In identifying potential conflict situations, there are four critical steps that must be taken.
After-the-fact disclosures are sometimes impossible and almost invariably inadequate. Firms must take four steps to identify potential conflicts of interest.
- Determine what potential conflicts could arise, especially out of the multiplicity of businesses in which it is engaged.
- Decide how it will deal with those conflicts should they arise.
- Disclose, in language anyone could understand, the potential conflicts that could arise and the method by which those conflicts will be resolved.
- If a conflict does arise, before finalizing any solution, assess whether the pre-conceived methodology produces a fair result for customers likely to be adversely affected by the conflict.