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Our compliance culture and individual accountability

This section addresses policies related to the fair treatment of investors. Working for a regulated entity places expectations on you to be responsible for following policies that ensure we Treat Customers Fairly.

Whether or not you are an Approved Person, you are required to disclose any conflicts of interest that could harm a client, follow ShareIn's policies to avoid inducements, and comply with restrictions that have been set out with respect of your personal investments.

It is every staff member's responsibility to attend any training offered by ShareIn and to remain competent to discharge your duty to clients, whether that is through independent training activities or self-directed study. Staff have also responsibilities with respect to reporting and assisting in the resolution of complaints and breaches.

4.1. How do we protect clients from conflicts of interest, and what is your role?

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.

  • 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.

The term 'conflict of interest', means any financial or other interest which may damage the interest of a client, and we must assess any situation where it is possible that we

  • are likely to make a financial gain, or avoid a financial loss, at the expense of the client as defined in the FCA Handbook;

  • have an interest in the outcome of a service or transaction provided that is distinct from the client's interest in that outcome;

  • have a financial or other incentive to favour the interest of one client or group of clients over the interests another;

  • carry on the same business as the client

  • receive or will receive from a person as defined in the FCA handbook 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.

Professional ethics play a key role in managing conflicts of interest because they can underline how conflicts are resolved.

In the UK, the high-level regulatory obligation in respect of conflicts of interest is set out in the FCA's General Principle 8 which states that "The firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and a client". Further detail is found in SYSC (SYSC Senior Management Arrangements, Systems and Controls) chapter 10: Conflicts of Interest.

4.1.1. Conflicts of Interest Policy

We are required to establish, implement and maintain a conflicts of interest policy that is set out in writing and is appropriate to the size and organisation of our firm and the nature, scale and complexity of the business.

A conflicts of interest policy identifies circumstances which constitute or may give rise to a conflict of interest and must include the following:

  • It must identify by reference to the specific services and activities carried out by or on behalf of the firm, the circumstances which constitute or may give rise to a conflict of interest entailing a material risk of damage to the interests of one or more clients.

  • It must specify procedures to be followed and measures to be adopted to manage such conflicts.

The procedures and measures adopted to meet the requirements of our conflicts of interest policy must:

  • Be designed to ensure that relevant persons engaged in different business activities involving a conflict of interest carry on those activities at a level of independence appropriate to the size and activities of our firm and to the materiality of the risk of damage to the interests of clients.

  • Include such of the following as are necessary and appropriate for us to ensure the requisite degree of independence:

a) Effective procedures to prevent or control the exchange of information between relevant persons engaged in activities involving a risk of a conflict of interest where the exchange of that information may harm the interests of one or more clients.

b) The separate supervision of relevant persons whose principal functions involve carrying out activities on behalf of, or providing services to clients whose interests may conflict, or who otherwise represent different interests that may conflict, including those of the firm.

c) The removal of any direct link between the remuneration of relevant persons principally engaged in one activity and the remuneration of, or revenues generated by, different relevant persons principally engaged in another activity, where a conflict of interest may arise in relation to those activities.

d) Measures to prevent or limit any person from exercising inappropriate influence over the way in which a relevant person carries out services or activities.

e) Measures to prevent or control the simultaneous or sequential involvement of a relevant person in separate services or activities where such involvement may impair the proper management of conflicts of interest.

If the adoption or the practice of one or more of those measures and procedures does not ensure the requisite level of independence, we must adopt such alternative or additional measures and procedures as are necessary and appropriate.

4.1.2. Disclosure Considerations

Senior management has a key role in setting the cultural standards of the business. However, the values and ethics of individuals who work in the firm in capacities other than senior management should also be given appropriate consideration.

Corporate governance should be structured in such a way that any conflicts of interest are highlighted and resolved.

Disclosure plays an important role in minimising the risk of conflicts of interest. It should be full and accurate and made in a durable medium. Disclosure alone, however, is not enough. Conflicts should be eliminated wherever possible and mitigated if not. With this in mind, particular attention is paid by management to areas such as remuneration and bonus structures, gifts and hospitality.

The following questions may be helpful in considering whether a conflict of interest may arise:

General questions about conflicts

  • Am I acting fairly towards this investor (or my employer)?

  • Is what I am about to do or propose in the best interests of the investor?

  • Am I being objective in giving opinions and statements?

  • Am I being honest and truthful?

  • Would I like to be treated in this way if I were the investor?

  • If I act for this investor will it prejudice any obligations I owe to any other investor?

  • Why am I being asked to lunch (or to an event/function)?

