ASIC updates guidance on obligation of Australian financial services (AFS) licensees to manage conflicts of interest

Before finalising the updated RG 181, ASIC undertook extensive public consultation to test its revised guidance and ensure it remained practical. On 30 July 2025, it released Consultation Paper 385 - Proposed updated to RG 181 Licensing: Managing conflicts of interest, inviting feedback from AFS licensees, industry bodies, consumer groups and other stakeholders on the scope, clarity and anticipated regulatory and financial impacts of the proposed changes.

ASIC sought comments on a range of matters, including the breadth of the conflicts‑management obligation, the interaction between RG 181 and other legal and regulatory requirements, and the adequacy of the proposed guidance on identifying, assessing and managing conflicts of interest.

Key themes which emerged from the submissions include:

• Scope of the conflicts-management obligation: submissions generally supported clarifying the scope of the conflicts management obligation and ASIC’s use of a non‑exhaustive ‘road map’ of related legal duties. However, many sought further guidance on what a proportionate, risk‑based approach entails and how ASIC will assess whether a licensee’s conflicts management arrangements are ‘adequate’. Our summary table below outlines how the updated RG 181 responds to and incorporates these matters where relevant.  
   

• Structural conflicts and vertical integration: several submissions urged ASIC to directly address structural conflicts in vertically integrated or related‑entity models. One industry body argued that the absence of structural independence between manager and trustee should be treated as a core conflict requiring strong, often structural, controls. Others sought more nuanced, case‑based examples and cautioned that related‑party or vertically integrated arrangements should not automatically be viewed as conflicted, noting they can deliver value when well governed.
   

• Wholesale vs retail distinctions: some industry bodies criticised the draft RG 181 for not distinguishing between wholesale and retail expectations, arguing that statements like ‘mere disclosure is unlikely to be sufficient’ could be misread as universal, even though disclosure, supported by contractual terms and governance, can often suffice for sophisticated wholesale clients. While maintaining that disclosure alone will generally be inadequate, the updated RG 181 clarifies that disclosure remains a valid tool and that disclosures to wholesale clients may be less detailed than those for retail clients.
   

• Fees, remuneration and ‘excessive/unnecessary’ characterisations: several industry bodies argued that charging fees or seeking profit is not inherently a conflict and sought clearer guidance on when fee structures become problematic. They also asked ASIC to refine examples, remove vague terms like ‘unnecessary fees,’ and avoid blanket positions on commission‑based remuneration given its prevalence in brokerage models. The updated RG 181 does not alter ASIC’s stance, confirming that entities may earn profits or returns for providing financial services, provided they deal fairly.

In updating RG 181, it appears ASIC has responded to some of the issues and concerns raised by industry stakeholders. The table below outlines these updates, comparing (where applicable) the new guidance with the 2004 version and summarising the major changes.  
 

If you’d like more clarity on these changes and how they might impact your policies and procedures around managing conflicts of interest or have any other questions, please reach out to the HW Funds team for tailored advice and support.