Credit Advisers, Consumer Credit and Equitable Fiduciary Obligations

What is it about?

Consumers use financial intermediaries such as brokers and other credit advisers to navigate complex financial markets and to provide guidance on credit products. The National Consumer Credit Protection Act 2009 (Cth) (‘Credit Regime’) was enacted to provide enhanced consumer protection in obtaining consumer credit. This article demonstrates that equitable fiduciary obligations also operate to regulate the conduct of the adviser in his or her dealings with the client. Despite compliance with the Credit Regime, credit advisers may breach any equitable fiduciary obligation thus exposing the adviser to equitable remedies. Equitable fiduciary obligations may thus be an as yet under-exploited avenue of protection for consumers and a concomitant zone of compliance risk for those subject to the Credit Regime.

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Photo by Tierra Mallorca on Unsplash

Photo by Tierra Mallorca on Unsplash

Why is it important?

Equitable fiduciary law is an important means by which the conduct of financial service providers may be supervised. Importantly, this route exists outside the remit of regulators. In an environment where increased scrutiny now falls on those who provide financial advice and sell financial products, the reach of equitable fiduciary law therefore cannot be ignored.