  • How would my actions look to, or be perceived by, a third party or my employer, and does this matter ethically?

  • How would my actions look to the FCA?

  • Should I refer my actions to my line manager or another appropriate person within the firm?

Specific to crowdfunding investing

  • How do I address the very obvious conflict that I make money related to the volume of investment through the platform versus protecting the interests of investors?

  • How do I find the projects to begin with? Are there any close ties between me and the projects I've selected?

  • Are any directors personally invested in any of the projects -- in particular, does anyone in the firm hold an investor category that would make us senior to any other investors at time of payout?

  • Do we have any undisclosed financial incentive related to the deals?

4.1.3. Impact Considerations

We must be able to demonstrate that rigorous internal policies are in place and procedures exist for identifying and managing conflicts of interest.

In normal circumstances we should:

  • Ensure that any such conflict is eliminated.

  • Disclose to the client (whether in a customer agreement or otherwise) any conflict of interest or duty the firm has in relation to an investment, and believe on reasonable grounds that the client does not object to the conflict.

  • If disclosure is impracticable, disregard the conflict so that any disadvantage to the client is avoided.

If you are uncertain whether a conflict of interest exists, please consult the compliance officer.

4.1.4. External Considerations

Directorships of external companies may be material. Such appointments must be disclosed to the compliance officer or the chief executive who will consider whether they give rise to any conflict of interest.

Before accepting an executive or non-executive directorship, or any other appointment in another organisation, all approved persons must obtain the prior approval of the compliance officer or chief executive. In any event, the compliance officer must be informed of all such appointments. The compliance officer should keep appropriate records of these notifications as well as any changes to this information.

4.1.5. Role of Senior Managers

The senior managers of the firm should be fully involved in conflict identification and management. Although they do not need to be personally involved in every decision, they need to assure themselves that decisions taken within the frameworks set up to identify and manage conflicts of interest are consistent. For example, that complaints are being approached openly and independently by supervisors or staff involved in resolving them.

Senior managers must review risks and consider mitigation across the full range of activities for which they are responsible. Mechanisms should be in place to allow them to assess the totality of conflict and how this is being managed. Regular review work should be conducted to test conflict procedures.

To achieve consistent treatment of conflicts of interest throughout the organisation, senior managers should set clear guidelines which set out:

  • The type of activities that generate conflicts which they feel cannot be adequately managed and should not be engaged in.

  • Effective systems and controls reflective of the nature and seriousness of differing classes of conflict.

  • The identity of the persons accountable for making decisions at differing levels.

Guidelines should include the types of conflict that should be escalated to senior management for a decision on whether the conflict can be mitigated.

4.1.6. Eliminating or Mitigating Conflicts of Interest

Methods of mitigation should be designed for those conflicts we have decided can be managed effectively. Consideration should also be given to the level of risk mitigation that will be required to ensure that it is within our risk management capability. Some examples of methods which can be used to manage potential conflicts include:

  • A hospitality and/or gift register.

  • Restrictions on gifts and hospitality individuals may accept.

  • Information barriers or 'Chinese walls' between different business units to prevent free flow of confidential information.

  • Changes to remuneration arrangements for the firm and individual staff to avoid incentives and targets which may encourage misuse of information.

  • Increasing disclosure to clients and obtaining informed consents from them.

  • Information systems designed to provide timely and accurate information.

  • Reporting structures to build in checks and balances to promote objective judgement.

  • Recording of and justification for decisions when selecting products or suppliers.

  • Documenting complaint handling and claims settlement procedures.

Our culture can be a key mitigating tool for the proper management of conflicts of interest. Culture is a combination of formal structures and procedures and informal structures. Examples of formal structures would be company policies on remuneration, complaints handling, appraisals, key performance indicators, discipline and training and any reporting tools for these. Examples of informal structures would be the ethical values of the firm and the individuals who work in it.

4.1.7. Conflicts Register

ShareIn and its Appointed Representatives logs all conflicts of interest and potential conflicts. This register serves as a record of our actions around the resolution, mitigation or disclosure of any conflict that has been identified.

The Conflicts Register must be reviewed regularly, and the conflicts challenged. Are they still valid? Are our remediating actions working? If not, how can we take immediate action to address the issue? Where there are failures these must be reported to senior management and a remediation plan put into place. Any damage to a client must be addressed and the client made whole. Material breaches must be reported to the Board and to the FCA.

4.1.8. Applying Objectivity

In making professional/business judgements and in giving opinions, an individual should not allow prejudice or bias or the influence of others to override objectivity.

