Hefty penalties have been introduced in the Future of Financial Advice (FOFA) obligations by ASIC for financial services licensees breaching best interests duty.
A civil penalty of over $1 million was imposed on a Melbourne-based financial licensee by the Federal Court of Australia for failing to ensure representatives of the company remained compliant with the best interests duty as set out in the FOFA. This penalty serves as a harsh reminder for all financial licensees nationwide to adhere to their obligations in the position they hold or to be held financially liable.
In the 2017 case mentioned above, the firm provided unfit advice to its clients on eight separate occasions, causing contraventions on sections 961L and 961K(2) of the Corporations Act.
To avoid receiving sizeable fines through penalties from breaches regarding best interests duty provisions, licensees of financial services working within Australia need to ensure they and all their representatives comply with industry regulations.