Finance industry has duty to manage conflicts

Author: | Published: 1 Feb 2005

From January 1 2005, the Australian Corporations Act 2001 provides that the holder of an Australian financial services licence must have adequate arrangements in place "for the management of conflicts of interest that may arise wholly, or partially, in relation to activities undertaken by the licensee or a representative of a licensee in the provision of financial services."

There are a number of other licensee obligations that also deal with or relate to conduct potentially affected by conflicts of interest, including the existing general duty under the Financial Services Reform Act (FSR Act) to provide financial services "efficiently honestly and fairly". However, the new conflicts management obligation imposes, for the first time, a direct and specific obligation on licensees to have adequate arrangements to manage their conflicts of interest.

To assist licensees in complying with this new requirement, ASIC has recently issued Policy Statement 181 as well as a supplementary guide for...