A discussion paper released by the business regulator last week on managing conflicts of interest has been welcomed by the financial services industry, which says it’s the most useful paper to be released in some time.

Since January 1 last year, arrangements for managing such conflicts have been mandatory for financial services licensees, and the Australian Securities and Investments Commission (ASIC) paper is intended to help identify them.

The National Insurance Brokers Association has welcomed the paper, saying it supports the kind of advice it has been giving its members.

“The paper has an informative summary of how licensees should deal with conflicts,” CEO Noel Pettersen said. “It is a commendable effort by ASIC to explain some of the more complex aspects of managing conflicts.”

The paper – which is open for industry comment until June 9 – uses hypothetical case studies illustrating real or perceived conflicts to explain ASIC’s views on how they should be managed. Several are loosely based on examples the regulator has seen across the industry.

In terms of insurance brokers, Mr Pettersen says the paper specifically considers the unique situation of cluster groups when a member arranges a policy with an insurer that pays extra commissions to the cluster.

ASIC Deputy Chairman Jeremy Cooper says it’s essential for the financial services sector to recognise conflicts and manage them adequately.

“Conflicts of interest impact the quality of the financial services provided and, in our experience, poorly managed conflicts tend to result in poor service to consumers and a market that is not fair and transparent.”