In terms of the General Code to the Financial Advisory and Intermediary Services Act (Act 37 of 2002), and described in more detail in the Board Notice 58 of 2010 issued by the Financial Services Board, John Boucher Brokers CC is required to maintain and operate effective organizational and administrative arrangements with a view to taking all reasonable steps to identify, monitor and manage conflicts of interest. John Boucher Brokers CC has put in place a policy to safeguard its clients’ interests and ensure fair treatment of clients.
Definition of Conflict of Interest
A conflict of interest involves the conflicted person to perform his duties, sell his skills or act in any manner where he does so for own benefit (interest) and to the actual or potential detriment of his employer, client or any other person. Examples are competing with your employer or selling a specific product because there is a hidden benefit for the seller, such as a kickback or undisclosed commission.
A conflict of interest in the financial services scenario is a situation in which financial or other personal considerations have the potential to compromise advice given or influence professional judgment and objectivity. An apparent conflict of interest is one in which a reasonable person would think that the professional’s judgment is likely to be compromised. A potential conflict of interest involves a situation that may develop into an actual conflict of interest. It is important to note that a conflict of interest exists whether or not decisions are affected by a personal interest.
The actual or potential existence of a conflict of interest may in itself not be an undesirable practice. It is imperative to properly disclose the nature and monetary value of such conflict to a client. Such disclosure can be made prior to rendering of financial services or in the record of advice, and should also be recorded in a register. Full disclosure allows a potential client to decide whether, in the client’s view, a conflict situation may influence advice provided. The client will therefore be better equipped to assess whether the advice given may be flawed or influenced unduly.
The General Code of the FAIS Act defines conflicts of interest as follows in Section 1:
Any situation in which a provider or a representative has an actual or potential interest that may, in rendering a financial service to a client, –
- influence the objective performance of his, her or its obligations to that client; or
- prevent a provider or representative from rendering an unbiased and fair financial service to that client, or from acting in the interests of that client,
including, but not limited to –
- a financial interest;
- an ownership interest;
- any relationship with a third party.
The key information is summarized below.
John Boucher Brokers CC is an authorized financial services provider (FSP Licence Number: 3108) providing to its clients advice and intermediary services on short-term insurance products.
Like any financial services provider, John Boucher Brokers CC is potentially exposed to conflicts of interest in relation to various activities. However, the protection of our clients’ interests is our primary concern and so our policy sets out how:
We will identify circumstances which may give rise to actual or potential conflicts of interest entailing a material risk of damage to our clients’ interests;
We have established appropriate structures and systems to manage those conflicts; and
We will maintain systems in an effort to prevent damage to our clients’ interests through identified conflicts.
Conflict of Interest
John Boucher Brokers CC strives towards ensuring it is able to appropriately and effectively identify and manage potential conflicts. It may manage potential conflicts through avoidance, establishing confidentiality barriers or by providing appropriate disclosure of the conflict to affected clients.
In determining whether there is or may be a conflict of interest to which the policy applies, John Boucher Brokers CC considers whether there is a material risk of damage to the client, taking into account whether John Boucher Brokers CC is likely to make a financial gain, or avoid a financial loss, at the expense of the client;
Has 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;
Has a financial or other incentive to favour the interest of another client or group of clients over the interests of the client;
Receives 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.
Our policy defines possible conflicts of interest as –
Conflicts of interest between John Boucher Brokers CC and the client;
Conflicts of interest between our clients if we are acting for different clients and the different interests conflict materially;
Holding confidential information on clients which, if we would disclose or use, would affect the advice or services provided to clients.
The measures John Boucher Brokers CC have adopted to manage identified conflicts are summarized below. We consider them appropriate to our efforts to take reasonable care that, in relation to each identified potential conflict of interest, we act impartially to avoid a material risk of harming clients’ interests.
We have adopted appropriate procedures throughout our business to manage potential conflicts of interests.
We respect the confidentiality of client information and disclose or use it with circumspect. No such information may be disclosed to a third party without the written consent of a client.
John Boucher is the Key Individual & Sole Representative of John Boucher Brokers CC and responsible for the supervision and monitoring of this policy and will regularly provide feedback on all related matters.
Inducements from third parties in relation to a service provided to clients are acceptable to John Boucher Brokers CC only if they are appropriately disclosed to clients and if it is either the payment of a normal fee or commission to continue the quality of our services to clients and does not impair our duty to act in the best interest of clients.
As Key Individual & Sole Representative of John Boucher Brokers CC, John Boucher will not accept any gifts other than those considered normal in the line of business. Excessive gifts from clients may result in a conflict of interest, which we are committed to avoiding.
Where there is no other way of managing a conflict, or where the measures in place do not sufficiently protect clients’ interests, the conflict will be disclosed to allow clients to make an informed decision on whether to continue using my service in the situation concerned. In all cases, where appropriate and where determinable, the monetary value of non-cash inducements will be disclosed to clients.
Declining to act
We may decline to act for a client in cases where we believe the conflict of interest cannot be managed in any other way.