Keeping the 'catch-all' in the FOFA best interest duty will result in 'unnecessary uncertainty' for advisers, according to a former Federal Court judge.
Speaking at a FOFA discussion in Sydney last week, 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 – said removing the catch-all provision would not cause any issues.
“I am in favour of requiring advisers to act in the best interests of their clients; I don't actually think taking that sub clause out causes any problems,” Ms Stone said.
“It [subsection 961B(2)(g)] creates unnecessary uncertainty, with people thinking 'what could parliament have meant?’” she said.
“In my view, what parliament meant was: over to you, we can’t think of anything else.”
Parliament has put things in statutes for the very useful purpose of drawing elements of the duty to the attention of the people concerned - financial advisers, Ms Stone said.
“But it would be a mistake to think that what those provisions have done is definitively outline the extent of the duty,” she said.
“I'm inclined to think that subsection 2(g) was just parliament saying 'we can’t think of anything else that would be required, but just in case you in your nefarious planning think of something and you don't do it, then we've got you!’.”
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