Understanding ASIC RG 236: The obligations that catch financial advisers off guard
ASIC Regulatory Guide 236 sets out ASIC’s approach to the best interests duty and related obligations under the Corporations Act 2001. Despite being well-known, it remains one of the most common sources of breach findings in ASIC surveillance activity.
What RG 236 actually requires
The best interests duty in section 961B requires a financial adviser to act in the best interests of the client in relation to the advice. This sounds straightforward, but the obligation is structured around a safe harbour in s961B(2) that most compliance frameworks treat as a checklist when it is, in fact, a floor.
The key steps in the safe harbour are:
- Identify the objectives, financial situation, and needs of the client
- Identify the subject matter of the advice
- Identify whether the adviser has the expertise to provide the advice
- Take reasonable steps to investigate and assess the client’s situation
- Base all judgements on the client’s relevant circumstances
- Take any other step that would reasonably be regarded as being in the best interests of the client
That final step — “any other step” — is where many firms trip up. It is not a catch-all that disappears once the earlier steps are met. It imposes an ongoing obligation to consider what else might be needed in the circumstances.
Where firms most commonly fall short
Scope creep without scope adjustment. An adviser identifies a tax issue during the advice process that is outside their scope. The safe harbour requires them to consider whether referring the client to a tax specialist is in the client’s best interests. Failing to document that consideration — even if they ultimately decide referral is unnecessary — creates a compliance gap.
Strategy-first, client-second. When the recommended strategy is determined before the fact-find is complete, the documentation trail often reveals the reasoning worked backwards from the recommendation. This is a pattern ASIC has identified repeatedly in surveillance reviews.
Incomplete investigation of alternatives. The obligation to “investigate and assess” means genuinely considering alternatives, not merely documenting that the recommended product was preferred. Comparative analysis against at least the major alternatives in the relevant product class is expected.
Practical implications
Compliance frameworks built around RG 236 should treat the safe harbour as a starting point, not a completion checklist. The question at each advice gate should be: what would a reasonable adviser regard as being in the best interests of this particular client, in these particular circumstances?
That question — answered honestly and documented clearly — is what survives ASIC scrutiny.
This post is for general information purposes and does not constitute legal or compliance advice. Regulatory obligations should be assessed against the current version of the relevant legislation and ASIC guidance.