Suitability of Advice (s961G)

How to evidence that your advice is appropriate to the client circumstances

What is the Appropriate Advice Duty?

Section 961G of the Corporations Act requires that the advice given to a client must be appropriate to the client circumstances. This is a separate obligation from the best interests duty even if an adviser acts in the client best interests, the resulting advice must still be suitable.

Suitability Assessment

Suitability is assessed by evaluating whether the recommended products and strategies align with the client stated goals, risk profile, investment timeframe, and financial situation. The SOA must clearly document this alignment boilerplate language is a common compliance gap identified by ASIC.

Replacement Product Analysis

When recommending a replacement product such as switching superannuation funds or insurance policies the SOA must include a detailed comparison of costs, benefits, fees, and features of both the existing and proposed products. This is a common area where SOAs fall short of compliance.

Risk Profile Alignment

The recommended strategy must match the client risk profile. If the SOA states a conservative risk profile but recommends growth assets, there must be clear justification for the departure. AdviserCheck flags risk profile inconsistencies in its contradictions layer.

Understanding the Appropriate Advice Duty (s961G)

Section 961G of the Corporations Act requires that the personal advice given to a retail client must be "appropriate to the client's circumstances." This means the adviser must have a reasonable basis for believing that the advice is suitable for you, given your objectives, financial situation, and needs as disclosed to the adviser. This duty is separate from the best interests duty (s961B) but works alongside it.

The appropriate advice duty applies to both the subject matter of the advice (e.g., the specific product or strategy recommended) and the warning given about any limitations of the advice. If the advice is based on incomplete or inaccurate information, and the adviser did not make reasonable inquiries to obtain complete information, the advice may not meet the s961G standard.

How Advisers Meet the Suitability Requirement

To meet the suitability requirement, your adviser must: gather sufficient information about your objectives, financial situation, and needs through a comprehensive fact-finding process; identify your risk tolerance, investment timeframe, and any specific requirements (such as ethical investing preferences); conduct a reasonable investigation into available financial products that could meet your needs; and document the reasoning for why the recommended product or strategy is suitable compared to alternatives.

Your SOA should clearly demonstrate that the advice is suitable for you. It should reference your specific goals, show how the recommendation addresses those goals, explain why the product or strategy is appropriate for your risk profile, and disclose any limitations of the advice. If the SOA does not connect the recommendations to your personal circumstances, the advice may not meet the s961G standard.

What Happens If Advice Is Unsuitable

If you receive advice that is not suitable for your circumstances, you can lodge a complaint with the adviser's licensee or with AFCA. AFCA can award compensation for losses suffered as a result of unsuitable advice (up to $1 million, or $5.36 million for superannuation complaints). ASIC can also take enforcement action against advisers who regularly provide unsuitable advice, including banning orders and civil penalties.

To strengthen your case, keep copies of all documents you provided to the adviser (such as your financial statements, goals, and risk profile questionnaires) and the SOA or ROA you received. If the advice does not align with the information you provided, this is evidence that the advice may not be suitable. You can also use AdviserCheck to analyse your SOA for suitability issues.

Frequently Asked Questions

What is the difference between s961B (best interests) and s961G (suitability)?
s961B requires the adviser to act in your best interests when providing advice (the process). s961G requires that the resulting advice is actually appropriate for your circumstances (the outcome). An adviser can follow the s961B process but still give unsuitable advice if they have misunderstood your situation.

Can advice be suitable for one client but not another?
Yes. Suitability is assessed based on your individual circumstances. The same product or strategy may be suitable for one client (with appropriate risk tolerance, timeframe, and goals) but completely unsuitable for another. This is why personalisation is critical.

Does suitability apply to all types of financial advice?
s961G applies to personal advice given to retail clients. It does not apply to general advice, which does not consider your personal circumstances. If you receive general advice, the adviser is not required to ensure it is suitable for you, but must give a general advice warning.

What if I did not provide complete information to my adviser?
If you did not provide complete or accurate information, the adviser may not be held responsible for unsuitable advice based on that incomplete information. However, the adviser is required to make reasonable inquiries if the information you provided appears incomplete or inconsistent.

A Decade of Advice Regulation

The rules governing financial advice have been rewritten repeatedly since 2012. This timeline shows what changed, and when.

Date	Reform	Impact on Consumers
July 2012	FOFA enacted	Best interests duty (s961B), ban on conflicted remuneration, opt-in for ongoing fees
July 2013	FOFA mandatory	Full compliance required — advisers must act in your best interests
July 2016	Accountants' exemption repealed	Accountants need AFSL to give SMSF advice, increasing consumer protection
2018-2023	Royal Commission + response	FEAR Act (2019) — higher penalties, breach reporting, enforceable director duties
Dec 2022	QAR Final Report	22 recommendations including simplified SOAs, new adviser class, streamlined best interests duty
July 2024	DBFO Tranche 1	FSG website disclosure option, conflicted remuneration clarification
Jan 2025	DBFO changes commence	Fee Disclosure Statements removed, streamlined ongoing fee consents, legal clarity for super advice fee deductions
Mar 2025	DBFO Tranche 2 draft	SOA rationalisation, collective charging for super, super fund targeted prompts. Best interests duty modernisation and new adviser class still in development.

Sourced from ASIC, Treasury DBFO documentation, FAAA and APESB publications.