Licensees’ conflict of interest under ASIC gaze
ASIC has announced it will be in talks with licensees next year about conflicts of interest as it updates its regulatory guidance.
In an update, the corporate regulator said it will update Regulatory Guide 181 on licensing and managing conflicts of interest.
This covers ASIC’s general approach to compliance with the statutory obligation for licensees to manage conflicts of interest, guidance for licensees on controlling and avoiding conflicts of interest, and guidance for licensees on disclosing conflicts of interest.
“ASIC is updating its regulatory guides (RGs) to ensure they remain simple to follow, effective, current and appropriate. This is part of our firm commitment to improving regulatory efficiency and reducing regulatory complexity.
“In 2025, ASIC will consult with stakeholders to update some key RGs, taking into account law reform, insights from case law about the provisions and other relevant issues.”
Specifically for licensees providing financial advice, RG 181 discusses the obligation to disclose benefits and relationships in a statement of advice when providing personal financial product advice to retail clients.
At the time of providing advice, they should also disclose the extent that the licensee has a legal or beneficial interest in the financial products that are the subject of the personal financial advice, the extent that the licensee is related to or associated with the issuer or provider of the financial products, or the extent that the licensee is likely to receive financial or other benefits depending on whether the advice is followed.
The five regulatory guides that ASIC has stated it will be updating in 2025 are:
- Regulatory Guide 53 - The use of past performance in promotional material.
- Regulatory Guide 168 - Disclosure: Product Disclosure Statements (and other disclosure obligations).
- Regulatory Guide 181 - Licensing: Managing conflicts of interest.
- Regulatory Guide 183 - Approval of financial services codes of conduct.
- Regulatory Guide 234 - Advertising financial products and services (including credit): Good practice guidance.
In a speech at the ASIC annual forum earlier this month, ASIC chair Joe Longo said the corporate regulator will convene a Simplification Consultative Group made up of consumer advocates, business leaders and directors, which will identify how ASIC can be more effective in administering the law.
“The fundamental approach of this group will be to listen to consumers, investors and industry, and challenge us to simplify and streamline how these issues are addressed. They will do this by leveraging the existing consultative panels ASIC runs, and inviting additional participation of groups, all with an urgent focus on establishing the key priorities that we can help address.
“While the focus of this regulatory simplification work will start with ASIC, through this process I expect we will gain insights and ideas for new mechanisms that can provide more analysis and recommendations for reform.”
AUTHOR
Laura Dew
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