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:

  1. make clear that the constituent terms are standalone obligations by separating them into individual paragraphs, which is currently the subject of some uncertainty;
  2. replace the word “efficiently” with “professionally”, in accordance with the meaning established by the case law; and
  3. 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.

 

Michael Vrisakis
Michael Vrisakis
Partner
+61 2 9322 4411
Fiona Smedley
Fiona Smedley
Partner
+61 2 9225 5828
Tamanna Islam
Tamanna Islam
Senior Associate
+61 2 9225 5160
Preeta Seshachari
Preeta Seshachari
Senior Associate
+61 2 9225 5763
Abby Sutherland
Abby Sutherland
Solicitor
+61 2 9225 5312