Understanding Conflict of Interest in Australian Finance (2025 Guide)

Conflicts of interest are the silent disruptors of trust in Australian finance. Whether you’re seeking advice from a mortgage broker, investing through a super fund, or comparing insurance policies, conflicts can shape outcomes in ways that aren’t always in your favour. In 2025, with the Australian Securities and Investments Commission (ASIC) tightening rules and the Hayne Royal Commission’s legacy still driving reforms, understanding how conflicts of interest work—and how to spot them—has never been more vital.

What is a Conflict of Interest in Finance?

A conflict of interest arises when a financial professional’s duty to act in your best interest clashes with their own financial incentives, relationships, or obligations. This can happen in countless settings:

• Mortgage brokers steering borrowers towards higher-commission loans
• Financial advisers recommending products from providers who pay them more
• Insurance agents prioritising policies with better kickbacks

Left unchecked, these conflicts can mean higher costs, unsuitable products, and—at worst—financial harm for everyday Australians.

2025: New Policies and Regulatory Crackdowns

This year, several updates are reshaping how conflicts of interest must be managed in the Australian finance sector:

• ASIC Regulatory Guide 273 Update (2025): Mortgage brokers are now required to provide clearer disclosure of all commissions and non-monetary benefits received for recommending certain products. Brokers must also demonstrate how their advice meets the ‘best interests duty’—and ASIC is auditing compliance more aggressively.
• Superannuation Advice Reforms: From March 2025, super funds must disclose all related-party arrangements and potential conflicts on member statements, including any incentives paid for fund switching or consolidation advice.
• Insurance Remuneration Transparency: Insurers must provide a plain-English summary of any incentives paid to intermediaries at the point of sale, with penalties for non-disclosure increased under the revised Corporations Act.

These changes reflect a systemic push for transparency, aiming to put the interests of consumers first—even if it means shaking up long-standing industry practices.

Real-World Examples: How Conflicts Play Out

Consider the following scenarios, all drawn from recent ASIC case studies and regulatory action:

• The Biased Broker: In Sydney, a mortgage broker recommended a suite of home loans from one lender, not because they were the best fit, but because the broker received a larger upfront commission and a luxury holiday incentive. The borrowers paid higher interest rates, only discovering the conflict after ASIC’s intervention in late 2024.
• Super Switch Traps: A Queensland superannuation adviser convinced members to switch funds, citing ‘better performance’—but failed to mention that the adviser’s firm received trailing commissions from the new fund. ASIC’s 2025 reforms now require these relationships to be disclosed in writing.
• Insurance Upselling: A Melbourne insurance agent pushed bundled life and income protection products, steering clients away from cheaper standalone policies. The agent’s bonus structure was tied to the bundled products, a detail only revealed after a client complaint and subsequent investigation.

In each example, the financial professional’s incentives directly conflicted with their obligation to prioritise the customer’s best interests.

Protecting Yourself: Spotting and Navigating Conflicts

While regulators are raising the bar, consumers still need to stay vigilant. Here’s how to spot and manage conflicts of interest in 2025:

• Ask Directly: “Do you receive any commissions or benefits for recommending this product?”
• Read the Disclosure: New regulations mean you should receive a clear, written summary of any relevant incentives. Don’t skip the fine print.
• Seek Independent Advice: Where possible, look for fee-for-service professionals who don’t accept third-party commissions.
• Compare Options: Use comparison tools and seek a second opinion—especially for major decisions like home loans, superannuation, or insurance.
• Report Suspicious Behaviour: ASIC’s consumer portal makes it easier to report concerns, and regulatory enforcement is stronger than ever in 2025.

The Bottom Line: Transparency and Trust in 2025

Conflicts of interest will always exist in some form, but the direction of Australian finance is clear: transparency, disclosure, and consumer-first practices are becoming the norm. Whether you’re making your first investment, refinancing your home, or reviewing your super, knowing how to spot and question potential conflicts is essential to protecting your financial future.