How advisers should show they are putting clients’ interests first, or acting in a client’s best interest, has been a contentious issue in the industry. Some have called for clearer guidelines.

But while the new Financial Services Legislation Amendment Bill provides clarity, it has left many unimpressed.

The bill says advisers have a duty to put a client’s interests first.

If they know, or ought reasonably to know, there there is a conflict between the interests of the person to whom advice is being given, and their own interests, or the interests of any other person, “[the adviser] must give priority to [the client’s] interests, including by taking all reasonable steps to ensure that the [adviser’s] own interests or the interests of any other person do not materially influence the advice.”

Adviser Murray Weatherston said it was too broad.

“Any could mean anyone – what happens with a sharebroker who is allocating a float?  There’s conflict between what they would give me or you.

"It’s fine to put meat on the bones and I’m personally pleased that my articulation of what I thought it meant is pretty right but with this ‘any other person’ I don’t think the people who wrote the legislation understood what they were writing."

David Ireland, of Kensington Swan and chair of the current code committee, said the committee would make a submission on the point.

He said, as it was written, it was not workable.

“Any means any, with no wriggle room other than it only extends to where the financial adviser ‘ought reasonably to know’ that there is a conflict.”

He said the way the bill had been framed was unfortunate in that regard.

“Irrespective of your views on whether the standard should be client first or best interests of the client or some alternative formulation of that sort of concept, code standard one [placing clients' interests first] has been fundamentally altered and its application narrowed by the way it has been reflected in the draft legislation.

“The explanation we have received as to the rationale behind that draft wording convinces me that the substance of the obligation should revert back to the code, where it does not require the tightness of a legislative straight jacket and can remain a principles-based requirement.

“To give effect to Parliament’s policy decisions, the Act could simply note the obligation to place the client first must be discharged in accordance with the code – or something similar. That way the financial advice sector and consumer interest groups get a decent opportunity to help the code working group properly couch this core obligation of the new regime.”