The Bank noted that the inspection revealed a number of failings related to the management of COI, particularly a lack of board ownership regarding their identification and management. The Bank also noted the marked differences between what it termed best-in-class and worst-in-class firms as regards the policies and procedures these firms had in place to identify and manage COI. Referring to culture as a driver for behaviour, the Bank noted that its themed inspection confirmed that those firms with a strong compliance culture managed COI effectively. The letter contains a (non-exhaustive) list of identified trends and both good and poor practices with regard to COI management.
On foot of this communication, the Bank requires investment firms to:
- Review all conflicts of interest policies and procedures to ensure they meet the relevant requirements.
- Consider all the practices listed by the Bank in the letter against the firm’s own conflicts of interest procedure.
- Review the existing list of identified conflicts of interest and ensure it remains current and relevant.
- Discuss, consider and minute accordingly, the contents of the letter at a board meeting before 30 June 2016.
by Audrey Giles of William Fry.
