In November 2021, the ALRC published its first (interim) Financial Services Legislation Report setting out a range of proposals for the simplification of financial services law. As part of this, the ALRC proposed to clarify the "efficiently, honestly and fairly" cornerstone obligation for AFS licensees under section 912A(1)(a) of the Corporations Act. In particular, the ALRC recommends that the legislation:
- make clear that the constituent terms are standalone obligations by separating them into individual paragraphs, which is currently the subject of some uncertainty;
- replace the word "efficiently" with "professionally", in accordance with the meaning established by the case law; and
- insert a note containing examples of conduct that would fail to satisfy the "fairly" standard.
We commented on this proposal in our article last year, noting in particular that the word "professionally" does not appear to be aligned with the ordinary meaning of "efficiently" as intended in section 912A(1)(a).
We have since made a formal submission to the ALRC in respect of reform on the "efficiently, honestly and fairly" obligation, reiterating our view that the best replacement of the term "efficiently" is "competently", rather than "professionally". If you would like to read a copy of our full submission, download a copy here.
The HSF team has extensive experience in assisting licensees to understand their cornerstone obligations and how to best put them into practice. Get in touch with one of our experts below.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
