1 Introduction
AlbR is authorised and regulated by the Financial Conduct Authority (FCA) and as a result must comply with all applicable regulations. As a Firm we are required to identify and manage any situations where the firm’s interests, or those of employees or other clients, could conflict with a client’s best interests. The FCA requires firms to:
- identify conflicts that could harm clients
- prevent or manage those conflicts through robust systems and controls
- disclose any conflicts that cannot be properly managed
- keep records of all conflicts
- review the effectiveness of arrangements regularly
- always act in the client’s best interests
These requirements are outlined in the FCA Handbook, primarily within the Senior Management, Systems and Controls (SYSC) sourcebook.
2 What is a conflict of interest?
A conflict of interest is a situation where a firm or the individuals representing the firm have competing professional and/or personal interests which may result in behaviour that is not in the best interests of the firm or its clients. A firm will inevitably encounter conflicts of interest between itself and its clients and between different clients, for example:
- The firm holds knowledge in confidence for one client which would benefit another.
- Acting for one client may damage another.
- A firm and/or its employees may be remunerated in a way which encourages them to act against its client’s interests.
- A firm’s employees may take advantage of client information.
These items are mainly applicable to firms with different group entities; AlbR does not have a corporate finance division, nor does it conduct trades for its own account, and it does not conduct direct investment research. The only assets held on behalf of the firm are within error accounts which are only used to correct any errors that may arise while transacting business for clients.
3 Types of conflicts
The following confirms the different types of conflicts of interest which may arise at AlbR including parties involved.
| Conflict Type | Description | Primary Parties Involved |
| Remuneration Schemes | Incentive schemes that might encourage AlbR employees to advise/undertake transactions irrespective of suitability, or to favour one investment solution over other more suitable ones. Incentive schemes that might encourage AlbR staff to reject complaints or to pay as little compensation out as possible on upheld complaints irrespective of whether clients are being treated fairly or have received a good outcome. | Employee v Firm |
| Discretionary Bonuses | Discretionary Bonus schemes that encourage AlbR employees to reject compensation claims or to pay out as little as possible irrespective of whether clients are being treated fairly. | Employee v Firm |
| Commission | Commission arrangements that encourage AlbR employees to advise or transact greater levels of turnover irrespective of the client’s best interests. | Employee v Client |
| Personal Relationships | Personal relationships with clients that influence employees to prioritise one client’s interests or complaint over that of another. | Employee v Client |
| Outside Business Interests | Directorships and positions of responsibility in other companies that influence AlbR’s procurement and corporate partnership decisions irrespective of clients’ best interests. | Employee v Client |
| Non-Public Information | Where AlbR employees may make improper use of non-public information for personal gain ahead of the client’s best interests. | Firm v Client |
| Gifts and Inducements | Gifts, entertainment, hospitality, and other inducements could influence the firm’s individuals to do business with one intermediary or supplier over another, irrespective of clients’ best interests or good outcomes. | Firm v Client |
| Personal Account Dealing | AlbR permits all individuals to have their own accounts and to place stock transactions. A Discretionary or Advisory service executive could trade ahead of clients to their own benefit and to the detriment of their clients. | Employee v Client |
| Financial Promotions | Where Financial Promotions are targeted at a selection of or a group of clients over another that may be in breach of the Treating Customers Fairly principles and good outcomes for clients. | Firm v Client |
| Strategy | Senior management’s desire to maximise profits may be incompatible with their responsibility to ensure that clients are always treated fairly with good outcomes. | Firm v Client |
| Close Links | ‘Close links’ with other firms that may influence AlbR’s decision to do business with one intermediary or one supplier over another, irrespective of clients’ best interests or good outcomes. | Firm v Client |
4 Managing conflicts of interest
AlbR has put in place arrangements to prevent, mitigate, and manage conflicts of interest as follows
| Policies and procedures | AlbR has developed a policy suite supported by procedure documents that inform and guide employees on how to complete their roles to include the identification, prevention and management of conflicts as they arise. |
| Information barriers | AlbR employees may only access information, confidential and non-public, which is relevant to their role. |
| Training and awareness | AlbR provides comprehensive training to employees so that they are aware of the nature and risks presented by conflicts of interest and to enable identification and management of them. |
| Remuneration | AlbR senior management reviews its remuneration schemes periodically and bonuses awarded are discretionary and linked to company and individual performance. |
| Outside business interests | AlbR employees may undertake roles with other entities so long as there are no conflicts of interest with AlbR or its clients. Roles undertaken are monitored and reviewed regularly. |
| Personal Account Dealing | AlbR employees must follow conditions and set process should they wish to deal on their own account which includes not taking positions in clients of AlbR. Employee trading is monitored regularly. |
| Inducements | AlbR employees are not allowed to receive gifts and hospitality where the inducing effect creates a conflict between parties including clients. Approvals are required over threshold amounts. |
5 Disclosing conflicts
AlbR will disclose a conflict to clients if internal arrangements are not sufficient to ensure, with reasonable confidence, that the potential risks or harm to the interests of a clients will be prevented. AlbR will ensure clients are well informed so they may decide whether to take up or continue services. Disclosures will be made in writing confirming the specific conflict risks and controls in place aim to prevent the conflict.
6 Recording conflicts
AlbR records potential and actual conflicts of interest and details of outside business interests on register and these are periodically reviewed, assessed, and managed accordingly. This policy is reviewed at least annually or when material changes are required.