Conflict of Interest Policy
1.
Introduction and Background
It is important to identify and effectively manage conflicts
of interest which arise or may arise in the course of providing a service and
carrying out regulated activities, as their existence may lead to material risk
of damage to a client’s interests. This
document sets out Lendahand Ethex Limited (“Lendahand Ethex”)’s policy for the
management of such conflicts of interest.
Lendahand
Ethex is a company limited by shares which is an appointed representative of ShareIn Limited who are authorised and regulated by
the FCA. Lendahand Ethex are appointed for the arranging (bringing about) deals
in investments, making arrangements with a view to transactions in investments,
and agreeing to carry on a regulated activity.
The company is a 50:50 joint venture between Ethex Investment Club
Limited (‘Ethex’) and Hands-On BV (‘Lendahand’).
The company has no employees.
Where ‘staff’ are referenced in this document it refers to employees of
Ethex and Lendahand who work for the company under contract. The firm provides
services to its clients collectively referred to here as the “Clients” as set
out below:
In drafting this policy, Lendahand Ethex has considered the points
raised by the FCA in the paper issued in November 2012 “Conflicts of interest
between asset managers and their clients:
Identifying and mitigating the risks”.
Lendahand
Ethex has taken this opportunity to examine its policies and procedures
to ensure they remain fit for purpose and address, where potentially relevant,
the issues raised by the FCA in its paper in a way which is proportionate to
the scale and complexity of its business.
Both the policy and the register of conflicts of interest will be
reviewed on at least an annual basis.
This document does not intend to create third party rights
or duties or form part of any contractual agreement between the firm and any
client. This policy may be amended and
updated at any time if any material change occurs and will be reviewed on at
least an annual basis.
If at any time you are in doubt as to how to act in a given
situation where you are faced with an actual or potential conflict of interest
you should notify Senior Management.
2.
FCA Rules
The Financial Conduct Authority (“FCA”) sets out obligations
in SYSC 10, COBS 12 and Principle 8 to which this document is prepared.
Whilst the FCA rules are important to be adhered to by all
of Lendahand Ethex’s staff, they are non-exhaustive, and certain other
additional rules may apply to readers who are members of professional
associations, or by virtue of their job role.
Failure to follow any of the rules whether by express breach, or failure
to follow any of the spirit of identifying, mitigating and managing conflicts
of interest may also be a breach of an employment contract. Disciplinary action may be taken by Lendahand
Ethex, or in serious cases by the FCA, or the Department for Business, Innovation,
and Skills.
3.
Conflicts of Interest
The
services that Lendahand Ethex provides to its clients could potentially give
rise to conflicts of interest entailing a material risk of damage to the
interests of one or more clients. This
document aims to set out these potential conflicts and the procedures that are
in place to be followed and measures to be adopted in order to manage such
conflicts.
Conflicts
of interest may occur between a customer and Lendahand Ethex, including its employees
or any persons directly or indirectly linked to the firm, or between two or
more clients.
Treating Customers Fairly is central to the core values of Lendahand
Ethex. There is an embedded culture that
understands what acceptable and unacceptable behaviour is. As such, conflicts
of interest and the identification / management / mitigation thereof are
central to this philosophy and culture.
Definition
An
actual or potential conflict may arise when, in the exercise of its activities
and services, the interests of:
Lendahand Ethex (including
its managers, employees or any person directly or indirectly linked to them by
the control); or
its associates;
And the
interest of its clients, are directly or indirectly in competition, and which
could significantly prejudice the client’s interests.
4.
Identifying situations where a conflict may
arise
The circumstances giving rise to conflicts of interest
include all cases where there is a conflict between the:
Interests
of Lendahand Ethex, an individual member of staff, certain persons directly or
indirectly connected to Lendahand Ethex; and the duty that Lendahand Ethex owes
to a client; or
Differing
interests of two or more clients, as Lendahand Ethex owes a separate duty to
each of them.
Conflicts
of interests could prejudice a client in various ways, whether or not Lendahand
Ethex suffers any financial loss and independently of whether the actions or
the motivations of the employees involved are intentional. For the purposes of identifying the types of
conflicts of interest that arise, or may arise, Lendahand Ethex must take into
account, as a minimum whether the firm, a relevant person (e.g. an employee or
a director, or a person who is directly involved in the provision of services
to the firm under an outsourcing agreements) or a person directly of 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;
Has
an interest in the outcome of the service to, or a transaction carried out for,
a client which differs from the client’s interest;
Has
a financial or other incentive to favour one client (or group of clients) over
the interests of another;
Carries
on the same or similar business as the client; and/or
Receives
an inducement from a third party in the execution of the service provided to
the client, other than the standard commission/fee for that service.
