Best Interests Duty
The statutory obligation on Australian financial advisers to act in the best interests of their client when providing personal advice, codified in the Corporations Act.
The Best Interests Duty (BID) is a set of obligations on financial advisers introduced by the Future of Financial Advice (FOFA) reforms and set out in sections 961B to 961J of the Corporations Act 2001 (Cth). Section 961B(1) is the duty itself: the provider must act in the best interests of the client in relation to the advice. Section 961B(2) is the “safe harbour”: the duty is satisfied if the provider proves it took each of seven steps.
Removing the safe harbour in favour of an outcomes-focused duty is government policy under the Delivering Better Financial Outcomes reforms. As at October 2026, s961B(2) was still law, unamended since 2016.
- 01
Identify the objectives, financial situation and needs the client disclosed through their instructions.
- 02
Identify the subject matter of the advice sought, and the client’s circumstances relevant to it.
- 03
Where it is reasonably apparent that information is incomplete or inaccurate, make reasonable inquiries.
- 04
Assess whether you have the expertise to advise on it, and decline if you do not.
- 05
Where a product recommendation is reasonable to consider, investigate and assess the products.
- 06
Base all judgements on the client’s relevant circumstances.
- 07
Take any other step reasonably regarded as in the client’s best interests.
BID is the standard ASIC applies when assessing whether a Statement of Advice was appropriate. An SoA file that shows each of the seven safe harbour steps is significantly harder to challenge than one that does not. The operational implication is that the workflow has to capture the evidence at each step, fact-find inputs, the basis-for-recommendation reasoning, the alternative options considered, as it goes, not retroactively reconstruct it from memory.
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