A compliance officer's role includes effectively managing conflicts of interest to enhance a firm's conduct culture. One of the ways to do this is a well designed conflict of interest policy that add clarity to the decision process. Below are a few suggestions to ensure that your policy is in good shape for 2020.
Review is always a beginning
The first step is to review your current conflict of interest policy and adjust according to changes in the regulations and legislation since the policy’s adoption. Many countries have guidelines on how to manage conflict of interest and looking at your country regulator website is a good way to start updating your policy.
While reviewing make sure you have a clear definition of conflict of interest. It is very helpful to write a few examples of “What are Conflicts of Interest?” in the policy. Examples are a good way to give employees possible scenarios, as conflict of interest can be formed in different ways depending on the organization's industry and sizes.
When doing these adjustments, you may also consider asking the following questions to yourself and team working on the updates:
- What is the goal of this policy and how it helps the organization?
- What is a conflict of interest in our organization?
- Which approach our organization uses to manage potential and actual conflicts?
Planning is very important
As any other task in our everyday busy diaries planning is very important. We strongly recommend setting a date of the year to review the policy. All people involved in the process should have it in their calendar and be aware of the timelines.
Make sure you train your staff
It is mandatory to present the conflicts of interest policy when onboarding staff and keep employees aware when changes occur during their employment. When the policy is updated a good way to make sure employees have read it is to create an online document with a text box where employees could state, they have read the document and date it.
When training staff you should outline scenarios and the circumstances in which they arise. Also, include in your management plan an ongoing training for staff that can occur once a year. Nowadays, companies can count on a wide variety of online platforms to help with training staff effectively. Managers can also review periodically conflicts of interest to improve the onboarding training process and overall management plan in place.
Set responsibilities
An organization conflict of interest policy may apply to Supervisors, Senior Managers, Directors, Board Members, and Approved persons, however, you need to make clear in the policy which responsibilities they fall under so they can take responsibility for their actions.
You must avoid ambiguous phrasing and statements, making as clear as possible the specifications of the conflict of interest policy for each group in the organization. Don’t forget that accountability is key to manage risks and lack of responsibility is a driver for future conflict of interest.
Encourage good behavior
Good examples from the management team helps staff to feel comfortable to share conflicts. To require that employees avoid conflicts, not just training is important but also a company's health culture and impeccable reputation.
As part of the continuous assessment of avoiding conflicts, employees must be thanked and welcomed to raise issues. It should be part of the company culture to promote the disclosure of conflicts in the organization. When an organization encourages good behavior, the benefits are immense including the attraction and retainment of quality employees.
A good policy is a continuous task
Why not keep the conflicts of interest policy in mind before meetings, including it on the agenda. You can ask board members to share situations that have come up recently. It is good practice to discuss conflicts before any transaction. The prevention stage is the most important part of avoiding conflicts of interest, organizations must deal with issues proactively rather than when the problem arises.
The monitoring and prevention stage must include:
- As mentioned above a constant review of the conflict of interest policy
- Encourage employees to update identified and new conflicts
- Reviewing the processes and procedures to prevent leaks of corporate inside information
- Reviewing the process in place to manage these conflicts, a suggestion follows in the next section of this article
Have a clear process to manage the conflicts
If a conflict is identified supervisors and employees should develop a conflict of interest management strategy to adequately resolve the conflict. It could include:
- The employee or person making the disclosure providing all material details and withdrawn from the situation leading to the potential or actual conflict.
- A meeting should take place where management and supervision will discuss if the conflict of interest can be mitigated or avoided.
- If the conflict of interest cannot be mitigated or avoided members must seek legal advice upon the issue to decide.
- Don’t forget to document the meeting and final decision and stored in a confidential and secure location.
Now that you have read a few steps to better design and implement your conflict of interest policy consider reading how MCO can help you address your conflicts. Access our solutions page here.
