before relying on the ratings

ASIC examProfessional commitment, ethical frameworks and referral

Harbourline Wealth, an AFS licensee, builds its approved product list from a research house's 'recommended' ratings. The research house is paid by the fund managers whose products it rates, and Harbourline has never reviewed its methods. Before relying on the ratings, Harbourline should MOST consider…

A nothing further: a 'recommended' rating from a licensed research house is enough
B the research house's conflicts and methods, alongside its own review of products
C requiring a second research house's rating before any product is listed
D whether each rating has been updated within the last 12 months

Show the answer and explanation

Answer: B. the research house's conflicts and methods, alongside its own review of products

ASIC expects advice providers to do due diligence on any research report provider they use, considering its business model, conflicts of interest, product selection process, methodology and ratings spread (RG 175.250–175.251). Research can be relied on to some extent, but the adviser remains responsible for the advice (RG 175.248), and a reasonable investigation under s961B(2)(e) of the Corporations Act 2001 (compilation 19 Sep 2026) needs more than a label. Issuer-paid ratings are a conflict signal that calls for scrutiny. A licence does not answer the conflict question. A second rating and an up-to-date rating are sensible extra checks, but neither tells Harbourline whether the research house's methods and conflicts make its ratings reliable.

Common mistake

A rating paid for by the product issuer needs scrutiny before reliance.

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