CONFLICTS OF INTEREST POLICY
The Financial Conduct Authority (“FCA”) requires Linchpin IFM Limited (referred together with its parent company Linchpin Advisory Limited as “Linchpin”) to have in place appropriate systems and controls to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interest of its clients.
FCA, SFC and SEC regulated firms are required to take all appropriate steps to identify and prevent or manage conflicts of interest. Principle 8 of the FCA Principles for Businesses requires a firm to “manage conflicts of interest fairly, both between itself and its clients and between a client and another client”.
Article 34 of the MiFID II Delegated Org Regulation requires that Linchpin establish a Conflict of Interests Policy which:
Identifies the circumstances which constitute, or may give rise to, a conflict of interest entailing a risk of damage to the interests of one or more clients; and
Specifies procedures to be followed and measures to be adopted in order to prevent or manage such conflicts.
As a mechanism for recording the identification, management, monitoring and mitigation of conflicts of interest, Linchpin’s Compliance Officer maintains a Conflicts of Interest Register as required which sets out the types of service or activity carried out by Linchpin in which a conflict of interest entailing a risk of damage to the interests of clients has arisen (or may arise) and identifies mitigating controls and responsibilities. It is reviewed on a quarterly basis but may be updated at any time.
The above mechanism assists Linchpin to adhere to FCA requirements and to the SEC requirements set out in Sections 206 of the IIA 1940.
Recording and managing conflicts of interest
SYSC 10.1.25R outlines the organisation requirements Linchpin must have in place to properly manage conflicts of interest.
Linchpin must maintain and operate effective organisational and administrative arrangements, with a view to taking all reasonable steps designed to identify, prevent, manage and monitor conflicts of interest in order to prevent them from adversely affecting the interests of investors (ie. parties who have invested in products managed by Linchpin’s clients through the introduction of Linchpin) or clients. Linchpin must assess whether its operating conditions may involve any other material conflicts of interest and disclose them to investors and clients.
Prior to taking on a new client or a new business activity Linchpin assesses whether there are any conflicts of interest. The Directors record any such actual or potential conflicts in a Conflicts Register which is reviewed quarterly.
Disclosure of conflicts of interest
If organisational requirements are not sufficient to ensure, with reasonable confidence, that the risk of damage to investors’ interest will be prevented, then Linchpin must clearly disclose the general nature or sources of conflicts of interest to the investors before undertaking business on their behalf (SYSC 10.1.8R). In addition, Linchpin must continue to do what it can to manage the conflict and this should include developing appropriate policies and procedures.
Linchpin is committed to treating clients fairly and will not knowingly put itself or its employees in a position whereby its own interests, or duty to another party, prevent it from discharging its duty to investors or clients. Linchpin maintains processes, procedures and organisational arrangements to manage possible conflicts of interest which include that all staff:
Are at all times, bound to act in full compliance with its policies and procedures;
Are bound by the ‘Gift and Benefits Policy’ which prevents them from soliciting or accepting any gift or inducement which may influence their independence or create a conflict with the duty owed to Linchpin or its clients;
Are bound by its Data Security Policy and access to confidential information is only permitted if essential for performing their job function;
Receive guidance and instructions regarding managing conflicts of interest;
Are bound by the Personal Account Dealing Policy and transactions undertaken by all employees are actively monitored;
Are required to seek prior consent by senior management before engaging in other external business interests.
If the measures in place are not sufficient to avoid or manage a conflict of interest relating to a client, Linchpin will disclose the conflict of interest before undertaking further business with the client.
Linchpin is therefore committed to identifying, monitoring and managing all actual and potential conflicts of interest that may arise in relation to its business.
Last updated February 2021
investment, fund placement, advisory