Commission-only remuneration arrangements should be avoided, the Australian Securities and Investments Commission says in an updated guide on managing conflicts of interest.

The regulator has clarified its guidance on commission-based salary packages after a consultation on proposed changes closed in September.

Two respondents suggested amendments to state there are situations when such arrangements can be acceptable.

The updated Regulatory Guide 181 Licensing: Managing Conflicts of Interest states: “Some types of conflicted remuneration and benefits are banned. However, some benefits that are not banned may still create conflicts of interest.

“You should ensure your remuneration practices, including any non-monetary benefits, comply with your conflicts management obligations. For example, you should … avoid remuneration structures where advisers only earn commission.”

RG 181 was issued this month and supersedes a 2004 edition.

The updated guide provides examples of where conflicts may arise in general insurance. This comes after the Insurance Council of Australia requested examples in relation to volume-based incentives and white-labelled products distributed through intermediaries.

In one example, a broker recommends a product that generates a higher commission than one with similar coverage. In another, a financial institution – influenced by its financial and related-party interests – recommends a related entity’s high-cost home insurance to new home loan customers.

ASIC commissioner Kate O’Rourke said: “Conflicts of interest aren’t just ethical dilemmas. They pose real threats that erode trust, tarnish reputations and cause lasting harm to consumers, investors and the entire financial ecosystem.

“Effective conflict management is more than a regulatory checkbox – it’s the cornerstone of trust in financial services.”