This is the first part of a blog series about how automated advice providers can ensure compliance with the best interests duty. In this blog entry, we will consider the best interests duty. Importantly, the same law applies where advice is provided by a person or by digital means. We will examine some of the challenges that arise when providers offer automated advice.
The best interests duty
Section 961B of the Corporations Act 2001 (Cth) (“the Act”) requires a provider of financial product advice to act in the best interests of the client in relation to the advice. This duty will be satisfied if the provider proves that it has met the following safe harbour requirements.
The provider must first identify the objectives, financial situation and needs of the client. Next, they must identify the subject matter of the advice. Then they must identify the client’s relevant circumstances. This refers to the objectives, the financial situation and the needs of the client that would reasonably be considered as relevant to the advice sought on the subject matter. If any of the information relating to the client’s relevant circumstances is incomplete or inaccurate, the provider must make reasonable enquiries to obtain complete and accurate information.
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