Best interests duty extends to cryptocurrencies

Financial advisers’ will need to be well versed in cryptocurrencies such as bitcoin and ethereum despite them not being considered financial products, a compliance consultant has warned.

Speaking to ifa, Assured Support principal Sean Graham said the increasing popularity of cryptocurrencies poses a number of challenges for financial advisers.

“The problem is that it’s mums and dads jumping into it at the moment, and from conversations I’ve had with advisers, they feel under pressure from clients who want to chase that growth or are asking them to do it,” he said.

According to Mr Graham, while cryptocurrencies are not classed as financial products under most circumstances, advisers still need to be aware of how their clients intend to use them and discuss the risks associated with doing so.

“If you’re an adviser who doesn’t want to recommend cryptocurrencies but your client comes and asks you to include them in the portfolio, then you have a best interests duty to address that,” he said.

“That might be to warn them of the risks and dangers of cryptocurrencies or the limitations, and I don’t think that’s necessarily being done.”

Equally, Mr Graham said, advisers who do want to recommend cryptocurrency investment to their clients should be wary that they may come under greater scrutiny from ASIC moving forward.

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Source: Best interests duty extends to cryptocurrencies – ifa