Difficulties may arise from the offer or acceptance of any gift, favour or hospitality which may be intended to influence an individual, or may be reasonably interpreted by a person being in full possession of the facts to be likely to have such effect. Inappropriate gifts or hospitality should not be offered or accepted. Our gifts and hospitality policy is outlined below.

Any report prepared for a client or employer should be accurate, truthful and, within its scope, complete and balanced. It should not contain ambiguities or half-truths. Nor should it be based on unreasonable assumptions. It should be objectively justifiable.

4.1.9. Respecting Confidentiality

The opportunity to have access to confidential information, if abused or misused, may confer an unfair competitive advantage. If individuals use or intend to use confidential information not reasonably available to the public for their own direct and substantial economic benefit, such conduct constitutes a conflict of interest.

The same principle applies if they disclose, or intend to disclose, information to other individuals or organisations in such a manner that a direct and economic benefit may be conferred on those individuals or organisations.

Any information acquired from a client should only be used or disclosed in the normal course of providing the service the client requires, unless the client has given consent or the information is required due to a legal or regulatory obligation to disclose.

When individuals change their employment they are entitled to use the experience they have gained in their employment. This does not include confidential information of any description. They should not use or appear to use confidential information, however acquired in the course of their professional work, for personal advantage or the advantage of a third party.

In short, the firm and all relevant persons have a duty to take reasonable steps to ensure fair treatment of clients in relation to situations where a conflict may arise.

4.2. What are inducements, and what procedures are in place to prevent them?

This section concerns payments, gifts and benefits in kind offered to and received from any investment business or other agent with which or through whom we do business. In this context, gifts include, but are not limited to, substantial hospitality, invitations to sporting and other social events, holidays, cars, small personal gifts such as food hampers or alcohol. Benefits in kind could include an opportunity to make a gain or avoid a loss.

Any inducement that may lead a recipient to go against his/her judgement of a client's best interests is prohibited, as is any inducement that is likely to conflict significantly with duties the giver or the recipient owes to clients.

If you have any doubts over payments, gifts, inducements or commissions, please speak to the compliance officer.

4.2.1 Commissions, payments and monetary inducements

We are prohibited from accepting or paying any fee or commission, or provide or receive any non-monetary benefit except in those cases where the relevant payment:

  • is designed to enhance the quality of the relevant service to a client of the investment firm;

  • does not impair compliance with the investment firm's duty to act honestly, fairly and professionally in accordance with the best interests of its clients; and

  • and is fully disclosed to the client in a comprehensible manner before their investment.

ShareIn does not pay commissions or rebates that would constitute an monetary inducement.

4.2.2. Gifts and Hospitality

We also have to ensure that we do not attempt to induce other firms or advisers in a manner which breaches the rules under COBS 2.3. We therefore have to have procedures in place which ensure that the rules are not breached. This applies not only to hospitality in general, but also in relation to any training or support provided for our intermediaries.

Excessive hospitality should be avoided. Direction of business through a specific single source in preference to other providers/brokers/third parties may be considered as a breach of these rules, and could fall afoul of provisions of the Bribery Act described in the next section.

Gift or benefit is reasonably believed to be under £100 in value OK to accept Notify the compliance officer by email
Gift or benefit is reasonably believed to be over £100 in value Get prior approval. An email must be sent to CEO/ other director requesting approval. Once approval obtained, notify Compliance. If no prior approval, hand over to compliance officer
If a value or frequency which can reasonably be expected to influence the recipient to go against his/her judgement when acting in the best interests of the client Prohibited Prohibited
Where the gift or benefit is under £100 in value OK to offer No requirement to inform compliance
Where the gift or benefit is over £100 in value Authorisation from the chieft executive, whom failing the compliance officer. Once authorisation obtained, notify Compliance. Inform compliance, who will log on the register

4.2.3. Bribery Act 2010

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.

The act has four offences, namely:

  • Bribing another person.

  • Accepting a bribe.

  • Bribing a foreign public official.

  • Failing to prevent bribery.

Firms need to ensure that they have adequate procedures in place to defend themselves against any accusations of bribery. These should include:

  • Conducting and documenting a periodic risk assessment, i.e. considering the bribery risks the business might face.

  • Taking action proportionate to the risk faced and the size of the firm's business to mitigate identified bribery risks.

  • Knowing exactly who one is dealing with to help protect the firm from taking on people who might be less than trustworthy.

  • Encouraging senior management to be active in making sure staff understand that bribery is neither acceptable nor tolerated.

