Conflicts of Interest - Investment - Thematic Review 2025

Summary

This is a thematic review report published by the Guernsey Financial Services Commission summarising the findings of a 2025 review into how investment and fiduciary licensees identify, manage and record conflicts of interest. It is not a new rule, but it sets out the Commission's observations, examples of good practice, and expectations for how existing requirements (under the COB Rules, Principles of Conduct and Code of Corporate Governance) should be applied.

• Scope of review: Questionnaires were sent to 33 investment licensees (about 25% of non-administered investment licensees), covering designated administrators, custodians, asset managers, brokers and registrars, with a 100% response rate.
• Key findings: Licensees generally have adequate conflict of interest controls, conflicts registers and policies proportionate to their business, but some over-focus on board-level conflicts and inconsistently record the specific controls used to manage each identified conflict.
• Common conflict themes: Role and duty conflicts, personal or financial incentives (e.g. inducements, retrocessions), relational conflicts, client-related conflicts (e.g. fair allocation of investment opportunities), and structural/governance conflicts (e.g. intragroup influence).
• Commission expectations: Licensees should document the specific controls implemented for each conflict in their registers, disclose conflicts to clients where controls are insufficient to prevent harm, and continue testing conflict controls through their Compliance Monitoring Programme.

The report does not introduce new legal obligations but reinforces existing requirements under the Protection of Investors Law, the COB Rules, the Principles of Conduct and the Code of Corporate Governance, and signals areas the Commission will scrutinise in future supervision.

Key obligations

• Licensees must maintain sufficient controls to identify, manage and record conflicts of interest affecting their business, clients and staff
• Under the COB Rules, licensees that are part of a group must consider circumstances in which a conflict may arise in relation to other group members
• Licensees must fairly allocate transactions and investment opportunities amongst clients (COB Rules Part 5.3)
• Licensees are expected to document the specific controls implemented to manage each conflict of interest within their conflicts of interest registers
• Licensees must disclose conflicts of interest to clients where implemented controls are not sufficient to prevent damage to client interests
• Licensees should test the effectiveness of conflicts of interest controls through their Compliance Monitoring Programme

Applies to

investment licensees, fiduciary licensees, designated administrators, custodians, asset managers, brokers, registrars