When it comes to the conflicts priority rule - the requirement upon financial service providers to place the interests of their client ahead of any related party - simply disclosing conflicts of interest may not be enough, according to Clayton Utz.
"You just can't assume that what you've done in the past is going to be okay in the future. There's a real need to rethink a lot of matters," said Mr Dennings.
"Simply relying on 'that's what we did before' is not going to cut the mustard," he added.
In a recent piece entitled Are you FOFA ready?, co-authored with Special Counsel Samantha Carroll and lawyer Eibhlin McBride, Mr Dennings said that in Clayton Utz's experience, the financial services industry has typically managed conflicts of interest through disclosure.
But according to Mr Dennings, the Australian Investments and Securities Commission (ASIC) has indicated in Regulatory Guide 175 that an advice provider cannot comply with the conflicts priority rule "merely by disclosing a conflict of interest or getting the client to consent to the conflict".
Instead, further action is likely to be required to satisfy the regulator, he said.
"There are a whole range of steps that can be taken to manage that. It's a question of being able to show that a) you've turned your mind to it and b) you can evidence that steps have been taken to manage it," said Mr Dennings.
One area in particular that is set to come under further scrutiny from ASIC is the formulation of approved product lists (APLs).
Clayton Utz understands that ASIC will require advice providers to provide the evidence behind the formulation of APLs, said Mr Dennings.
"[APLs need to be] well balanced having regard to the demographic that you are pitching to for your advice - and that's quite a sophisticated exercise," he said.
