Conflict of Interest Policy
Sanlam Private Wealth (‘SPW’), Sanlam Securities UK (‘SSUK’) and SPI Wealth Management (‘SPIWM’) collectively ‘SPI UK Group’ has comprehensive procedures in place in order to identify, monitor, manage and where applicable disclose conflicts of interest that may exist. The effectiveness of all these controls is monitored on an ongoing basis.
One of the objectives of the group’s business plans is the maintenance of a strong compliance culture. This is not something that can be measured, but its importance cannot be underestimated in the efficient operation of systems and controls to manage issues such as conflicts of interest. This culture is constantly reinforced with all our staff, for example, through a comprehensive induction and ongoing training programme that emphasises the need always to act in clients' best interests, and regular assessment by the Compliance team of any rule breaches and errors, focusing on treating customers fairly.
What is a conflict of interest?
Broadly speaking, a conflict of interest may arise where our corporate interests or a member of staff’s personal interest does or could conflict with a duty we have to a client.
To help us identify potential conflict of interest we have considered a number of areas including:
- circumstances where we could make a financial gain, or avoid a financial loss, at the expense of the client;
- situations where we could have an interest in the outcome of a service provided to the client or of a transaction carried out on behalf of the client, which is distinct from the client's interest in that outcome;
- where a financial or other incentive to favour the interest of one client or group of clients over the interests of another client or group of clients might arise;
- where we carry on the same business as a client; and
- where we may or will receive from a person other than the client an inducement in relation to a service provided to the client, in the form of monies, goods or services, other than the standard commission or fee for that service.
Managing and monitoring conflicts
We have a number of mechanisms in place to manage potential and actual conflicts, these mechanisms are summarised below.
1. 1 Policies and procedures
Policies and procedures are embedded throughout the business to ensure conflicts are identified, considered and mitigated. Our employees undergo regular training and receive guidance where conflict situations arise. The management team are responsible for ensuring that their teams have robust controls in place to identify and manage risks which arise. We also have a conflicts register on which details of conflict situations are recorded as well as details of the controls which was put in place to mitigate potential issues.
1. 2 Information barriers
Where a team comes into possession of price sensitive information we have robust procedures to ensure this information is not inappropriately exchanged which include, electronic and physical segregation as well as enhanced training and record keeping requirements.
1. 3 Supervision
Where the interests of one team and its clients may conflict with the interests of another team and its clients, the management structure has been separated.
1. 4 Remuneration
We have a remuneration policy which is updated annually. Our staff are remunerated by a combination of;
- Basic salary and related benefits
- Discretionary annual bonus
- Long term incentive arrangements
These take into account individual, team and company performance.
Our research is based on quantitative data and qualitative analysis and this, together with our policy of linking part of the remuneration of relevant employees directly to the performance of the investments they select, provides control over this potential conflict.
1. 5 Gifts & inducements
We have procedures in place about the giving and receiving of gifts or hospitality. Employees must neither solicit nor accept any inducements which may conflict with our obligations to clients, nor offer inducements which could conflict with the recipient’s obligations to its own clients.
1. 6 Best execution
When selecting funds or individual securities for our clients' portfolios, we act on a best interest basis. Our procedures are also designed to ensure that we abide at all times with the overriding principles of ‘best execution’ when effecting transactions on our clients' behalf and ‘suitability’ when making investment recommendations. This is intended to ensure that our clients are never disadvantaged and are always treated fairly.
1. 7 Outside business interests
All employees are required to disclose outside business interests and directorships.
1. 8 Personal account dealing
Our employees are subject to restrictions around their own, personal account, dealing and that of their partners and dependants.
1. 9 Dealing & allocation
In order to ensure that deals cannot be allocated in favour of one group of clients or staff, we operate dealing and allocation procedures which cover dealing fairly and in due turn, and how allocations should be made if insufficient stock is available. Please note that we may arrange for your transactions to be executed, in whole or in part, through an affiliate or agent
1. 10 Research
Where investment research is produced by SSUK, we clearly identify whether it can be considered as ‘investment research’ under the FCA rules, the note will also contain details on relevant oversight and control measures or prove a link to a venue where this information can be obtained (i.e. the website).
Further details on how we manage conflicts of interests in relation to SSUK research are contained in SSUK’s research and conflicts management policy.
1. 11 Funds
For funds purchased under our discretionary and advisory services we will normally purchase institutional units which do not pay commissions.
For the Income Study/White List Service, SPW generally opts to purchase units/shares in collective investment schemes (although this is not always the case) where a share of the annual management charges rebated by fund managers (‘renewal commission) are retained by us. However, we negotiate a discount on the initial commission charged by fund managers and rebate this in its entirety to clients to reduce the costs of purchase. Renewal commission offsets some of the costs of providing investment management services, which might result in us otherwise having to pass these on to clients in higher investment management fees. Where we do purchase commission paying units/shares in collective investment schemes we ensure that the rate of renewal commission payable by fund managers does not influence their selection. We disclose that we may receive renewal commission in our schedule of fees and explain the current basis of this in our terms of business. Our terms of business are given to prospective clients before we provide investment services.
Subsequently, clients are reminded of the current rates of renewal commission in our client valuation reports.
1. 12. Group funds / shares
SPW does invest in group shares, in funds where it acts as fund manager, funds managed by other companies within the Sanlam Group. We define group funds as those where the Sanlam Group has a 20% or more shareholding in the fund manager concerned or we manage the funds ourselves. All funds or shares, whether group or non-group funds, are strictly assessed for suitability of inclusion in discretionary funds or where providing advice. We will negotiate the fees payable by our clients for investment in Sanlam funds on a ‘stand alone’ basis and on the same commercial terms as for other funds invested. The current group funds which are on our “buy” or “hold” list are:
- Sanlam Private Wealth Global High Quality Fund
- Sanlam Private Wealth Strategic Investment Grade Bond Fund
- Sanlam FOUR Active UK Equity Fund
SPW directors may have personal holdings in Sanlam funds or shares. However, where such investments are price-sensitive the directors are subject to personal account dealing rules which do not permit them to deal contrary to unit holders’ or shareholders’ interests. SPW directors may also sit on the boards of other group companies, which may appoint us to manage Sanlam funds. Each director recognises that they have an ongoing legal, regulatory and professional obligation to disclose and manage any conflicts which arise from these appointments.
1. 13 Group company services and referrals
On occasion, we may be unable to advise a client, who has been taken on directly rather than referred by an intermediary, on his or her particular financial requirements since wider financial planning advice is required. In these instances we may recommend that they seek advice from a financial adviser. In the first instance we will introduce clients to our Sanlam Group associate financial advisers. We may receive a fee if the client subscribes to their services. The Sanlam Group financial advisers may recommend investments from the Sanlam Group product range for clients. Where the Sanlam Group associates’ services do not extend to the financial planning advice required or a client requests details of external financial advisers, we will refer them to financial advisers who may have introduced clients to us or industry websites with IFA association contact details.
1. 14 Policy of independence
Our staff procedures require them to disregard any material interest or conflict of interest when acting for clients.
In practice, the conflict of interest arrangements summarised above have been designed to reduce the risk that a conflict of interest will be detrimental to a client and in most situations we consider that these will be sufficient to ensure clients’ interests are protected. However, there may be rare occasions where we consider these arrangements are insufficient. In such circumstances it may be possible to disclose the conflict of interest to the client(s) in writing directly or, in the event of a severe conflict of interest, we may need to cease or decline to act for a client.