Conflicts under the microscope: Key takeaways for insurance firms from ASIC's Updated RG 181

In December 2025, the Australian Securities and Investments Commission (ASIC) released a fully revised version of Regulatory Guide 181 – Managing Conflicts of Interest (RG 181), replacing previous guidance on conflicts management that had remained largely unchanged since 2004. The updated guide modernises and clarifies ASIC’s expectations for how Australian financial services (AFS) licensees must identify, assess and manage conflicts of interest under section 912A(1)(aa) of the Corporations Act (the Act).

For insurance firms (including insurers, brokers, MGAs and Insurtechs) operating under an AFSL, the revised RG 181 is essential reading. It provides clear and practical guidance to help firms assess the adequacy of their existing conflicts frameworks, setting out:

• how the law applies, including the scope of the obligation;
• the types of conflicts firms should consider;
• what constitutes “adequate arrangements” to manage conflicts; and
• what effective conflicts management looks like in practice — including when to avoid, control or disclose conflicts.

Importantly, ASIC emphasises that conflicts management should be proportionate, risk-based and tailored to the firm’s business model.

Action: As part of your FY26 compliance activities, AFSL holders should consider undertaking a structured gap analysis of their existing conflicts management framework against the updated RG 181.

1. Modernising the Legal Framework and Scope

ASIC is clear that it views section 912A of the Act as a cornerstone of the financial services regulatory regime, designed to promote fair, efficient and honest markets, while supporting consumer protection and market integrity.

The updated guidance confirms that the conflicts management obligation is intended to be broad in scope, applying to all conflicts that arise in connection with a firm’s financial services business - except those that are wholly outside (that is, completely unrelated to) the business.

ASIC also draws attention to related legal obligations, including directors’ duties to disclose material personal interests and the statutory ban on conflicted remuneration for AFS licensees. This reinforces that conflicts management should not be viewed in isolation, but as part of a wider governance and conduct framework.

2. Clearer Conflict Identification

ASIC defines a conflict of interest as arising:

“where there are competing financial interests, personal interests, business or related party interests — whether direct or indirect — or competing loyalties and obligations. In some circumstances, a combination of these may give rise to a conflict.”

RG 181 strengthens ASIC’s guidance on identifying conflicts, making clear that the regulator is concerned with conflicts that present a real and sensible possibility of improperly influencing judgement or decision-making. This reflects a deliberate shift towards an objective, fact-based assessment, rather than subjective perceptions.

ASIC confirms that both actual and potential conflicts fall within scope and provides an extensive list of factors relevant to assessing the seriousness or materiality of a conflict.

For insurance firms, one of the most valuable aspects of RG 181 is the detailed list of illustrative examples in Table 1, including:

• an insurance broker recommending a product that pays higher commission over a comparable product offering similar cover;
• a broker influenced by cross-ownership or shareholdings with an insurer, placing business with a related insurer rather than considering customer suitability;
• a director holding decision-making roles in both a general insurer and an advertising agency engaged by that insurer, creating a potential conflict due to competing loyalties; and
• an insurance comparison website prioritising or recommending products in which it has a related interest.

These examples provide clear insight into how ASIC is likely to view conflicts in real-world insurance scenarios.

3. Robust, Tailored Arrangements Are Expected

ASIC is explicit that generic conflicts policies or reliance on disclosure alone will often be insufficient. Licensees are expected to implement robust, effective and tailored arrangements that reflect the risks inherent in their business model.

RG 181 makes clear that appropriate arrangements may include a combination of:

• policies, processes and procedures;
• appropriately skilled people and resources;
• systems and controls over business activities and staff; and
• governance, oversight and supervision mechanisms.

The guide provides extensive practical examples to help firms design and implement arrangements that are both proportionate and effective.

4. To Disclose, Control or Avoid?

While disclosure remains a recognised conflicts management tool, ASIC is clear that disclosure alone will often be inadequate, particularly where there is a meaningful risk of consumer harm. Whether disclosure is sufficient depends on the specific circumstances. In many cases, ASIC expects firms to control conflicts — or, where the risk is acute, avoid them altogether.

ASIC notes that stronger controls or avoidance are likely to be appropriate where there is a real and sensible possibility that a conflict could adversely influence decision-making. RG 181 outlines a range of potential control mechanisms, including:

• information barriers;
• functional separation (for example, between underwriting and claims);
• enhanced approval and escalation processes; and
• removal of conflicted individuals from decision-making roles.

The guide also places renewed emphasis on the role of remuneration structures in creating, exacerbating or mitigating conflicts, reinforcing the need for careful design and oversight of incentive arrangements.

Implications for AFSL Holders and Next Steps

The updated RG 181 raises the bar for conflicts management and provides much clearer guidance on what ASIC considers to be an effective framework. In practical terms, AFSL holders should:

• take a risk-based, objective approach to identifying conflicts;
• strengthen governance, oversight and control mechanisms;
• ensure conflicts assessments and decisions are well documented; and
• review conflicts registers, policies and training in light of the updated guidance.

Ultimately, ASIC’s revised approach is aimed at embedding greater discipline and accountability in conflicts management — supporting stronger consumer outcomes and improved market integrity across the financial services sector.

Need support in reviewing your conflicts of interest arrangements? Get in touch at info@regnition.com