  • Communicating policies and procedures to staff, providing training which is proportionate to the risks faced.

  • Monitoring and reviewing by keeping an eye on the anti-bribery steps taken, so that pace can be kept with any changes in the bribery risks faced when, for example, new markets are entered.

ShareIn provide Bribery Act training on to staff and Appointed Representatives, and Compliance is available to address any questions.

4.3. What are the restrictions on your personal investing?

ShareIn works exclusively with unlisted investments. ShareIn's senior management have concluded that the risks of insider trading or client conflicts related to personal account trades in listed securities are minimal to non-existent.

ShareIn therefore does not prohibit or restrict personal account dealing in respect of listed securities.

We 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.

Note that there are two separate steps in this process:

  1. Pre-clearance -- that means getting Compliance sign-off -- for any investments representing more than 50% of the total value

  2. Reporting -- that means filling out a declaration form after the fact -- if you make an investment representing 20% or more of the total value of a fundraise on a platform

4.3.2. To Whom Does the Policy Apply?

This policy applies to all regulated members of the firm, which is to say the following persons:

  1. All directors, partners, full-time employees, part-time and temporary employees, secondees of ShareIn

  2. The same as above for all Appointed Representatives of ShareIn

  3. Companies of which either 1) or 2) the above act as trustee or director

  4. Investment clubs of which either 1) or 2) the above is a member

If you are in any doubt as to whether these rules apply to you, please seek compliance advice.

4.3.3. Introduction to our PA Investment Policy

The personal account dealing rules form part of our general code of conduct for disciplinary purposes, and failure to adhere to these rules could render you liable to disciplinary action. These procedures are in place to ensure that:

  • Standards of conduct are maintained at the highest level of integrity.

  • The interests of investors always take precedence over the interests of members of the firm.

All members of the firm are protected from unfounded allegations of market abuse or other abuses of confidential information.

4.3.4. Connected Persons

Connected persons are defined as spouses, partners, minor children and any other person (for example, elderly relative) over whose dealings you may be considered to have influence.

You must take all reasonable steps to ensure there is no conflict between the interests of connected persons and those of the investors on our platforms, which must take preference.

4.3.5. Clearance to Invest

We will only require pre-clearance to invest in cases where a staff member's investment would represent greater than 50% of the total value of the investment, when such a holding could come with majority voting rights that give rise to potential conflicts of interest with other investors.

When an investment in a project on our platform, or on competitor crowdfunding platforms would cause you to become a majority shareholder or bondholder, contact compliance in advance of making your investment. Compliance will advise whether you have approval to invest.

4.3.6. Reporting of Personal Investments on Relevant Platforms

ShareIn require you to declare any investment that will represent a holding of >20% of the value of the total project.

Once you make an investment on a relevant platform, you must report the investment on the Personal Account Investing Register no later than five business days after the date of the investment. Any late submissions may be investigated as potential breaches of these rules.

4.3.7. Trustees and Company Directorships

The personal account investment rules extend to acting as a trustee or as a director of a company, unless you are not involved in making the investment decision for the trust or company involved.

4.3.8. Investment Clubs

The personal account dealing rules extend to membership in an investment club. Unless operating on a fully discretionary basis, any dealings by an investment club of which you are a member will be subject to the dealing requirements referred to above.

4.4. How do we ensure you are competent to discharge your role?

Rules related to the FCA's training and competence regime can be found in the Training and Competence Sourcebook (TC) and the Senior Management Arrangements Systems & Control Sourcebook (SYSC). The latter includes the competent employee rule (SYSC 3.1.6R/SYSC 5.1.1R) which has applicability to ShareIn and its Appointed Representatives. These rules define the standards which authorised firms should achieve in training their staff and ensuring their initial and ongoing competence to perform their jobs. Competence is defined as skills, knowledge and expertise.

The training and competence regulations are framed in a way that enables firms to make their own decisions and apply to all authorised firms, irrespective of the amount of regulated activities they undertake. To a large extent, they are non-prescriptive. In ShareIn's case, because we do not offer investment advice, we will have fewer requirements for formal qualifications. This does not, however, mean that our training and compliance regime will not be demanding.

Accordingly, using well-established T&C principles, we must ensure that all relevant members of the firm:

  • Are competent.

  • Remain competent for the work they do.

  • Are appropriately supervised.

  • Have their competence regularly reviewed.

  • Have a level of competence which is appropriate to the nature of the business.

Employees of ShareIn and its Appointed Representatives are responsible for taking a proactive role in maintaining ongoing competence.

