Following months of industry consultation, the Australian Securities and Investments Commission (ASIC) has released the updated Regulatory Guide 181: AFS Licensing: Managing Conflicts of Interest (RG 181). The revised guide materially expands the conflicts management obligation and sets out clearer, principles-based guidance for Australian Financial Services Licence (AFSL) holders.
The August wish list following ASIC’s consultation with industry
In July 2025, ASIC released Consultation Paper 385 (CP 385) seeking industry feedback on proposed updates to the RG 181 first issued in 2004. Our analysis showed that AFSL holders sought clarity on several key issues, including:
- clearer definitions of the term ‘conflict of interest’ and who ASIC considers to be the 'affected parties'
- the basis on which duty/duty conflicts fall within the scope of the obligation (noting that section 912A(1)(aa) only references 'conflicts of interest')
- whether confidentiality obligations are relevant to the management of conflicts.
What ASIC clarified and what remains uncertain
ASIC has addressed some of the above issues in principle, with the revised RG 181 confirming:
- an expanded scope of the conflicts management obligation
- multiple examples of 'conflict of interest', including fiduciary, structural and third-party conflicts
- a clear hierarchy for managing conflicts – avoidance where possible, controls where necessary, and disclosure as a supplement (not a substitute)
- duty/duty conflicts fall within the scope of the conflicts management obligation
- recognition that competing obligations of confidentiality may, in some cases, require conflicts to be avoided altogether rather than disclosed.
However, areas of ambiguity remain, including:
- the absence of a single definition of 'conflict of interest'
- the statutory basis for duty/duty conflicts
- the boundaries of 'affected parties'.
ASIC also makes clear that merely having conflicts policies is insufficient. AFSL holders must be able to demonstrate that conflicts management is embedded in governance, operations and decision-making.
The 'bonus' gifts
Beyond the changes highlighted above, the updated RG 181 introduces a number of expectations that will require practical uplift across many AFSL holders’ businesses. These include:
- a four‑step conflicts management framework – identify, assess, respond and implement
- a risk‑based approach, requiring conflicts arrangements to be tailored to the size, complexity and nature of the business
- expanded discussion of control arrangements, with 10 examples referenced
- clearer rules on disclosure arrangements, including timing, content and exceptions
- conflicts record‑keeping obligations, including the maintenance of conflicts registers capturing actual, potential and perceived conflicts.
What AFSL holders should do in 2026
AFSL holders should use the start of 2026 to review their frameworks, practices and controls and implement the revised guidance with care. Key steps include:
- reviewing and updating governance frameworks, conflicts and related policies to reflect the expanded scope
- mapping legal and regulatory obligations relevant to conflicts management across the business
- creating or updating conflicts registers to capture actual, potential and perceived conflicts
- reviewing remuneration structures and reporting lines, particularly where volume-based incentives or structural conflicts may arise
- reassessing disclosure practices to ensure disclosures are specific and meaningful
- evaluating third-party relationships and duty/duty conflicts, particularly in complex or multi-role structures.
A summary of the changes and a to-do list for 2026 can be downloaded here.
If you have any questions about the updated RG 181 or need assistance with reviewing and uplifting your arrangements, please contact us here.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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