Managing Conflicts of Interest for FCA Regulated Firms

Course outline and objectives

Identification and management of conflicts of interest is key to meeting counterparty and client expectations as much as it is a key regulatory requirement. Mismanagement of conflict of interest occurs when a conflict of interest is not properly identified, disclosed or managed. Failing to identify or mismanage conflicts of interest can have serious consequences for organisations and individuals.

It is essential to understand how conflicts of interest occur and how they differ from other types of conflicts, such as those between the obligations of secrecy and disclosure. All organisations should have clear policies and procedures in place to effectively identify and manage conflict of interest.

There is a range of legislation in the UK under which conflicts of interest can be prosecuted such as the Bribery Act, Fraud Act and Companies Act. In addition, the FCA can prosecute conflicts of interest as both a criminal or civil offence.

For breaches of conflicts of interest the FCA has the power to impose unlimited fines, order injunctions or prohibit regulated firms or approved persons. It also has the power to investigate and bring criminal cases to court. Criminal sanctions for conflicts of interest can incur custodial sentences of up to 2 years. FSMA was amended in 2020 to raise the maximum penalty to £18mn or 4% of turnover for a conflict of interest offence.

By the end of this course you will have a comprehensive understanding of the FCA's requirement in your own firm. We will discuss the various different types of conflicts of interest and the FCA's rules and we will cover case studies to help participants to understand how conflicts of interest can arise in practice and how they should be managed.

Who will benefit?

Identifying and managing conflicts of interest is important for FCA-regulated firms because it helps to protect the interests of clients and customers, comply with FCA rules and maintain public trust in the financial services sector. It can help firms to avoid making decisions that put their own interests ahead of their clients', prevent employees from using confidential information for personal gain, avoid insider trading, prevent bribery and corruption and ensure fair and ethical business practices.

It is particularly relevant for individuals with responsibility for risk, compliance, governance and oversight activities. This encompasses: Chief Operating Officers, Senior Management, Compliance Officers, Risk Managers, Internal Auditors, Sales, Dealers and Traders and Wealth and Investment Managers.

Topics may include, but are not limited to:

• Identifying conflicts of interest
• Assessing the risks of conflicts of interest
• Implementing measures to manage conflicts of interest
• Monitoring the effectiveness of conflict of interest management policies and procedures
• Roles and responsibilities