4.4.1. Recruitment and References

Making suitable checks at the recruitment stage is a crucial component of the T&C regime. Good recruitment procedures help us establish that new employees should be able to achieve competence in the role for which they are intended, given appropriate training and supervision.

As part of our recruitment procedures, ShareIn will assess the knowledge and skills of the individual in relation to the knowledge and skills required for the role. We will take reasonable steps to obtain sufficient information about the individual's previous relevant experience, qualifications and training, and may include credit and criminal checks.

Where we consider appointing an individual to perform a controlled function, we will request a professional reference. If the individual has been FCA authorised in the previous 6 years, we will obtain a regulatory reference. The referring firm must, as soon as reasonably practicable, provide us with all relevant information of which it is aware.

ShareIn has a template for regulatory reference requests, which can be found in the Appendix.

Similarly, we are bound to provide a reference should one of our members of staff seek a controlled function role with another FCA regulated firm. We should always bear in mind that we owe a duty to a former member of staff and any recipient firm to exercise due skill and care in the preparation of a reference. The reference should be accurate and based on documented fact. We may give frank and honest views, but only after taking reasonable care as to factual content and as to the opinions expressed, and verifying the information upon which they are based.

4.4.2. Training

Training does not necessarily imply attendance at courses. This is, of course, extremely useful. However, an individual can develop skills and gain experience in a variety of ways, which could include individual study. It is likely that competence will be developed most effectively by a mixture of training methods and blended learning. On-the-job training is generally not enough.

When ShareIn or its Appointed Representative wishes an employee to perform a new activity, an initial assessment of the employee's relevant knowledge and skills 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.

4.4.3. Attaining Competence

An assessment of an employee's knowledge and skills in relation to his/her role, and their demonstration through practical application, is necessary for a firm to satisfy itself that the employee has attained competence. An employee must be assessed as competent to apply the knowledge and skills necessary to engage in or oversee the activity without supervision. In assessing an employee, we should take into account, among other things:

  • The individual's technical knowledge and its application (including the individual's previous and existing experience in the role and whether that experience means they are competent to carry out the role).

  • The individual's skills and their application (for example, analysis, communication, organisational, and communications skills).

  • Changes in the market and products.

  • Changes to legislation and regulation.

4.4.4. Maintaining Competence

ShareIn and its Appointed Representatives will review on a regular and frequent 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. It is important that training to maintain competence is effective and purposeful, rather than undertaken to meet a target number of hours.

Examples of structured continuing professional development activities include participating in courses, seminars, lectures, conferences, workshops, web-based seminars or e-learning which require a contribution of 30 minutes or more.

All continuing professional development should:

  • Be relevant to the current role and any anticipated changes to that role.

  • Maintain knowledge applicable to any qualification standard relevant to the role.

  • Contribute to professional skill and knowledge.

  • Address any identified gaps in technical knowledge.

  • Have written learning objectives based on learning needs and a documented learning outcome.

  • Be measurable and capable of being independently verified.

ShareIn and its Appointed Representatives ensure that maintaining competence for an employee takes account of technical knowledge and its application, skills (their application and development) and changes in the market and to products, legislation and regulation. Employees should feel empowered to approach their line manager or Compliance in the event they feel current procedures are out of step with what they have learned via independent learning.

Arrangements we consider include:

  • Regular appraisal sessions with employees, which are detailed enough to identify role-specific competence.

  • Periodic testing sessions to ensure that all employees are carrying out their roles in compliance with their FCA obligations and the firm's internal procedures.

  • Setting up a reporting structure to ensure that, if the role of an employee changes, the training function is notified so that competence can be reassessed.

  • Setting up a reporting structure to ensure that any changes made to processes and procedures are notified to the training function, so that the revisions can be incorporated into training materials and any necessary training can be organised.

As a means of demonstrating ongoing competence, a central file should be maintained for each Controlled Function holder containing:

  • Evidence of an appraisal during the preceding 12 months.

  • An up-to-date job description.

  • Current CPD ("Continuing professional development") records.

ShareIn Compliance offer regular training to ensure that staff are aware of their legal and regulatory responsibilities and how to fulfil them. The ShareIn training approach is to offer frequent and brief group training, with short assessments afterward to identify which employees need more targeted assistance so as to fully understand the concepts.

