ASIC action plans and better client outcomes

Alan Kirkland (ASIC) sits down with Toby Potter (IMAP) to discuss ASIC’s 2025-26 Corporate Plan in relation to managed accounts, including conflicts of interest, a governance framework, and assessing consumer outcomes.

ASIC’s Corporate Plan 2025-26 (released in August 2025) outlines the regulator’s priorities over the next year.

As part of this plan, ASIC has announced it will be undertaking surveillance of licensees recommending and offering managed accounts, specifically calling out ‘governance frameworks’, ‘management of conflicts of interest’, and ‘outcomes for consumers’. Planning and scoping for that surveillance work is currently underway by ASIC.

Over the next 15 months, this surveillance work could have serious implications for the managed accounts sector, including potential new regulation of advice on managed accounts.

By Jayson Forrest

Speaking at the IMAP Independent Thought 2025 conference, ASIC Commissioner — Alan Kirkland — says two of the five strategic pillars in the 2025-26 Corporate Plan are focused on the financial wellbeing of Australian consumers.

These are:

• improving consumer outcomes generally, and
• supporting better retirement outcomes for retirees.

Both these strategic pillars have direct implications for the managed accounts sector.

Under the Corporations Act, there is one obligation that is particularly important for those involved in the provision of managed accounts, and that is in relation to the management of conflicts of interest.

ASIC recently consulted on updates to RG 181 — Licensing: Managing conflicts of interest. As the guide was last updated in 2004, the regulator believed it was important for RG 181 to be updated to reflect changes in law and policy.

According to Alan, RG 181 in its current and proposed revised form makes clear a number of provisions of the Corporations Act which raise obligations in relation to conflicts in the provision of financial services. He adds one of the most important is the obligation in Section 912A(1aa) — A financial services licensee must: have in place adequate arrangements 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 the licensee in the provision of financial services as part of the financial services business of the licensee or the representative. 

“That obligation is broadly framed, but it’s articulated in the law as a key obligation of licensees. We expect licensees under that obligation to engage deeply and on a regular basis to understand where conflicts may arise, and ensure their arrangements for addressing those conflicts are adequate.”

Alan says any proposed changes to RG 181 will be the result of observations from ASIC’s surveillance and enforcement work. He believes any changes will better articulate how the law applies in relation to: other related obligations; the types of conflicts that need to be identified and managed in order to meet your obligations; the need to have robust and tailored arrangements to manage those conflicts; and how you can effectively manage conflicts. 

ASIC aims to publish the final updated guidance by the end of 2025.

For ASIC, it’s clear that managed accounts are playing an ever increasing role in the Australian investment landscape. This is supported by IMAP data, which recently reported net inflows into managed accounts reaching $256.4 billion as at 30 June 2025, with funds under management increasing by an average of 24 per cent annually since 2019.

Alan acknowledges these inflows has raised the regulator’s interest in the sector, particularly in relation to: what’s driving growth; what the impact of these changes are; how different incentives might be influencing these changes; and what these changes mean for consumers.

“That’s why our 2025-26 Corporate Plan identifies managed accounts as an area of focus for ASIC,” says Alan. “It has been a number of years since ASIC looked at managed accounts, and given the growth and potential risks of this sector, we consider a review to be warranted and timely.”

According to Alan, ASIC’s focus will be on licensees and advisers who recommend or offer managed accounts to retail clients. The regulator will examine how licensees are managing compliance with their general obligations, which require industry participants to act efficiently, honestly, and fairly.

“When financial advisers recommend managed accounts, we will examine how they comply with their obligations to act in the best interest of their clients and provide appropriate advice. We will also examine what conflicts of interest may be present, and how these conflicts are addressed by advisers and licensees.”

Alan adds managed accounts can be very attractive for licensees in all parts of the value chain — from product manufacturing through to distribution. As such, the regulator will also examine the types of conflicts that may arise, what challenges they present, and how they are being managed.

When asked what he believed will be the types of conflicts front of mind for ASIC as part of its 2025-26 Corporate Plan, Alan says ASIC is approaching this project with an open mind.

“As a starting point, we really want to understand the state of play of managed accounts, like the different offerings available in the market and how they compare. We also want to understand the extent of the efficiencies from operating managed accounts, as opposed to advising on individual client portfolios, including how those efficiencies are being realised, and who is capturing the value from those efficiencies."

“We also want to understand the relationships between the different players (advisers, licensees, product issuers, asset consultants, investment committees), and how those relationships vary in different models and what conflicts they might throw up.”

