No, an Approved Product List (APL) does not inherently restrict adviser independence or create conflicts of interest, unless it is poorly governed, commercially influenced, or prevents advisers from recommending suitable products. AFS licensees must ensure APL frameworks allow advisers to act in the client’s best interests, including using non-APL processes where required.
Expanded Answer
AFS licensees use an Approved Product List (APL) as a governance and risk management tool to support consistent research, supervision, and product oversight. ASIC’s focus is not on the existence of an APL, but on whether advice is appropriate and conflicts of interest are effectively managed. An APL, when properly designed, supports these outcomes rather than limiting adviser judgment.
In practice, an APL only restricts independence where it is too narrow, inflexible, or influenced by commercial arrangements that bias product selection. Well-governed APLs include transparent inclusion criteria, robust research, and workable exception processes that allow advisers to recommend or retain non-APL products where this better meets the client’s objectives, financial situation, and needs.
Regulatory risk increases where APL design or usage leads to product bias, limited choice, or poor client outcomes. ASIC expects licensees to demonstrate that product governance frameworks prioritise client outcomes and that advisers are not constrained from meeting their best interests obligations. For further context, see AFSL fundamentals: Approved Product Lists and why APL governance is a licensee obligation.
Why it matters
Mischaracterising the APL as restrictive can lead to poor advice practices, either by over-relying on it or ignoring it. The real risk arises where APL governance embeds conflicts or prevents appropriate recommendations, increasing exposure to ASIC scrutiny.
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Practical guidance
- Assess whether the APL allows sufficient product range to meet diverse client needs.
- Use and document non-APL processes where APL options are not appropriate.
- Review APL governance to ensure product selection is evidence-based and free from commercial bias.
Further reading
Navigating the conflicts management obligation: a comprehensive guide for financial planners and prospective AFSLs
Why compliance isn’t enough: reconciling law with ethical principles and ASIC’s expectations