The current Compliance training modules and frequency are shown in the table below. Note that "regular" means these modules will be offered on a recurrent but not strictly annual basis, throughout an employee's term with ShareIn:

Once, in first week of work Induction/New Employee (includes What is Compliance, AML Overview and Conflicts of Interest)
Regular What is Compliance / Regulatory Permissions
Once AML/CTF overview
Annual AML/CTF detail
Regular Treating Customers Fairly and Compliance Culture
Regular Breaches
Regular Conflicts of interest
As needed Financial promotions - creating
As needed Financial Promotions - reviewing
Code of conduct and logs/registers
Regular Cybersecurity
Regular Retail clients
As needed Client money handling and CASS Resolution

Employees of ShareIn and its Appointed Representatives are expected to attend training sessions when offered, participate in an engaged manner and ask questions when they are unclear about a concept or item covered.

4.4.5. Supervising and Monitoring Competence

Adequate supervision is an essential component of the regime. It allows an employee to gain experience while minimising risk. The supervising and monitoring part of the regime applies to individuals engaging in or overseeing an activity with or for retail customers. However, there is a commitment relating to all regulated activities (and for all types of customer), which states that a firm must ensure its employees are appropriately supervised.

Where an employee engages in or oversees an activity with or for retail customers, we must ensure he/she is appropriately supervised until assessed as competent in that activity.

Employees who are being supervised should have appropriate reviews and assessments of their work. They should also be given individual coaching and performance assessments.

4.4.6. Record-Keeping

Record-keeping is essential to proper regulatory conduct. The FCA requires records to be kept to provide evidence of compliance with TC ("Training and Competence Sourcebook").

The record-keeping rules consist of two parts. The first part requires appropriate records that demonstrate compliance with TC "Training and Competence Sourcebook") and the second part deals with time periods for retention.

We maintain records to demonstrate compliance with the above requirements for a period of at least five years after resignation of the employee or director from the firm.

We should retain the following records:

  • Confirmation in writing that in the preceding 12 months each Controlled Function holder has complied with the Code of Practice for Approved Persons.

  • The criteria applied in assessing competence and continuing competence.

  • How and when the competence decision was taken.

  • How the employee continues to be competent.

  • The criteria applied in deciding the level of supervision and monitoring required for its employees.

  • How the supervision and monitoring of its employees is carried out.

  • The criteria governing the firm's decisions on exemptions from appropriate examinations.

  • The time limits within which an appropriate qualification has been attained.

As a member of staff, you should keep records of competence and suitability assessments performed. You should also keep records of industry events you may have attended, such as conferences, seminars and presentations, and examinations you may have passed.

4.5. What are your responsibilities in responding to complaints and breaches?

4.5.1. Complaints

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. These procedures must ensure that a complaint may be made free of charge. We must also take reasonable steps to ensure compliance with these procedures, including ensuring that all personnel are aware of the procedures and of the duty to comply with them. As a firm, we are required to appoint an individual having the appropriate seniority to undertake oversight of compliance with the complaints process. In the event that this individual has involvement with the complaint, a suitable replacement would be appointed. This complaints officer does not necessarily have to be our compliance officer.

Eligible complainants are individuals and businesses that fall in the following groups:

  • A consumer -- A person acting outside of his/her trade or profession. This would seem to exclude a self-employed person buying financial services for his/her small business, but he/she is likely to fall into the next category.

  • A Small Medium Enterprise -- A business which employs fewer than 50 people and has an annual turnover of less than £6.5 million or annual balance sheet not exceeding £5 million when the complaint is made (although payment services firms have slightly different rules).

  • A charity with an annual income of less than £1 million when the complaint is made.

  • A trustee of a trust which has a net asset value of less than £1 million when the complaint is made.

The FCA established the Financial Services Ombudsman (FOS) as an independent dispute resolution scheme. The service is aimed at resolving disputes as an informal alternative to the courts. The service is free to customers and can investigate complaints and order restitution up to a maximum of £350,000. However, customers are expected to ask regulated businesses to try to resolve all complaints before they refer them to the FOS. The jurisdiction timeframes of the FOS are set out in FCA rule DISP 2.8.

The FOS can be contacted at:

The Financial Ombudsman Service

Exchange Tower

Harbour Exchange Square


E14 9SR

Tel 0800 023 4567 or 0300 123 9123

We are required to provide information about the FOS, including its website address, on our website.

All complaints (irrespective of the client type) are required under FCA rules to be dealt with on a prompt and fair basis, including those complaints falling within the jurisdiction of the FOS. A record of all complaints received should be logged in the complaints register, but only those falling within the jurisdiction of the FOS require to be provided with the FOS leaflet.

4.5.2. Definition of a Complaint

The FCA defines a complaint as:

Any oral or written expression of dissatisfaction, whether justified or not, from or on behalf of, a person about the provision of, or failure to provide, a financial service or a redress determination, which:

  • Alleges that the complainant has suffered (or may suffer) financial loss, material distress or material inconvenience.

