Your duty to prioritise your client’s interests over your own interests

Your duty to provide advice that prioritises your client’s interests over your own interests arises under section 961J of the Corporations Act. ASIC discusses it in paragraphs RG 175.363 to 378.

Your duty to provide advice that prioritises your client’s interests over your own interests is in addition to and separate from your duty to provide advice that is in your client’s best interests and is appropriate to your client.

In summary, in the context of risk insurances where the adviser is rewarded by a commission, this means that your advice must not be primarily motivated by commissions.

But the client prioritisation rule is more than just a rule against commission motivated advice.

For example, the client prioritisation rule means advisers should not over-service clients by creating excessively complex arrangements likely to generate greater income for the adviser. By way of further example, it also means that advisers should recommend strategies likely to decrease a client’s need for financial products in the future. For example, recommending a client use their excess cash flow to reduce debt even if this means the need for life insurance products will fall and the adviser’s income may fall.

The Dover Group