Claims advisers already have a fiduciary duty to clients
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Discussions about whether a fiduciary duty for financial planners be mandated have been ongoing since the recommendation was made by the Ripoll Inquiry.
Claire Wivell Plater, director of Gold Seal Risk Management Services, has questioned the need for imposing a fiduciary duty on financial advisers, who she proposes in many respects already have a fiduciary relationship with their clients.
"A fiduciary relationship arises where there is a relationship of trust and of confidence, and the fiduciary has an ability to affect the client's interest," she said. "Surely that is the case in an adviser/client relationship."
Wivell Plater said a fiduciary is bound to act for the benefit of the client and in the interests of the client, adding that the fiduciary cannot allow personal interest to conflict with the duty to their client. She said this is already encompassed in Common Law and the Corporations Act.
Looking at the Corporations Act, Wivell Plater said financial advisers are required to provide their financial services honestly, efficiently and fairly, provide advice that is appropriate for the client, fully disclose all remuneration received for the services provided, and fully disclose any associations or personal interests that might have influenced their recommendations.
Added to this, she said Common Law already takes into account issues of appropriate recommendations and conflicts of interest in that advisers must "take reasonable care to ensure that the product recommended is suitable for the client's circumstances and will achieve the client's stated objectives" and "avoid or manage conflicts of interest". The latter is also required by the Corporations Act.
"So for individual advisers, is this really so different to a fiduciary duty?" Wivell Plater asked. "Provided a broad view of the fiduciary relationship emerges, where conflicts and associations can be managed by disclosure (rather than avoided altogether), perhaps the whole and the sum of the parts will arrive at the same place?"
Wivell Plater conceded that some aspects of the financial services industry are likely to be affected more than others, for example, planners who use white labelled platforms and those employed by product providers.
"Either way, one thing is for certain - we will all be looking more closely at conflicts of interest and how to manage them in the future."
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