  • Relates to an activity of that respondent, or of any other respondent with whom that respondent has some connection in marketing or providing financial services or products, which comes under the jurisdiction of the Financial Ombudsman Scheme.

We regard financial loss as including a consequential or prospective loss, not just an actual loss. Material distress or inconvenience is harder to define and is dependent on the circumstances of the complaint. If in doubt, please refer the matter to the compliance officer or complaints officer.

4.5.3. Receipt and Investigation of a Complaint

With effect from 30 June 2016, a complaint can be resolved, through means of a verbal or written acceptance by the complainant, by close of business on the third business day following the day on which it is received, without full application of the requirements noted below. Specifically, the time limits and forwarding rules.

Where such an approach is applied, we are required to issue to the complainant a summary resolution communication and include such complaints in our reporting to the FCA. The summary resolution communication needs to include:

  • Reference to the fact that the complainant has made a complaint and that we now consider the complaint to have been resolved.

  • A statement that if the complainant subsequently decides that he/she is dissatisfied with the resolution of the complaint, he/she may be able to refer the complaint to the Financial Ombudsman Services (FOS).

  • An indication whether or not the respondent consents to waive the relevant time limits in DISP 2.8.2R or DISP 2.8.7R by including the appropriate wording set out in DISP 1 Annex 3R.

  • The website address of FOS.

  • Reference to the availability of further information on the website of FOS.

Regardless of whether a complaint is resolved within three days, we remain required to adequately document and include such instances within the appropriate report to the regulator.

When a complaint cannot be resolved within the three-day allowance, the arrangements for ensuring that all client complaints are properly dealt with are as follows:

Receipt and Investigation of a Complaint:

  • On receipt, all complaints or expressions of dissatisfaction which are capable of becoming a complaint (both written and verbal) must be notified to the Head of Compliance immediately on receipt.

  • On receipt, the complaint will be undertaken in a diligent and impartial manner. Additional information will be obtained as necessary by the Head of Compliance unless he/she is the subject of the complaint (in which case the investigation will be carried out by another member of the senior management team).

  • The Head of Compliance will promptly arrange for contact to be made with the complainant in writing by acknowledging the complaint, setting out our understanding of the nature of the complaint and noting the name and title of the person investigating the complaint.

  • Thereafter the Head of Compliance will ensure the complainant is kept informed of the progress being made in the complaint's resolution.

Final or Other Response Within Eight Weeks:

By the end of eight weeks after receipt of the complaint, we must either send the complainant:

  • A final written response which (i) accepts the complaint and, where appropriate, offers redress or remedial action or (ii) offers redress or remedial action (without accepting the complaint) or (iii) rejects the complaint and gives reasons for doing so. In all cases, the response should (a) attach the standard explanatory leaflet from the Financial Ombudsman Service (FOS), (b) provide the website address of the FOS, (c) inform the complainant that if he/she remains dissatisfied he/she may now refer the matter to the FOS and (d) indicate whether or not the relevant FOS time limits have been waived or

  • A written response which (i) explains why we are not in a position to make a final response, (ii) indicates when we expect to provide a final response, (iii) attaches the standard explanatory leaflet from the FOS, (iv) provides the website address of the FOS, (v) informs the complainant that he/she may now refer the matter to the FOS and (vi) indicates whether or not the relevant FOS time limits have been waived.

It should be noted that the last two bullet points above do not apply if the complainant has already indicated in writing acceptance of a response, provided that the response informed the complainant how to pursue his/her complaint if he/she remained dissatisfied.

4.5.4. Reporting

Only complaints received from eligible complainants need be reported to the FCA.

A record of each case will be kept, for a minimum of five years from date of receipt, by the compliance officer, showing:

  • Name of complainant.

  • Details of the complaint and its nature.

  • Copies of all correspondence with the complainant regarding the complaint.

  • Details of the outcome and any redress offered by us/client.

  • Whether or not the FOS was involved in resolution of the matter.

The FCA will be advised of certain statistics relating to complaints twice yearly showing:

  • Number of complaints received, by category and product type.

  • Number of complaints resolved within the three-day allowance.

  • Number of complaints resolved within eight weeks, more than eight weeks.

  • Number of complaints outstanding at end of the reporting period.

These reports currently relate to the six-monthly and financial year-end periods and must be submitted to the FCA within 30 business days of the end of each period.

