Under FCA’s Principle for Business, Principle 8 (Conflicts of interest) we are required to pay due regard to the interests of each client and to manage any conflicts of interest fairly, both between our firm and our clients and between a client and another client. The specific rules for dealing with conflicts of interest can be found under the Senior Management Systems and Controls (SYSC) rules which can be found at SYSC 10.
We will take all appropriate steps to identify, prevent, and manage conflicts of interest, by:
- Identifying and preventing any potential circumstances which may give rise to conflicts of interest, and which pose a risk of damage to clients’ interests;
- Establishing and maintaining appropriate mechanisms and systems to manage those conflicts; and
- Maintaining systems at all times in an effort to prevent actual damage to clients’ interests through the identified conflicts.
The directors fully support this initiative and are committed to ensure that all conflicts between our firm and our clients, and between clients, are managed fairly with no party disadvantaged.
At least on an annual basis, our senior management team will receive a written report providing details of the kinds of services or activities carried out by our firm in which a conflict of interest entailing a risk of damage to the interest of one or more client has arisen or, in the case of an ongoing service or activity, may arise.
In addition to complying with the FCA requirements, we recognise that handling conflicts fairly is a fundamental element of good business practice and is required to assist in maintaining and developing our firm’s business.
What is a conflict of interest?
Conflicts of Interest appear in situations where our firm:
- Is likely to make a financial gain, or avoid a financial loss, at the expense of a client;
- Has an interest in the outcome of a service provided to a client or of a transaction carried out on behalf of a client, which is distinct from the client’s interest in that outcome;
- Has a financial or other incentives to favour the interest of another client or group of clients over the interests of a client;
- Carries on the same business as a client; or
- Receives or will receive from a person other than a client an inducement in relation to a service provided to the client, in the form of monies, goods or services, other than the standard commission or fee for that service.
Conflicts of interest may therefore include but are not restricted to interests between:
- Our firm and our clients
- Our staff and our clients
- Two or more different clients
- Third parties and our clients
- New services/products and our clients
- Strategic changes and our clients
We have sought to identify and prevent conflicts of interest that exist in our business and have put in place measures we consider appropriate to the relevant conflict in an effort to prevent, monitor, manage and control the potential impact of those conflicts on our clients.
The conflicts identified are:
In order to ensure as fair treatment as possible for clients, our Best Execution Policy requires us to take all sufficient steps to achieve the best overall trading result for clients.
On some occasions client orders may have a material effect on the relevant securities price. In order to ensure our staff do not take advantage of the situation by dealing on their own account (Personal Account Dealing) or encourage a third party to deal, we operate a ‘No front running’ policy whereby client orders will always take priority. We regularly monitor business transactions in order to ensure we meet these requirements.
Personal account dealing
Our staff may buy, sell or hold the same investments as our clients. We control personal account deals by ensuring that all such deals are identified and where applicable approved by management prior to execution. All staff, irrespective of their position in the firm sign on an annual basis to confirm their understanding of our procedures.
Details of our procedures for this area are covered later in this document.
Inducements to staff
Staff are not allowed to accept gifts, entertainment or any other inducement from any person which might benefit one client at the expense of others when conducting investment business.
Similarly, our staff are not allowed to place undue pressure on clients to persuade them to trade through the firm to the extent that this gives rise to a conflict of interest between that client and another client.
Segregation of duties
We strive to ensure that the performance of multiple functions by relevant persons does not and is not likely to prevent those persons from discharging any particular functions soundly, honestly and professionally. Our policies concerning the segregation of duties within the firm and the prevention of conflicts of interest are laid out below.
We are aware that effective segregation of duties is an important element in the internal controls of a firm in the prudential context. In particular, it helps to ensure that no one individual is completely free to commit the firm’s assets or incur liabilities on its behalf. Segregation also helps to ensure that the firm’s senior management receives objective and accurate information on financial performance, the risks faced by the firm and the adequacy of its systems.
We ensure that, in general, no single individual has unrestricted authority to do all of the following:
- initiate a transaction;
- bind the firm;
- make payments; and
- account for it.
Where we are unable to ensure the complete segregation of duties due to a limited staff base, we have adequate compensating controls in place including the frequent review of an area by relevant senior managers. The firm ensures that its relevant persons are aware of the procedures which must be followed for the proper discharge of their responsibilities.
All relevant staff who are open to a conflict of interest are paid a basic salary including those who hold key support areas such as compliance, finance and operations. This salary is not dependent on business performance. Relevant persons involved in the compliance function will not be involved in the performance of services or activities they monitor.
A bonus structure does exist which is linked to business performance, team performance or the individual performance. However, we have implemented monitoring which includes reviewing of advice given to clients, the frequency of transactions and portfolio performance.
There may be occasions where we are not, in our opinion, reasonably confident that the risks of damage to the interests of the client will be prevented. Therefore as a last resort, where there are no other means of preventing or managing a conflict, we will disclose clearly, in writing, sufficient details, taking into account the nature of the client, to enable the client to make an informed decision with respect to the service in the context of which the conflict of interest arises.
This disclosure will also:
- Clearly state our firm’s arrangements to prevent or manage that conflict is not sufficient to ensure, with reasonable confidence, that the risks of damage to the interest of the client will be prevented;
- Include a specific description of the conflicts of interest that arise in the provision of providing our services; and
- Explain the risks to the client that arise as a result of the conflicts of interest.
Declining to act
Where we consider we are not able to prevent or manage the conflict of interest in any other way, we may decline to act for the client.
Changes to our conflict of interest policy
We keep our conflict of interest policy under regular review and we’ll place any updates on this web page or inform you of any changes when they occur. This policy was last updated on 15/12/2018.
How to contact us
Please contact us if you have any questions about our conflict of interest policy by email at firstname.lastname@example.org