Conflicts of Interest – A Guide For UK Financial Services

Primarily written for the UK market and legislation, the application can be applied globally.

Definitions of conflicts of interests;

A conflict of interest is a situation in which an individual has competing interests or loyalties.  Conflicts of interest involve dual relationships; one person in a position in one relationship and a relationship in another situation. A conflict of interest can exist in many different situations. The easiest way to explain the concept of conflict of interest is by using some examples:

• with a public official whose personal interests conflict with his/her professional position.

• with a person who has a position of authority in one organization that conflicts with his or her interests in another organization

• with a person who has conflicting responsibilities.

Types of activities that can create a possible conflict of interest include:

• Nepotism is the practice of giving favours to relatives and close friends, often by hiring them.

• Self-dealing is a situation in which someone in a position of responsibility in an organization has outside conflicting interests and acts in their own interest rather than the interest of the organization.

Remember, The interests of a party receiving a service and the party providing it are of course never completely aligned. In the client’s ideal world they would receive your services free of charge and would buy your assets from you at cost. Legitimate business interests are not the target here. Conflicts arise rather when there is an imbalance of power, information or resources whose existence is known to one party but not the other, and is exploited to the detriment of the latter.

Conflicts of Interest in the Workplace

Here are some workplace situations in which conflicts of interest in the workplace occur:

• An employee may work for one company but he or she may have a side business that competes with the employer. In this case, the employee would likely be asked to resign or be fired.

• A common workplace conflict of interest involves a manager and his or her employee who are married or dating and have a relationship. This is a conflict because the manager has the power to give raises or promotions to the employee. Discussions about the company between the two people may also breach confidentiality restrictions.

• An employee who has a friendship with a supplier and allows that supplier to go around the bidding process or gives the supplier the bid.

• A former employee may take his former company’s customer list and directly compete. Non-compete agreements are often required of executives and business owners for this reason.

Conflicts of Interest by Boards of Directors

Members of a corporate board of directors sign conflict of interest policy statements. If a board member has a conflict of interest, he could be kicked off the board and possibly sued. For example, if a board member has a sexual relationship with an employee, or if he is taking business away from the company and giving it to others.

A common conflict occurs when a board member hears of a potential deal that might affect the selling price of company stock (up or down). The board member’s attempt to profit from this knowledge is called insider trading; it’s illegal as well as being a conflict of interest. Objectives

• To be able to identify conflicts of interest effectively in a timely, professional and first-class manner

• To appreciate the ethical approach to conflicts of interest and why it is critically important

• To understand the legal and regulatory framework

• To recognise the need for a clear line of communication between operations and senior management for managing conflicts of interest

• To recognise good practice

• To avoid poor, sloppy or ineffective management of conflicts of interest

• Be able to define an effective and comprehensive conflicts of interest policy

• Learn how to identify unexpected consequences or hidden conflicts of interest

• Be able to identify the best response

• Be able to create a clear and auditable method for managing conflicts of interest to ensure transparency

• Think like a compliance professional and make sure you have all the right information

Course Sections

Where Are The Conflicts?

• What is a Conflict of Interest?

• Definitions

• Briefly Touch On Regulatory Requirements

• Types of Conflict

• Regulatory, Legislative and Ethical Requirements

Ethical Issues

• Business Ethics and Ethical Business

• Examples of Ethical Dilemmas

• Ethical responses and Conduct Risk or TCF

• Good practice

• Conceptual Framework

• Rules – and principles-based approaches

Ethical conflict resolution

• Gifts, Sponsorship and Hospitality – Inducements

• Best Practice

• Managing Confidentiality Arrangements

• WORKSHOP – CofI in Practice

• The Risks Around Getting it Wrong.

• Think Like A Compliance Professional

Who this course is for:

• FCA registered individuals
• FCA registered firms
• FCA authorised person
• FCA regulated businesses
• PRA regulated businesses