The purpose of this Policy is to provide rules to ensure that (real or potential) conflicts of interest do not adversely affect the interests of the clients of LIA Wealth Advisers Limited (hereinafter the “Company”).
In addition, the Policy provides rules regarding the management of conflicts of interest within the Company and/or between the Company and its related parties (e.g. shareholders, branches and/or subsidiaries).
The Policy serves as a framework for the implementation of effective steps to identify, prevent or manage conflicts of interest, mitigate the potential impact of those risks and where a residual risk to the clients remains, disclose it to the clients (the “Clients”).
1. Definition and scope
Conflict of interest may be defined as the action to enter into a transaction or arrangement that (i) will benefit the private interest, or might result in a possible excess benefit of a given entity (and/or its representatives) and (ii) will result in damage against its customers and/or against the entity itself.
As per the legal and regulatory environment, investment/insurance companies shall take all reaonable steps to identify and manage conflicts of interests between:
- Their own interests (including the ones of their directors, employees and shareholders and their obligation towards their Clients;
- Two or more of their Clients, towards whom they have specific obligations;
- Undertakings within the group and their Clients;
- The Company itself and respectively its related parties or outsourced third parties.
As per the applicable laws and regulations relating to conflicts of interests, the term “Company” shall be understood as any “concerned person” as defined hereinafter:
- The Board of Directors of the Company;
- The shareholders of the Company;
- The related parties of the Company;
- Their employees.
“Conflicts of interest” rules are applicable in the following services:
- Sale of insurance policies with or without advice;
- Services related to the insurance policies;
- Insurance intermediation;
- Provision of investment advice;
- Distribution of units in Undertaking for Collective Investment;
- Provision of ancillary investment services;
- Services outsourced to their related parties and/or third parties ;
- Any others services/products that trigger a (real or potential) conflict of interest.
2. Identification of potential conflicts of interest
Due to competing objectives of the Company, its employees and the Clients, potential conflicts of interest may arise.
For the purposes of identifying the type of conflicts of interest that arise in the course of carrying out an insurance distribution activity, the Company shall assess whether it or any person directly or indirectly linked to the Company by control have an interest in the outcome of the insurance distribution activities, when:
- It is distinct from the customer’s or potential customer’s interest and;
- the Company or related persons have the potential to influence the outcome of the distribution activities to the detriment of the customer.
The Company shall proceed in the same way for the purpose of identifying conflicts of interest between one customer and another one.
Main potential conflicts of interest have to be identified, based on the following non-exhaustive list of potential competing objectives:
2.1 The Clients’ objectives
The objective(s) of the Clients may be defined as:
- Select the best product/services in line with their risk profile;
- Optimize personal tax situation;
- Benefit from the highest protection.
2.2 The Company’s objectives
The objective(s) of the Company may be defined as:
- Achieve yearly strategic goals;
- Optimize sales distribution and profits;
- Select the best service/product providers;
- Comply with applicable laws and regulations.
2.3 The employees’ objectives
The objective(s) of the employees may be defined as:
- Achieve the Company’s objectives;
- Improve their professional status and remuneration;
- Develop their own business.
2.4 List of potential damages
The damages caused against the Clients can be listed as follows (non-exhaustive list):
- Any arrangement of the Company that may make a financial gain, or avoid a loss, to the potential detriment of a Client. For example, an intermediary has an interest in its own financial success. This success may depend on payments from insurance undertakings, for instance related to sales volumes. This might lead the intermediary to propose products that does not match the demands and needs of the customer, but which instead pay the intermediary higher commissions, whether directly or indirectly;
- The Company has an interest in the outcome of a service provided to a Client or of a transaction carried out on a Client’s account, which may conflict with that Client’s interests in that outcome ;
- The Company has a financial or other incentive to favour the interest of one Client or group of Clients over the interest of another Client or group of Clients ;
- The Company is involved in the same business as a Client which may clash with the Client’s business;
- The Company receives or will receive from a person, other than its Client, an inducement in relation to a service provided to that Client, in the form of monies, goods or services, other than the standard commission or fee for that service; and/or
- The Company is substantially involved in the management or development of insurance-based investment products, in particular where such a person has an influence on the pricing of those products or their distribution costs.
The damages caused against the Company can be listed as follows (non-exhaustive list):
- The business relationship of the Company with the related parties has or may have a significant and negative impact on the risk profile of the Company ;
- Transactions conducted with its related parties are performed with lower competitive advantages than the ones applicable to the same transactions when performed with a “non-related” third party;
- Transactions conducted with its related parties that contravene with basic principles and prudential management of the Company ;
- Employee or BoD members may have an interest in the outcome of a transaction, which may conflict with the Company’s interest of that outcome.
3. Prevention and management of conflicts of interest
In order to prevent conflict of interest situations, the Company has taken a wide range of measures aiming at the following:
- Implement organisational and administrative procedures to preserve the interests of the Client when providing services ;
- Prevent or control the information flow between business areas 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 ;
- Identify all employees/BoD members in respect of whom conflicts of interest may arise in the course of their work and require them to disclose their conflicts of interest ;
- Identify and manage board memberships and employees’ outside business interests ;
- Identify all its related parties and/or third parties providing services for the Company and ensure “arm’s length” business relationship ;
- Develop measures to prevent or control the simultaneous or sequential involvement of a relevant person in separate insurance distribution activities where such involvement may impair the proper management of conflicts of interest;
- Implement measures to prevent or limit any person from exercising inappropriate influence over the way in which insurance distribution activities are carried out;
- Ensure that the Company does not promote behaviour disadvantaging the interests of a Client in its favour or other Clients (e.g. through remuneration, appraisal or other arrangements) ;
- Use a basic principle for handling claims that involves the correct application of the complaint procedure, which is drawn up with the aim of preventing conflicts of interest ;
- Implement a Code of Business Conduct stating that Company’s employees must always act in the best interests of Clients. In this Code of Business Conduct, different specific internal rules to avoid and manage conflicts of interest have been established.
- Develop rules on giving and receiving inducements, whereby the relevance of the inducements for Clients must always be demonstrated ;
- Train employees on an on-going basis ;
- Implement appropriate escalation processes when identifying a conflict of interest and inform the Client(s) when a conflict of interest may trigger sensitive risks against their own interests.
Moreover, on a general point of view:
- Employees should act independently insofar as the interests of their respective Clients are concerned; independence is the key;
- When the Company is already acting for one Client, it may be appropriate not to undertake business for another Client if the Company is not in a position to manage the conflict of interests on a reasonable basis; in that situation the Company shall decline to act;
- Transactions with its related parties and/or third parties should be carried out in the interest of the Company and on an arm’s length basis.
4. Registration of conflicts of interest
In addition to the list of potential conflicts of interest, the Company maintain an updated register of conflicts of interest.
The Board shall receive at least on an annual basis written reports on conflicts of interests.
The Company shall comply with the followings rules:
- Identify all existing conflict of interests;
- Avoid in the extent possible such conflicts ;
- Manage unavoidable conflicts of interest in order to mitigate sensitive risks for the Clients and/or for the Company and escalate to appropriate internal body (e.g. BoD);
- Inform concerned Client(s) when remaining residual risks of damages.
All these obligations shall be managed with regard to the size, the nature and the complexity of the business developed by the Company.