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Thursday, 23 August 2001
Page: 26452


Senator CONROY (10:09 AM) —I move amendment (3) on revised sheet 2330:

(3) Schedule 1, item 1, page 162 (lines 4 to 7), omit paragraph (a), substitute:

(a) do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly; and

I believe that the inclusion of the words `to the extent reasonably practicable' in section 912A is not necessary and may interrupt the judicially established interpretation of the requirement to provide financial services efficiently, honestly and fairly. The courts have held that those three words are to be interpreted compendiously, such that the requirement would only imply that the licensee act efficiently while having regard to the dictates of honesty and fairness, act honestly while having regard to the dictates of efficiency and fairness and act fairly while having regard to the dictates of efficiency and honesty. This interpretation would appear to balance any conflict between the terms and exclude the need for the qualifying words `to the extent reasonably practicable'. Indeed, it was suggested by one law firm in their analysis of the bill that, if this paragraph is not amended, it could imply that a licensee may not have to act honestly if that is not reasonably practicable. Similarly ASIC said, `It would be difficult for us to contemplate a situation where we would tolerate anyone saying that it was not practical for them to act honestly.' ASIC have also stated that they would consider the surrounding circumstances before taking any enforcement action against the licensee. In fact they have admitted that, if there is a minor non-systemic thing, they do not take action. The qualification `to the extent reasonably practicable' is not appropriate in the circumstances of a financial services licensee who deals directly with clients. It should be removed.