The only way to solve arguments around the 'best interests' duty and approved product lists is to legislate the difference between a salesperson and an IFA, argues a former Federal Court judge.
Speaking at a FOFA discussion in Sydney last night, the Hon Kevin Lindgren AM, QC – a former judge of the Federal Court of Australia and former acting judge of the Supreme Court of New South Wales – said he sees no way of satisfactorily resolving the problem short of legislation.
“In other words, some of the people would be licensed as truly independent financial advisers and others would be known to be salesmen, and they could go hell for leather and sell the product of the particular issuer,” Dr Lindgren said.
“I can’t see any straightforward or honest way around the language with that difficulty,” he said.
Also speaking at the event was the Hon Margaret Stone – a former judge of the Federal Court of Australia who is currently a visiting professorial fellow at the University of New South Wales.
Ms Stone, along with Dr Lindgren, believe that removing the ‘catch-all’ provision in subsection 961B(2)(g) of the FOFA legislation will make no difference.
“I am in favour of requiring advisers to act in the best interests of their clients, but I don't actually think taking that sub-clause out causes any problems,” she said.
“It actually creates unnecessary uncertainty with people thinking 'well what could parliament have meant?'
“In my view, what parliament meant was: ‘over to you, we can’t think of anything else’.
“It is basically my view parliament was saying to financial advisers: 'do this, this, this and this, and we can’t think of anything else, but the burden is on you'.
“It doesn't make a difference if subsection (2)(g) is deleted.
“I’ve thought quite hard about what a financial adviser might reasonably have to do that is not comprehended in the previous subsections, and I haven't been able to think of it.”
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