APRA letter to RSE licensees: Managing Conflicts of Interest

March 2015
Regulatory & Governance

Following an assessment of how the industry has implemented SPS 521, APRA has sent a letter to RSE licensees in relation to managing conflicts of interest.

APRA assessed a cross-section of the industry including industry, retail, corporate and public sector funds.

In its letter to RSE licensees, the regulator makes the following observations:

  • Some funds take an overly narrow view of what may constitute a conflict (eg focusing on conflicts of responsible persons and ignoring conflicts that might arise for the RSE licensee).
  • Some funds take a reactive approach rather than implement an ongoing process for detecting and addressing potential conflicts early.
  • Some funds rely too heavily on self-identification of conflicts by directors and responsible persons with insufficient independent review.
  • In some cases, multiple directorships were not identified or inadequately assessed.
  • Governance arrangements may not be sufficiently robust to ensure that conflicts have been considered or declared at board or committee meetings.
  • Some funds have inadequate training for directors, other responsible persons and staff on the impact of the new conflicts management requirements.
  • In some cases, conflicts policies are not adhered to or are out of date or are not embedded in the RSE licensee’s business operations.
  • There is a lack of consistency in relation to the identification and management of conflicts with related service and product providers.

APRA’s responsible supervisors will continue to focus on conflicts management issues as part of future supervision activities.

To download a copy of the letter from the APRA website, click here.

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