The real issue is regulation.
As you point out conflict of interest.
I hope we all learned about conflict of interest from the great recession of 2008 with respect to the financial sector.
They came out with new products/services that the regulatory bodies hadn't dealt with and in many cases, reduces regulation.
That is to say, anytime you grant some powerful organization a new power or tool, it needs to be examined for conflict of interest and other pitfalls.
Seems reasonable.
What hasn't happened is regulation on government.
Well that is not true. Historically, we have regulation on government dating all the way back to English common law.
The government was granted the right to enforce the law. Many centuries have passed and we have pretty reasonable laws to regulate government in how it enforces law (warrants, search and seizure, trial, juries...) It's not perfect and the regulation varies, but it is actually pretty reasonable in most of the western world.
What has not happened is the regulation on government in all the new areas it has gained power.
Everything from pensions (special for public sector workers), to administrating common fines, regulating daily lives of people, debt, taxation...
You can tell we don't have regulation in these areas as there is really nothing stopping the government from doing anything, except that is doesn't do it. We can have 99% taxation. Nothing illegal about it. We can have the government grant arbitrary benefits to any segment of the population...
In this case, we have a conflict of interest between revenue, fines, pay...
So we could have rules and regulations like the following:
1. All fine revenue from regulatory activities can only be used for victims of the act. It cannot be used for revenue or paying salaries...
This would keep fining honest and removes the conflict of interest.
Now that is just a sample regulation, but that is the general idea.