Alan emphasises that ASIC is not approaching this project with a presumption that there are any particular conflicts of high concern but rather, it wants to better understand the models available in the market and then determine where potential conflicts might arise. Importantly, the regulator also seeks to better understand how relevant players are identifying those conflicts and managing them.

In terms of a proposed governance framework for the managed accounts sector as part of its 2025-26 Corporate Plan, Alan acknowledges the different moving parts of the sector (advisers, licensees, and product manufacturers), including the range of services available — from ‘off-the-shelf’ offerings through to tailored solutions — makes an all-encompassing framework challenging.

“For example, you’d expect different arrangements for advice licensees, depending on whether the people providing advice under your licence are employed advisers, or operating as authorised representatives, or a mix of both. And depending on the managed account offering you’re providing — like an ‘off-the-shelf’ offering or an in-house solution — you’d also expect arrangements to be different,” he says.

“We need to ensure models are relevant to advice-related obligations, ensuring that advisers under a licence are providing advice that are in their clients’ best interest, that the advice is appropriate, and they are prioritising the client’s interest over their own. Importantly, the advice is delivered efficiently, honestly, and fairly.”

While Alan acknowledges there are many advice firms that provide toolkits and templates that help employees comply with their AFSL obligations, which may be helpful, he says there is no guarantee that such toolkits and templates will satisfy ASIC’s requirements that an advice business is complying with those obligations.

Two of the strategic pillars of the 2025-26 Corporate Plan are focused on improving consumer outcomes — both generally and in retirement — by delivering advice and services efficiently, honestly, and fairly.

According to Alan, responsibility for consumer outcomes does not fall solely with ASIC, but rather it’s the responsibility of all stakeholders operating within the financial system:

• For licensees that means ensuring you continue to fulfil your obligations to provide efficient, honest and fair financial services.
  • For advisers that means acting in the best interests of your clients by providing appropriate advice and prioritising clients’ interests over yours.
• For fund operators that means fulfilling your obligations as a responsible entity and licensee, including acting in the best interests of scheme members and providing efficient, honest and fair financial services.
• For platform operators that means continuing to perform your obligations honestly, and with reasonable care and diligence.
• For ASIC that means ensuring compliance through its supervisory and surveillance work, and addressing misconduct where the regulator sees it.
  

In relation to determining whether advice is good or bad, Alan says one thing ASIC won’t do is review investment decisions with the benefit of hindsight. Instead, in terms of consumer outcomes, the regulator is more interested in identifying “clear signals” around client detriment.

For example, this includes where recommendations don’t appear to be aligned with the relevant circumstances of the client, or where product switching recommendations that come with significant negative tax implications for the client, or significant upfront and/or ongoing fees, haven’t been appropriately considered.

According to Alan, it’s “much easier and fairer” for ASIC to consider consumer outcomes through a “negative lens” (like excessive costs), where there are clear markers around client detriment. He says ASIC will look closely at tangible areas, like fees and costs, because they have a key impact on the financial outcomes of consumers.

However, IMAP Chair — Toby Potter —rejects this premise, instead encouraging the regulator to consider consumer outcomes from a more positive perspective, such as the transparency and efficiencies benefits that come from using a managed account, which provide clients with an overall better investment outcome, compared to advisers servicing separate client portfolios.

Providing a comment on consumer outcomes as a delegate at the IMAP conference, Tim Farrelly — Principal at Delta Portfolios — agrees, adding that the quality of investment decision-making in managed accounts is vastly better today than the old advice models.

He urges ASIC not to make it harder for the industry to do the right thing by adding more regulation to managed accounts.

Alan reiterates that ASIC is agnostic to the managed account models that businesses want to offer, but through this project, it aims to identify examples of good practice (advice businesses excelling in the delivery of managed accounts), as well as bad practice (businesses failing with their obligations under the law).

“ASIC doesn’t have specific views on particular models within the managed accounts world,” says Alan. “It’s all about the process you must go through in relation to thinking about the potential conflicts that come up in your model, and how you go about identifying, assessing and managing those conflicts.

“The ball is in the industry’s court. If you can demonstrate you have worked through that process, and you review that process regularly — particularly if there are changes in your model or any risks that might be thrown up through your data collection — then you’ll be in a much better position to demonstrate compliance.” 

Alan Kirkland is a Commissioner at ASIC.

He spoke on ASIC’s 2025-26 Corporate Plan in relation to managed accounts at the IMAP Independent Thought 2025 conference.

The session was moderated by Toby Potter — Chair of IMAP.