Conduct risk is a term used by the FCA to describe the risks from a firm’s behaviour which may result in poor outcomes for its customers. To a large extent, conduct risk follows on from the Treating Customers Fairly (TCF) regime, as both have a strong emphasis on customer outcomes when making decisions.
The FCA expect conduct risk to be assessed regularly and managed through good corporate governance practices. ShareIn expect to see evidence that conduct risk is taken into consideration by its Appointed Representatives and that any areas of concern are raised with ShareIn as needed. Areas of conduct risk are listed below.
We are required to have written internal procedures in place for the prompt and reasonable handling of FCA-related complaints (both written and verbal). We must also refer eligible complainants to the availability of such procedures at (or immediately after) the point of sale.
The ShareIn Complaint Policy discusses this in detail.
You should inform the compliance officer immediately on becoming aware of a breach or any alleged breach, no matter how trivial. Breaches can occur either because of human error or where our established procedures and controls have not been complied with. Examples of breaches could include not making the FCA quarterly returns within the prescribed timeframes or an unauthorised financial promotion.
ShareIn have a Breach and Incident Management Policy available should a breach occur.
7.3 Conflicts of Interest & Close Links
ShareIn and its Appointed Representatives must take all appropriate steps to identify and to prevent or manage conflicts of interest between:
- One client and another;
- The firm and investors;
- Our firm including its managers, employees and appointed representatives, or any person directly or indirectly linked to us by control, and a client of the firm.
ShareIn has a Conflicts of Interest policy and procedural documents that identifies circumstances which constitute or may give rise to a conflict of interest. If you are uncertain whether a conflict of interest exists, please consult the compliance officer.
As an FCA regulated business, ShareIn is required to demonstrate our approach to understanding and assessing close links that may influence our relationship with Appointed Representatives (ARs) and/ or Approved Persons (AP) of the AR.
The ShareIn Close Links Policy details this.
7.4 Training and Competence
When ShareIn or its Appointed Representative wishes an employee to perform a new activity, an initial assessment of the employee’s role should be carried out to determine the training required. Training should be planned, appropriately structured, and evaluated, and be effective and up to date. It should take account of:
- The knowledge and skills necessary to fulfil the role.
- Changes in the market and products.
- Changes to legislation and regulation.
Induction and ongoing training at ShareIn covers the following:
- FCA high-level obligations.
- The individual's specific obligations under the FCA regime.
- The individual's specific role within the firm. In particular, the processes and procedures which specifically apply to his/her role.
- How the particular industry operates, how the firm operates and how all the different departments interrelate.
- The skills applicable to the role.
- Training individuals responsible for the supervision of other individuals on their responsibilities, focusing on the role and purpose behind supervision and monitoring of employees as a means of ensuring the firm's compliance with FCA rules.
ShareIn and its Appointed Representatives will review on a regular basis employee competence and take appropriate action to ensure employees remain competent for their role (TC 2.1.12R). This consideration again needs to address the ongoing knowledge and skills necessary to fulfil the role, changes to markets and products as well as changes to legislation and regulation.
Where an individual’s role develops or changes, we will need to consider whether further training or updating is necessary. ShareIn Compliance will deliver training to ensure that ShareIn staff are aware of their legal and regulatory responsibilities and how to fulfil them. Training is delivered at least annually or in the event of a regulatory change. The ShareIn training approach is to offer frequent and brief group training to help employees to fully understand the concepts.
ShareIn maintains a Remuneration Policy that applies to certain members of staff. More information on this can be found in the ShareIn Remuneration Policy.
Bribery is seen as a threat to economic progress and development around the world. Instead of businesses competing on a level playing field, they might be competing, unfairly, against the biggest backhander. The Bribery Act 2010, effective from 1 July 2011, is an attempt to reverse this approach and ensure that bribery is tackled more effectively. ShareIn have an Anti-Bribery and Corruption Policy which discusses this in detail.
7.7 Personal Account Dealing
ShareIn have devised procedures related to Personal Account (PA) investments on our platforms, or on competitor crowdfunding platforms. This prevents the firm or staff being placed at risk of conflicts of interest with clients or investors.
The ShareIn Personal Account Dealing Policy details this.
7.8 Gifts and Hospitality
ShareIn have to ensure that we do not breach the FCA’s rules under COBS 2.3. This applies not only to hospitality in general, but also in relation to any training or support provided for our intermediaries.
ShareIn’s policy on Gifts and Hospitality can be found in the Anti-Bribery and Corruption Policy, which discusses this in detail.
7.9 Best Execution
“Best execution” rules, exist to make certain types of costs and processes more transparent to investors. This does not apply to investments on any of the ShareIn AR platforms, and the ShareIn Best Execution Statement details why this is.
7.10 Vulnerable Customers
ShareIn have a Vulnerable Investor policy which describes ShareIn’s approach to identify, manage, and protect vulnerable consumers, i.e. investors on the platform.
ShareIn have an Introducers Policy which describes ShareIn’s approach to allowing its Appointed Representatives to work with introducers, and the controls in place to mitigate the inherent risk of customer harm which could result from poor conduct by introducers.