ASIC refreshes Regulatory Guide 181 for conflicts of interest in financial services

On 16 December 2025, the Australian Securities and Investments Commission published updated regulatory guidance on managing conflicts of interest for financial services businesses. The update is intended to align expectations with developments in law and policy, and to incorporate supervisory insights, including lessons drawn from surveillance activity in private markets.

Why conflicts of interest matter in practice
The regulator presents conflicts of interest as more than an ethical concern. They are framed as a material risk that can undermine trust, damage reputations, and create harm for consumers, investors, and the wider financial system. This framing is important because it positions conflict management as a core part of sound governance and conduct, rather than a narrow compliance exercise.

What the updated guidance covers

The revised document is Regulatory Guide 181 on Australian financial services licensing and managing conflicts of interest. It sets out principles-based guidance for financial services licensees on designing and operating effective conflict management arrangements. The stated objective is to help licensees meet their licensing obligation to maintain robust arrangements and strategies that are tailored to their business model, products, distribution channels, remuneration structures, and relationships with related parties.

The updates focus on several practical dimensions that are commonly challenging for firms. First, the guide explains how the law applies to conflicts of interest, including the scope of the conflicts management obligation and how it connects with other related obligations. Second, it describes the types of conflicts that licensees should identify and manage, which is particularly relevant for firms operating multiple business lines, using third-party distribution, or participating in private market activities where information asymmetries and incentive misalignment can be more pronounced. Third, the guidance emphasises that arrangements must be robust and tailored, which implies that generic policy documents are not enough unless they are clearly embedded in governance, oversight, and operational controls. Fourth, the guide sets out practical steps for effective conflict management. Finally, it includes a catalogue of related legal obligations and supporting information, which is intended to help firms understand how conflict management intersects with other regulatory expectations.

A key contextual point is that this revised guide replaces earlier guidance issued in August 2004. The regulator positions the update as part of an ongoing regulatory maintenance and simplification agenda, with the stated aim of making regulatory information easier for businesses to access and apply.

Legal baseline for licensees

The update sits against a clear legislative requirement. Under section 912A(1)(aa) of the Corporations Act 2001, Australian financial services licensees must have adequate arrangements to manage conflicts of interest effectively. The obligation applies broadly, except for conflicts that occur wholly outside the financial services business. For governance and compliance functions, this distinction matters because it reinforces the need to define the scope of the regulated business carefully and to document how the firm identifies conflicts that arise within that scope.

Consultation process and feedback themes

The regulator also provides transparency on how it arrived at the final version of the guidance. A public consultation ran from 30 July to 5 September 2025, and the regulator received 26 submissions from industry, industry groups, and other interested parties. The feedback reportedly supported simplifying and updating the guidance overall, while many comments focused on technical points and the level of specificity in guidance, including the illustrative examples used to distinguish different conflict types. The regulator states that it updated Regulatory Guide 181 to address feedback where appropriate and summarised its responses to key issues, alongside non-confidential submissions.

Why private markets are highlighted

The emphasis on private markets is not incidental. The regulator links the need for clarification to its work on evolving public and private market dynamics, where conflicts of interest can be a significant driver of misconduct and associated harms. It also notes that conflict management was identified as a compliance issue in a private credit surveillance report, and that the updated guidance had been set out as a deliverable in the regulator’s roadmap for the next 12 to 18 months, published as part of its response to the earlier discussion paper.

Implications for financial services governance

For firms, the practical takeaway is that conflict management should be treated as a system rather than a document. The revised guide’s focus on legal scope, conflict identification, tailored arrangements, and practical steps signals that supervisors expect controls that work in context. That typically includes clear escalation pathways, governance ownership, staff training calibrated to role and risk, monitoring and review mechanisms, and evidence that conflicts are actively managed rather than passively disclosed. For boards and senior management, the update reinforces that managing conflicts of interest is central to sustaining trust in financial services, particularly as business models evolve and private market activity grows.

Source: 25-304MR ASIC renews guidance on managing conflicts of interest in financial services | ASIC