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Conflicts of Interest Policy

1.      Background & introduction

The Firm is regulated by the FCA and therefore has an obligation and fiduciary duty to manage and deal in the best interests of its clients.  The FCA Handbook includes:

  • FCA Principle 8:

 

This requires the Firm to manage conflicts of interest fairly, both between the Firm and its clients as well as between one client and another client.

  • SYSC 10.1:

 

This requires the Firm to take all reasonable steps to identify conflicts of interest between:

    • The Firm (including its managers, staff or any person directly or indirectly linked to them by control), and a client of the Firm; or

    • One client of the Firm and another client.

2.      Policy

The Firm’s Policy is to:

  • identify circumstances which may give rise to a conflict of interest entailing a material risk of damage to a customers’ interests;

  • establish appropriate mechanisms to manage those conflicts;

  • maintain systems to prevent actual damage to clients’ interests through the identified conflict.

3.      Types of Conflict

The Firm provides investment advisory and management services on behalf of multiple clients.

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For the purposes of identifying the types of conflict and potential conflicts that arise which may entail a material risk of damage to the interests of a client, the Firm must take into account whether the Firm or a relevant person, or a person directly or indirectly linked by control to the Firm:

  • Is likely to make a financial gain, or avoid a financial loss, at the expense of the client; or,

  • Has an interest in the outcome of a service provided to the client or of a transaction carried out on behalf of the client, which is distinct from the client’s interest in that outcome; or,

  • Has a financial or other incentive to favour the interest of another client or group of clients over the interests of the client; or,

  • Carries on the same business as the client; or

  • Receives or will receive from a person other than the 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.

4.      Managing Conflicts

  • Governance

The Firm has sought to identify conflicts of interest that may exist in its business and has put in place measures it considers appropriate to the relevant conflict in an effort to monitor, manage and control the potential impact of those conflicts on its customers. The conflicts identified include:

  • those between customers and the Firm where their respective interests in a particular outcome may be different;

  • those between customers with competing interests; and

  • those between the personal interests of staff of the Firm and the interests of the Firm or its customers where those interests may be different.

 

The Firm has a Conflicts Register that seeks to identify and mitigate the Firm’s potential and actual conflicts of interest.  This is maintained and reviewed by the Compliance Officer.

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The Firm has adopted policies and procedures to manage and mitigate conflicts of interest which are reviewed annually by the Board as part of the Compliance Officer’s Report with respect to Senior Management Arrangements, Systems & Controls (“SYSC”).

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  • Integrity

 

The Firm requires that in its dealings with customers, its staff must use the highest standard of integrity in their actions at all times.  Staff are expected to be aware and familiar with and observe the FCA Principles for Business, statements of Principle and the Code of Practice for Approved Persons.

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  • Policies & Procedures

 

The Firm’s policies and procedures are documented in the Compliance Manual.  These are designed to establish consistent controls to manage and mitigate conflicts. The Compliance Manual is reviewed by the Firm annually and when the Firm’s business changes, to ensure the policies and procedures are current and effective.

Upon joining the Firm, Staff receive guidance and training in respect of this Policy to ensure they are aware of the importance of the Policy and the need to report any potential or actual conflict of interest immediately to the Compliance Officer.

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  • Segregation of functions

 

The Firm has defined and clear reporting lines.  An organizational chart is maintained by the Compliance Officer.

The Firm has structured its senior management to appropriately segregate duties so as to avoid conflicts of interest wherever possible.

 

The Firm also has external compliance consultants to advise on the Firm’s compliance programme and to assist in the independent monitoring of the Firm’s regulatory obligations, including management of conflicts of interest.

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  • Information Barriers and confidentiality

 

The Firm has effective procedures to prevent or control the exchange of information between Staff engaged in activities involving a risk of a conflict of interest where the exchange of that information may harm the interests of one or more clients.

The Firm insists on strict client confidentiality to ensure that information is disclosed only to those entitled to receive it or otherwise with the approval of the Compliance Officer.

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  • Affiliated companies

 

Clients will be informed of the relationship where counterparty to a deal is another Capricorn company or where the services of another Capricorn company is recommended.

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  • Remuneration policy

 

The Firm has a documented Remuneration Policy detailing the Firm’s approach to remuneration and compensation arrangements.  Staff in key support areas such as compliance, finance and operations are paid a basic salary (not dependent on company performance) plus discretionary bonus (dependent on company, team and individual performance).

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  • Personal Conflicts

 

Staff and Directors are required to disclose in writing any conflicts of interest upon commencement of employment with the Firm and on a periodic basis. Staff and Directors will disclose any conflicts of interest directly to the Compliance Officer and, if necessary, to the Board.

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The Firm has a policy on Personal Account Dealing which is signed off as understood by all staff regardless of position.

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  • Disclosure to Clients

 

If the Firm’s arrangements to manage a potential conflict of interest are not considered sufficient to ensure with reasonable confidence that the risk of damage to that client’s interests is prevented, the Firm will

  • clearly disclose, the general nature and source of the conflict of interest to the client before undertaking business for the client; and

  • provide sufficient detail to enable that particular client to take an informed decision in relation to the service offered.

It should be noted that disclosure is not a tool for managing conflicts, but a measure of last resort when all other steps fail to manage a control.

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  • Declining to Act

 

The Firm may decline to act for a client in cases where the Board believes the conflict of interest cannot be managed in any other way.

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Any queries on the above should be directed to the Compliance Officer at info@capricorncapital.com

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