Conflicts of Interest in Investment Firms
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The Central Bank has published the findings of its thematic review of conflicts of interest within investment firms carrying out MiFID services, and outlined required actions arising from its findings
On 25 February 2016, the Central Bank issued a letter to investment firms highlighting the results of its themed inspection on the identification and management of conflicts of interest (COI). 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.
Contributed by Audrey Giles.