AFS Licence Conflicts Management

New Conflicts Policy

ASIC has issued Policy Statement 181 Licensing: Managing conflicts of interest [PS 181] setting out how it expects financial services licensees to manage their conflicts of interest.

Australian Financial Services Licensees are obliged (among other things) to have adequate arrangements for the management of conflicts of interest that may arise wholly, or partially, in
relation to the provision of financial services by the licensee, or a representative of the licensee, as part of the financial services business of the licensee or the representative (the ‘conflicts management obligation’).

The new obligation takes effect from 1 January 2005.

The policy is not limited to advisers. It is not limited to commission or staff bonus disclosures.

The purpose of a “conflict of interest policy” is to prevent and address potential conflicts of interest.
Possible conflicts might include:

  • The organisation, its directors or staff could be involved with another organization which may have dealings with your customers;
  • Outsourcing decisions, including participation in group service arrangements;
  • Investment management decisions.
  • Whether or not the above, or similar possibilities, apply to you, each AFS Licensee is required to have a policy stating how it would identify and then manage these if they did arise.

    The conflicts management obligation does not prohibit all conflicts of interest. It does not provide that a licensee can never provide financial services if a conflict of interest exists. Rather, the conflicts
    management obligation requires that all conflicts of interest be adequately managed.

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