The Safe Harbour provision does not provide as much protection as advisers expect and could be abolished in due course, according to The Fold Legal.
Writing on a blog, solicitor director Simon Carrodus, said the Safe Harbour, which was designed to provide advisers with certainty in acting in the best interest of their clients, did not provide much protection for advisers with respect to the FASEA Code of Ethics Standard 2.
Standard 2 of the Code of Ethics, due to come into force on 1 January 2020, states advisers must act with integrity and in the best interest of each of their clients.
It had already been recommended by Commissioner Kenneth Hayne that the Safe Harbour provision was repealed at the end of 2022. This was because Hayne felt it encouraged a ‘form over substance’ approach to advice. He felt that removing it and focusing on Best Interest Duty (BID) instead would mean advisers focused more on the quality of their advice.
Carrodus said: “While the Safe Harbour provision was designed to provide advisers with a degree of certainty with respect to the BID, we don’t believe it provides as much protection as many advisers and licensees think. Our view is that using a Safe Harbour checklist alone is probably not enough- it really should be combined with an assessment of the appropriateness of the advice provided.
“For the moment, the Safe Harbour provision lives to fight another day, but it may not be with us much longer.”