ASIC flags potential conflicts on research and | Australian Markets

The latest evolution of research and rankings homes into product areas has been flagged as an difficulty by the Australian Securities and Investments Commission (ASIC) because it seeks to replace steering round managing conflicts of curiosity.

The regulator final week issued a session paper round how it intends updating its 2004 Regulatory Guide 181 to make it related to present industry follow and famous the potential for conflicts for AFSLs round confidentiality, conflicts of duties and structural conflicts.

It cited a quantity of examples together with “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 unique RG 181, the ASIC session paper mentioned that because it was revealed “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 obligation and associated obligations for financial advisers, and prohibitions on sure conflicted remuneration;

(b) market integrity guidelines for securities and future market members; and

(c) prudential necessities.

Within the session paper, ASIC mentioned it sought to recognise that any method taken needs to be proportionate advert scalable to an AFSL’s obligations, the materiality of the risk of any battle and the scale and complexity of their financial providers business.

“For example, we acknowledge that adequate arrangements will vary significantly between small and large businesses,” it mentioned. “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.”