ASIC financial adviser exam, Professional commitment, ethical frameworks and referral question: licensee relies on a research house's

ASIC examProfessional commitment, ethical frameworks and referral

A licensee relies on a research house's 'recommended' ratings to build its approved product list. The research house is paid by the fund managers it rates. What should the licensee MOST consider?

A Nothing further: a 'recommended' rating from a licensed research house is sufficient
B The research house's conflicts and methods, alongside its own review of products
C Requiring a second research house's rating before a 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

Relying on third-party research is reasonable only if the licensee understands its methods and any conflicts (such as issuer-paid ratings) and applies its own judgement; ASIC's RG 175 and the reasonable investigation requirement in s961B(2)(e) of the Corporations Act 2001 (compilation 19 Sep 2026) require more than accepting a label. Due diligence is part of the ASIC curriculum for professional practice. A rating is an input, not proof of suitability for any particular client.

Common mistake

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

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