Speaking before the Senate Economics Legislation Committee inquiry into the FOFA amendments, Minter Ellison parter Richard Batten said that unless the final ‘catch-all’ provision is removed from the ‘best interests’ duty, the legislation must end up in court.
His comments confirm earlier concerns by Financial Planning Association chief executive Mark Rantall and Financial Services Council chief executive John Brogden in February that the final requirement to take ‘any other step’ that is in the clients’ best interests would “end up in court”.
“Most cases, obviously, will be dealt with within the industry dispute resolution body — the Financial Ombudsman Service [FOS],” said Mr Batten.
“Certainly, [FOS] will be spending a lot of time on these provisions, I would expect. We will certainly see some guidance coming out of that.”
But the problem with FOS is it’s not precedent setting, said Mr Batten.
Ultimately, he said he would expect to see case law on the FOFA legislation given the uncertainty posed by the catch-all provision.
“If I was a plaintiff lawyer – which I am not and have never been – I would certainly be focusing on that particular step, amongst other provisions,” said Mr Batten.
“Any form of uncertainty or breadth of drafting will always give room for people, as a lawyer, to raise an argument.
“There will be lawyers and I am in sure, in circumstances as you point out, there will be some form of corporate failure at some point in the future – no doubt, you cannot legislate against it – where that will occur,” said Mr Batten.
