Following consultation conducted between 30 July and 5 September, during which ASIC received 26 submissions, it has revised Regulatory Guide 181 AFS Licensing: managing conflicts of interest (RG181).
“Conflicts of interest have historically been a significant source of misconduct as well as consumer, investor and economic harm within the financial services sector,” the regulator said.
The changes to RG181 draw on ASIC’s regulatory experience and insights from its surveillance of private markets to bring the guidance into alignment with development in law and policy.
The key updates include:
- How the law applies to conflicts of interest, including the scope of the conflicts management obligations and links to other related obligations;
- The types of conflicts AFS licensees should identify and manage;
- The need for robust, tailored arrangements to manage conflicts;
- Practical steps for effective conflict management; and
- A non-exhaustive ‘catalogue’ of related legal obligations and information.
According to the regulator, most of the consultation feedback focused on technical details and specific guidance, such as illustrative examples ASIC provided to identify different types of conflicts of interest.
The RG181 update was triggered by several submissions to ASIC’s discussion paper on the evolving dynamics in public and private markets earlier this year flagging the management on conflicts of interest as an area requiring further clarification. It was also identified as a compliance issue in the regulators credit surveillance report released in November.
ASIC commissioner Kate O’Rourke said: “Conflicts of interest aren’t just ethical dilemmas. They pose real threats that erode trust, tarnish reputations, and cause lasting harm to consumers, investors, and the entire financial ecosystem. Effective conflict management is more than a regulatory checkbox – it’s the cornerstone of trust in financial services.”
In its submission to ASIC on RG181, the Financial Advice Association Australia (FAAA) said it was important the updated guidance emphasised adviser-level responsibilities, alongside licensee frameworks, without creating another compliance checklist.
“It is not sufficient for conflict obligations to sit conceptually at the licensee level; obligations must cascade clearly to the adviser-client relationship. We commend ASIC’s work in developing a ‘roadmap’ that demonstrates the intersection of conflict obligations with related duties,” the submission said.
“This broad approach is useful, but it is important that it remains just that: broad. The roadmap should not evolve into a checklist. The obligations under RG 181 are deliberately broad and should remain principle-based: they are designed to encourage careful, contextualised decisions, not mechanical compliance.”
Meanwhile, the Financial Services Council said there needed to be greater clarity regarding the charging off fees for services provided as the existing guidance was unclear.
“ASIC remove and refine references to the charging of fees being a conflict of interest to explain in what instances a conflict might arise, as the charging of fees in and of itself is not a conflict,” its submission said.