Generic Conflicts
Lendahand
Ethex has identified the following circumstances in which general types of potential
conflicts of interest may arise:
The
firm or an associate undertakes designated investment business for other
clients including its associates (and the clients of its associates);
A director
or employee of the firm, or of an associate, is a director or partner of, holds
or deals in securities of, or is otherwise interested in any company whose
securities are held or dealt in on behalf of a client;
A director
or employee of the firm, or of an associate, is involved in the management of any
company whose securities are held or dealt in on behalf of a client;
A
transaction is effected in bonds of a company of which the firm or an associate
is the manager, operator, company director or adviser;
A
transaction is effected in securities in respect of which the firm or an associate,
director or employee of the firm or an associate, is contemporaneously trading
or has traded on its/their own account or has either a long or short position;
The
firm may, when acting as agent for a client, match an order of the client with
an order of another client for whom it is acting as agent;
5.
Prevention and management
Lendahand
Ethex has identified specific potential conflicts of interests which may arise in
relation to its activities. The general
nature and/or source of these conflicts will be disclosed to clients before
undertaking business in sufficient detail to enable the client to make an
informed decision about the service in the context in which the conflict has
arisen. For each potential situation, Lendahand
Ethex has analysed whether or not the risk is actual or potential for one or
more of its clients.
It is
not always possible to prevent actual conflicts of interest from arising. In that case Lendahand Ethex will try to
manage the conflicts of interests by segregating duties or establishing Ethical
Walls. In most circumstances, Lendahand
Ethex will decline to take on a new client where a direct conflict would
result. As a small organisation Lendahand
Ethex recognises that segregating duties is not a realistic tool in managing
conflicts.
If Lendahand
Ethex considers
developing new products or services or making other changes to its business
model or operations, Senior management will consider whether any additional
potential conflicts of interest arise.
Senior management will update the Conflicts of Interest Policy and
Register of Potential Conflicts of Interest as necessary on an ongoing basis
and formally consider the continued adequacy of the arrangements annually.
Inducements including
gifts and hospitality
Lendahand Ethex maintains business relationships with third
parties who may remunerate Lendahand Ethex in the form of management and
performance fees which can constitute monetary or non-monetary benefits thereby
impairing Lendhand Ethex’s fiduciary duties to the client. The FCA Rules classify these as
inducements.
Gifts and hospitality could lead to potential conflicts of
interest. No employee may accept from,
or give to, any person any gift or other benefit that cannot properly be
regarded as justifiable in all circumstances.
Policies and procedures have been implemented to ensure that staff and
their connected persons do not offer or accept gifts or inducements which may
give the perception that decisions or actions are not impartial. These include the requirement for gifts or
hospitality, received or given, in excess of £50 but below £100 to be notified
to Senior Management and, where the amount is above £100, written approval must
be obtained from Senior Management. All
employees must act with the highest standards of integrity to avoid any
allegations of conflicts of interest.
A record is kept of any gifts or hospitality received or
given.
Where an invitation to a hospitality event could be
construed as being a business inducement, it must be declined and Senior
Management informed.
Personal account
dealing
Employees may only undertake personal investment activities
that do not breach applicable law or regulation, do not unduly distract from
their employment responsibilities and do not create an unacceptable risk to the
company’s reputation. Transactions
should also be free from business and ethical conflicts of interest. Employees must never misuse proprietary or
client confidential information in their personal dealings and must ensure that
clients are never disadvantaged as a result of their dealings.
Outside employment
and business interests
No employee may engage in any additional occupation without
the consent of the Company. In certain circumstances, consent may be withheld.
Employees must not accept personal fiduciary appointments
(such as trusteeships or executorships other than those resulting from family
relationships) without first obtaining written approval from a Director.
5.1
Disclosure
In certain cases, Lendahand Ethex may disclose the general
nature and/or source of potential or actual conflicts to its client in writing
before undertaking business on its behalf so that the client can decide whether
or not to accept these potential conflicts.
If it is not possible to avoid or manage a conflict of
interest, Lendahand Ethex may have no choice but to decline to provide the
service requested.
5.2 Remuneration
and Oversight
The management oversight and determination of appropriate
remuneration of members of staff is conducted by Lendahand Ethex’s Senior Management. Remuneration for staff is based on the
overall results of the firm and is not based on the success of any transaction.
Staff are subject to appropriate management and supervision
to ensure that Lendahand Ethex is able to demonstrate that it has appropriate
and effective arrangements in place to ensure that conflicts of interest are
properly managed.
6.
Record Keeping
Under SYSC 10.1.6 Lendahand Ethex must keep and regularly
update a written record of the kinds of investment or ancillary services or activities
carried out by or on behalf of the firm in which a conflict of interest
entailing a material risk of damage to the interests of one or more clients has
arisen or, in the case of an ongoing service or activity, may arise. These records will be for a minimum of five
years from the date of creation and are maintained on an ongoing basis by the
Company Secretary.
7.
Reporting
Conflicts
of Interest situations or potential conflicts situations should be reported to
Senior Management immediately.
Updated and Approved by the Company on: 28th July 2017