ASIC flags potential conflicts on research and products

Mike Taylor

Managing Editor/Publisher, Financial Newswire

4 August 2025

The recent evolution of research and ratings houses into product areas has been flagged as an issue by the Australian Securities and Investments Commission (ASIC) as it seeks to update guidance around managing conflicts of interest.

The regulator last week issued a consultation paper around how it intends updating its 2004 Regulatory Guide 181 to make it relevant to current industry practice and noted the potential for conflicts for AFSLs around confidentiality, conflicts of duties and structural conflicts.

It cited a number of examples including “conflicts in research reports (including conflicts between business units in a conglomerate firm); as well as conflicts in managed investment schemes (including employee conflicts); and conflicts relating to market participants (including conflicts relating to outsourced third-party commercial relationships)”.

Noting the age of the original RG 181, the ASIC consultation paper said that since it was published “there have been significant developments in the law, including a range of new obligations that relate to conflicts of interest and the conflicts management obligations”.

It then cited as examples:

(a) the best-interest duty and related obligations for financial advisers, and prohibitions on certain conflicted remuneration;

(b) market integrity rules for securities and future market participants; and

(c) prudential requirements.

Within the consultation paper, ASIC said it sought to recognise that any approach taken should be proportionate ad scalable to an AFSL’s obligations, the materiality of the risk of any conflict and the size and complexity of their financial services business.

“For example, we acknowledge that adequate arrangements will vary significantly between small and large businesses,” it said. “While this is recognised in the existing guidance, proportionality is made more explicit in draft RG 181, considering its broad application across our regulated population and the types and extent of conflicts that need to be considered.”