Providing Financial Services 'Efficiently, Honestly and Fairly': Part 2

Abstract

Published in (2020) 37 Company and Securities Law Journal 382 This article is written to update the author’s earlier article published in the Company and Securities Law Journal in Australia in 2006 which examined the statutory obligation of a financial services licensee to act “efficiently, honestly and fairly” as required by s 912A(1)(a) of the Corporations Act 2001 (Cth). The article examines new caselaw since 2006 on the meaning of this obligation. The weight of authority supports interpreting the conjunction “and” to confirm that this is a single, composite and omnibus obligation rather than three separate obligations. Further, the failure of those in the financial services industry to act efficiently, honestly and fairly was cited repeatedly in the context of the evidence of widespread misconduct falling below community expectations revealed by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (2018/2019). Some of the limits of enforcing this law are raised, and the article concludes with an introduction to the new civil penalties in financial services regulation introduced in the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 (Cth). These have strengthened penalties for breaches of corporate laws including this section and should enhance and will support ASIC’s new “why not litigate” approach. The Royal Commission was clear that acting efficiently, honestly and fairly is part of the right” thing to do.