Appropriate management controls should be in place to ensure that, when handling complaints, any recurring or systemic problems are identified and remedied. Such controls should take into account the nature, scale and complexity of our business, including the number of complaints received. If such problems come to light, consideration should be given as to whether or not remedial action needs to be taken with regard to other clients who may have suffered detriment in this respect but have not complained.

An individual (who is carrying out a governing function such as chief executive, director or partner) must be appointed to have responsibility for oversight of compliance with DISP1 (Treating Complainants Fairly) which details the FCA's complaints handling requirements.

4.5.5. Breaches

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 are:

  • Not making the FCA quarterly returns within the prescribed timeframes.

  • Not issuing periodic reports to clients in accordance with established procedures.

  • Incorrect information reported to an investor in the periodic reports.

  • Wrong investment bought or sold for an investor or investors.

  • A corporate action not processed correctly.

The person who discovers the breach should provide the compliance officer with written details on a breach record form. Compliance accepts these forms via a Trello board called Breach Logging. The compliance officer will take such action as is felt necessary, including engaging input from relevant members of staff and senior management, in order to:

  • Ensure that any investor who has been detrimentally affected by the breach is compensated such that he/she is put back in the position he/she was in prior to occurrence of the breach.

  • Produce a comprehensive written record on the breach record form covering the following details:

a) What went wrong and the consequences.

b) Who gave rise to the breach.

c) Who discovered the breach.

d) Actions taken to rectify the breach.

e) Any payment made by us to compensate an investor as a result of a breach.

f) Claims made against our professional indemnity insurance.

g) Any gaps or shortcomings identified in our procedures, IT systems or internal controls and what action will be taken to address these matters.

  • Closely monitor and manage the resolution process.

  • Ensure any procedural weaknesses are fully addressed.

The compliance officer will maintain a summary of all breaches in Breaches Log Trello board. Any significant breaches will be immediately reported to the FCA by the compliance officer. Under FCA rule SUP 15.3.12 significance is determined by having regard to potential financial loss to clients or to the firm, frequency of the breach, implications for the firm's systems and controls and if there were delays in identifying or rectifying the breach.

4.6. What is a "Disclosure in the Public Interest" or Whistleblowing?

The FCA encourages all regulated firms to adopt and communicate to staff appropriate internal procedures for handling staff concerns, as part of an effective risk management system. With this in mind, the Public Interest Disclosure Act 1998 (PIDA) ensures that any clause or term in an agreement between an employee and an employer is void, if it precludes an employee from making a protected disclosure ('blowing the whistle').

A protected disclosure is a qualifying disclosure which meets the relevant requirements as set out in the PIDA "Public Interest Disclosure Act") at Section 1. A qualifying disclosure is a disclosure, made in good faith, of information which, in the reasonable belief of the member of staff making the disclosure, tends to show that one or more of the events noted below has been or is likely to be committed:

  • A criminal offence.

  • A failure to comply with any legal obligation.

  • A miscarriage of justice.

  • The putting of the health and safety of an individual in danger.

  • Damage to the environment.

  • Deliberate concealment relating to any of the above five matters.

Any wrongdoing can detrimentally affect our organisation, so we take failures seriously. We encourage you to blow the whistle internally, and your confidentiality will be respected if you so wish.

In making a disclosure, you must have reasonable belief that the information disclosed tends to show one or more of the offences or breaches listed above ('a relevant failure'). Although false and malicious allegations will be penalised, you will be supported and protected from reprisals for blowing the whistle in good faith, even if you turn out to be mistaken. By this we mean you must show that you held the belief and that it was a reasonable belief in the circumstances at the time of disclosure.

Protection under the provisions applies even if the qualifying disclosure concerns a relevant failure which took place overseas, or where the law applying to the relevant failure was not that of the UK.

Managers are encouraged to be open to concerns. However, if you do not feel you can approach your manager with a particular concern, you may go directly to the compliance officer.

If necessary, you can blow the whistle outside the firm by contacting the FCA as the regulator prescribed in respect of financial services and markets matters under PIDA. The current FCA website link, where more information is available, is

The FCA will give priority to live concerns or matters of recent history, and will emphasise that a member of staff's first port of call should ordinarily be the firm.

The FCA would regard as a serious matter any evidence that we had acted to your detriment because you had made a protected disclosure (see FCA rule SYSC 18.2.1 G (2)(b)) about matters which are relevant to the functions of the FCA. Such evidence could call into question the fitness and propriety of our firm or relevant members of our staff. It could also, if relevant, affect our continuing satisfaction of threshold condition 5 (suitability) or, for an approved person, his/her status as such.