An Australian Securities and Investments Commission (ASIC) review of vertically-integrated funds management businesses has given some of them a clean bill of health while others have been deemed to have indulged in window-dressing rather than real action to remove conflicts of interest.
The ASIC review, released today pointed to some vertically-integrated organisations where it appeared that the conflicts policy was “one of many policies which has been prepared to satisfy a regulatory requirement rather than seeking to properly identify and address conflicts and embed requirements to address conflicts into business practices”.
However, more broadly, the regulator said it was “encouraged that many organisations appear to take their conflicts management obligations seriously, with detailed and tailored policies that appear to be embedded in business practices from boards and senior management, cascading down to business units”.
“Entities were able to demonstrate a commitment to reviewing and updating the policy, communication and training,” the ASIC review said.
Commenting on the outcome, ASIC Commissioner Greg Tanzer said the regulator was pleased it ahd been able to contribute to the international focus on culture within organisations with this, and previous reviews, revealing good examples of companies committed to conflicts management.
“However, it is clear that some organisations adopt a generic template conflicts policy, with no demonstrated commitment to the conflicts management in the organisation,” he said. “We saw some very real examples where the conflict in question was so fundamental that complete avoidance was necessary — the conflict could simply not be managed internally and disclosed externally.”
“We consider that a failure to identify and manage conflicts of interest may lead to significant breaches of the Corporations Act and fiduciary duties, and result in reputational and financial damage,” he said.
