Best Interests Duty checklist: the s961B(2) safe harbour steps
Section 961B of the Corporations Act says an adviser must act in the client’s best interests. Subsection (2) lists seven steps that satisfy the duty if the adviser can prove each one. Here they are in plain English, with what to keep on file for each.
Checked against the sources listed on this page on 3 October 2026. General information, not legal advice: your licensee’s own requirements come first.
The duty, and the safe harbour
Section 961B(1) is one sentence: “The provider must act in the best interests of the client in relation to the advice.” Subsection (2) is the safe harbour. The duty is satisfied “if the provider proves that the provider has done each of” seven things. The adviser has to prove it, which is why the file matters as much as the advice.
Three neighbouring sections finish the picture. Section 961G says advice may only be given if it would be reasonable to conclude it is appropriate to the client. Section 961J says that where there is a conflict, the client’s interests come first. Section 961L makes the licensee take reasonable steps to ensure its representatives comply with all of it.
The seven steps
- (a)
Identify the objectives, financial situation and needs the client disclosed to you through their instructions.
Keep on file: The client’s instructions as they gave them: the fact find, meeting notes and emails.
- (b)
Identify the subject matter of the advice the client is seeking, whether they said so or it was implied, and the objectives, financial situation and needs that would reasonably be relevant to it (the client’s “relevant circumstances”).
Keep on file: A written scope of advice, and why anything was left out of scope.
- (c)
Where it was reasonably apparent that information about the client’s relevant circumstances was incomplete or inaccurate, make reasonable inquiries to get complete and accurate information.
Keep on file: What was missing or did not add up, what you asked, and what the client told you.
- (d)
Assess whether you have the expertise to advise on the subject matter and, if you do not, decline to give the advice.
Keep on file: A note of that assessment, and any referral you made.
- (e)
If it would be reasonable to consider recommending a financial product, investigate the products that might meet the client’s relevant objectives and needs, and assess what the investigation found.
Keep on file: The products considered, how they were compared, and why the recommended one was chosen.
- (f)
Base all judgements in advising the client on the client’s relevant circumstances.
Keep on file: The reasoning that links each recommendation back to the circumstances identified at (b).
- (g)
Take any other step that, at the time of the advice, would reasonably be regarded as being in the client’s best interests, given their relevant circumstances.
Keep on file: Anything further you did for this client, and why.
These are plain-English paraphrases. The exact words are in section 961B(2), linked in the sources.
How long the file has to be kept
An ASIC instrument (2024/508) requires a licensee to keep records of the best interests duty and safe harbour steps, of the advice and why it is appropriate under s961G, and of how conflicts were prioritised, for 7 years after the personal advice was given. The instrument runs until 1 October 2029. A Statement of Advice itself must also be kept for 7 years (reg 7.7.09C).
Is the safe harbour being removed?
It is government policy. Treasury’s December 2024 outline of the Delivering Better Financial Outcomes reforms proposed “removing the existing process-based safe harbour steps” in favour of an outcomes-focused duty, and the Minister repeated it in March 2025. On 3 October 2026 section 961B(2) was still law, unamended since 2016, and we found no draft legislation for that change. Until a change passes and commences, these seven steps remain how an adviser shows the duty was met.
Questions advisers ask
What are the Best Interests Duty safe harbour steps?
They are the seven steps in s961B(2) of the Corporations Act: identify the client’s disclosed objectives, situation and needs; identify the subject matter of the advice and the client’s relevant circumstances; make reasonable inquiries where information is incomplete or inaccurate; assess whether you have the expertise, and decline if not; investigate and assess products where a product recommendation is reasonable; base all judgements on the client’s relevant circumstances; and take any other step reasonably in the client’s best interests.
Who has to prove the steps were followed?
The adviser. Section 961B(2) says the duty is satisfied “if the provider proves” each step was done, which is why the evidence for each step belongs on the client file.
What is the difference between s961B and s961G?
Section 961B is the duty to act in the client’s best interests, with the safe harbour steps in subsection (2). Section 961G is a separate requirement that advice may only be given if it would be reasonable to conclude it is appropriate to the client, had the best interests duty been satisfied.
Is the licensee responsible for the Best Interests Duty?
The duty sits with the adviser, and s961L requires the licensee to take reasonable steps to ensure its representatives comply with ss961B, 961G, 961H and 961J.
Has the safe harbour been removed?
Not as at 3 October 2026. Removing it is government policy under the Delivering Better Financial Outcomes reforms, but s961B(2) remained in the Corporations Act, unamended since 2016.