Conflicts: Never off the menu

Authored by Ngaire Willis

Conflicts of interest. It is the risk that regulators will never take off the menu, and for good reason. Effective conflicts management is foundational to trust in the financial sector.

Australian regulators are collaborating to update their expectations on conflicts management. ASIC’s focus began with its review of public and private markets in early 2025, narrowed to private credit, and broadened into a full rewrite of Regulatory Guide 181 (RG 181). APRA has concluded its consultation on updated governance standards under CPS 510, including conflicts of interest provisions. For compliance, risk, and governance professionals, this is an opportune moment to critically assess your conflicts management framework.

The updates to RG 181 are a material rewrite of the previous version, last updated in August 2004. The revised guide significantly elevates ASIC’s expectations across governance, risk management, and compliance functions, including:

• Extending the scope of the conflicts management obligation under s912A(1)(aa), now expressly described as broad and capturing conflicts that arise within and between the financial services business and external activities

• Introducing a prescriptive lifecycle framework requiring firms to identify, assess, respond to, and implement, monitor, maintain, and review their conflicts management arrangements

• Emphasising avoidance and control over disclosure. ASIC is clear that disclosure alone is insufficient and that a proactive approach is required

• Requiring disclosures, where used, to be timely, prominent, specific, and meaningful, and expressly discouraging boilerplate disclosures

• Targeting remuneration practices, vertical integration, and internal structures as key conflict drivers requiring active management

  
  

This brings Australia’s conflicts management provisions much closer to those in Europe and the UK. Firms without a presence in those jurisdictions should take particular care to benchmark against the updated requirements.

APRA’s CPS 510 consultation is more narrowly focused on board and committee governance but imposes on banks, superannuation funds, and insurers an obligation to maintain a board-approved conflicts policy. CPS 220 further requires processes for identifying, monitoring, and managing conflicts as part of the risk management framework. Together, these reinforce ASIC’s move toward more prescriptive expectations.

Firms should use this heightened regulatory activity as a catalyst to review current arrangements. A policy and register alone are not enough. Effective conflicts management requires an integrated framework embedded into business processes, enabling systematic identification, risk assessment, governance decision-making, and control implementation on an ongoing basis.

What actions should your firm take?

In light of the concurrent regulatory updates from both ASIC and APRA, firms should consider taking the following steps as a matter of priority:

1. Gap analysis. Benchmark your conflicts framework against RG 181’s four-step lifecycle (identify, assess, respond, implement/monitor/review) and assess whether arrangements are genuinely integrated into operations.

2. Policy governance. Ensure your conflicts policy has board or senior management approval, particularly for APRA-regulated entities where CPS 510 requires board oversight.

3. Controls over disclosure. Assess whether you rely too heavily on disclosure. ASIC expects proactive avoidance or control through information barriers, functional separation, trading restrictions, and approval requirements.

4. Remuneration structures. Evaluate remuneration structures and organisational design for misaligned incentives, including vertical integration and volume-based remuneration.

5. Conflicts register. Ensure your register is actively maintained with documented records of conflicts identified, actions taken, and disclosures given to affected parties.

6. Training. Provide targeted training so staff understand and can apply the firm’s conflicts arrangements in practice. ASIC expects demonstrable integration, not just documentation.

7. APRA risk framework. For APRA-regulated entities, review CPS 220 conflicts processes and ensure linkage to governance and risk appetite settings with Board Risk Committee oversight.

The regulatory landscape for conflicts management is shifting rapidly. Whether you need a gap analysis, policy uplift, remuneration review, or preparation for CPS 510, the team at Owl Advisory is here to assist.

This publication is a joint publication from Mallesons, and Mallesons Compliance Pty Ltd (ACN 672 547 027) trading as Owl Advisory by Mallesons.  Mallesons Compliance Pty Ltd is a company wholly owned by the Mallesons Australian partnership.  Mallesons Compliance Pty Ltd provides non-legal compliance and governance risk advisory services for businesses.  Mallesons Compliance Pty Ltd is not an incorporated legal practice and does not provide legal services. Laws concerning the provision of legal services do not apply to Mallesons Compliance Pty Ltd.