While many vertically integrated businesses are managing conflicts of interest well, there are still players that are not taking their obligations seriously, a review by ASIC has found.
The regulator yesterday released the findings of its review into conflict management practices in vertically integrated businesses within the funds management sector.
The report focuses on 12 AFSL-holding entities that run at least two of such operations as funds management, responsible entity, superannuation trustee, platform structure, investment administration and custody business.
According to the report, many of the organisations had "detailed and tailored policies that appeared to be embedded in business practices from boards and senior management, cascading down to business units".
"Entities were able to demonstrate a commitment to reviewing and updating the policy, communication and training," ASIC said.
However, in other companies, the conflict policy appeared to be part of many that were put in place to simply satisfy the regulatory requirement, and not taken seriously.
"It is clear that some organisations adopt a generic template conflicts policy, with no demonstrated commitment to the conflicts management in the organisation," said ASIC commissioner Greg Tanzer.
"We saw some very real examples where the conflict in question was so fundamental that complete avoidance was necessary – the conflict could simply not be managed internally and disclosed externally."
The report did not name the organisations that were reviewed and did not include deposit-taking, insurance or financial advice business divisions.
ASIC chairman Greg Medcraft said it is important for company leaders to demonstrate good conflicts of interest practices.
"As our work on culture has indicated, the 'tone', being the attitude and commitment to conflicts management, must come from the 'top' and needs to be appropriately cascaded down the organisation through business practices, communication and accountability, as well as appropriate governance and remuneration," he said.
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 19 Dec 2018Advice bodies reach code monitoring agreementBy Adrian Flores
- 18 Dec 2018Court lays charges against former Sydney adviserBy Adrian Flores
- 19 Dec 2018Fiducian buys Vic financial planning businessBy Sarah Simpkins
- 18 Dec 2018ASIC permanently bans Victorian adviserBy Adrian Flores
- 18 Dec 2018Melbourne-based dealer group loses AFSLBy James Mitchell
- 18 Dec 2018AFA appoints new chair of women advocacy bodyBy Sarah Simpkins
- view all