Under Section 961B of the Australian Corporations Act, 2001 (as amended), discussed as a global best practice for ethical advice, which of the following is one of the steps an adviser must take to satisfy the 'best interests' standard?

[ A ]Identify the client's financial situation, objectives and needs, and ensure this information is complete and correct, making further enquiries if gaps or inconsistencies appear[ CORRECT ]

[ B ]Obtain written sign-off from a second, independent adviser before making any product recommendation

[ C ]Recommend only products from a fixed list of pre-approved products published annually by the regulator

[ D ]Guarantee the client a minimum rate of return before the advice can be considered compliant

Takeaway

Option A is correct: Section 961B requires the adviser to identify and verify the client's financial situation, objectives and needs as a foundational step of the 'best interests' standard.

Derivation

Section 19.8.2 ('Australian Guidelines') explains that Section 961B of the Corporations Act, 2001 lists steps an adviser must take to satisfy the 'best interests' standard, including identifying the client's financial situation, objectives and needs, identifying the subject matter of advice sought, ensuring the information is complete and correct (making enquiries where gaps appear), and only recommending a product after thoroughly investigating the most appropriate options. A common error is inventing extra procedural steps, such as a second adviser's sign-off or a guaranteed return, that the Act does not actually require.

Why the others fail

B — Obtain written sign-off from a second, independent adviser before making any product recommendation

Section 961B's steps focus on understanding the client's situation and basing advice on it; a mandatory second-adviser sign-off is not one of the listed steps.

C — Recommend only products from a fixed list of pre-approved products published annually by the regulator

The workbook describes a process of thoroughly investigating the most appropriate products for the client's circumstances, not selection from a regulator-published fixed list.

D — Guarantee the client a minimum rate of return before the advice can be considered compliant

Guaranteeing returns is not part of the best interests standard; the workbook elsewhere specifically warns investors against advisers who promise assured or guaranteed returns.