It is important to identify and manage conflicts of interest that arise or may arise in the course of providing a service. A conflict of interest may arise where a company or an employee who, owing a duty to a client, may have personal or professional interests which compete with this duty and may entail a risk of material damage to clients' interests. A situation may be a conflict of interest even if no improper act or disadvantage to the client arises from it.
Crowdstacker Limited (“the Firm/us”) is committed to identifying, monitoring and managing all actual and potential conflicts of interest that can arise between our clients and us and between clients in all areas of our business.
The purpose of this Policy is to identify and summarise those conflicts, which we experience as an organisation and how we can address the challenges that such conflicts create. It also provides our clients with appropriate information relating to the policies we have in place to identify and manage conflicts of interest.
This Policy is designed to fulfil the Firm’s obligations under SYSC 10, COBS 12 and Principle for Business 8 of the FCA Handbook, the first two of which implement the Markets in Financial Instruments Directive (“MiFID”). This policy should ensure that procedures are in place to identify, monitor and handle all potential and actual conflicts so that these are not to the detriment of the client.
Conflicts of interest are defined in the context of FCA rules as any conflicts that arise between:
- The firm and a client; or
- A client and another client
when the firm is carrying out activities which are regulated by the FCA or ancillary services.
The types of conflicts envisaged by the FCA may include situations where the Firm:
- Stands to make a financial gain, or avoid a loss, at the expense of the client;
- Has an interest in the outcome of a service provided to the client, or a transaction carried out on their behalf, which is materially different from the interest of that client;
- Has financial or other incentive to favour the interests of another client or group of clients over that client;
- Carries on the same business as the client; or
- Is likely to receive from a person other than the client an inducement, whatever the form, relating to the service provided to the client other than standard fees or commission for that service
Identification of conflicts of interest
For the purposes of identifying the types of conflict of interest that may arise in the course of providing investment and ancillary services or a combination thereof and whose existence may damage the interests of a client, the Firm takes into account any of the following situations, whether they are as a result of providing investment or ancillary services or investment activities or otherwise:
- the company/firm or relevant person is likely to make a financial gain, or avoid a financial loss, at the expense of the client
- the company/firm or relevant person has an interest in the outcome of a service provided to the client or of a transaction carried out on behalf of a client which is distinct from the client’s interest in that outcome
- the company/firm or relevant person has a financial or other incentive to favour the interest of another client or group of clients over the interest of the said client
- the company/firm or relevant person carries on in same business as the client
- the company/firm or relevant person receives or will receive from another other than the client, an inducement in relation to a service provided to the client in the form of a financial gain, goods or services – other than the standard fee or commission for that service
|Material Conflict||Nature of conflict and measures|
|Transactions via the Crowdstacker Platform||
The risk arising is that staff who are party to privileged information concerning investments with which we deal may trade on information which is unknown to the client for personal gain.
The firm has a policy where all employees of the Firm must obtain written approval from the Compliance Officer to make or sell loans via the Crowdstacker platform. Directors of the Firm must obtain written approval from the Board of Directors to make or sell loans via the Crowdstacker platform.
This covers the risk that any gifts or hospitality provided by a third party may materially influence a decision which effects the client.
The firm has a gifts and benefits policy in place to manage this.
This deals with the risk that remuneration policy may encourage staff to take account of their own earnings from a potential transaction rather than the best interests of the client. All staff are aware of their obligations to act in the client’s best regardless of personal benefit.
A peer review system will ensure that advice is suitable for the client.
Managing and Recording Conflicts of Interest
The Firm has set up internal policies and is responsible for identifying and managing potential conflicts of interest and will ensure compliance with such procedures. Such procedures and controls that the Firm follows regarding conflicts of interest are as follows:
- Effective procedures to prevent or control the exchange of information between the relevant persons where the exchange of such information may harm the interests of one or more clients
- Separate supervision of relevant persons whose principal functions involve carrying out such 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 company/firm
- 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 may arise in relation to those activities
- Measures to prevent or limit any person from exercising inappropriate influence over the way in which a relevant person carries out investment or ancillary services and/or activities
- Measures to prevent or control the simultaneous or sequential involvement of a relevant person in separate investment or ancillary services or activities where such involvement may impair the proper management of conflicts of interest
- Segregation of duties that could give rise to conflicts if carried out by the same individual
- To monitor and report on all compliance procedures above to the Board of Directors
- Establishment of the four-eyes principle in relation to the supervision of the Firm’s activities
The Firm conducts a regular review of conflicts of interest as a part of its compliance monitoring programme. As a part of this, and in accordance with SYSC, the Firm regularly carries out a review and maintains a record of the types of activity carried out from which a conflict of interest may arise.
If it appears for any reason that the conflict cannot be reasonably managed so as not to prejudice the best interests of the client, this will be disclosed.
To prevent conflicts of interest, the Firm has the following policies in place:
- Personal Account Dealing Guidance setting out personal account dealing requirements applicable to relevant persons in relation to their own loans via the Crowdstacker platform and/or that any loans made or sold via the platform must be approved by the Compliance Officer/Board of Directors prior to the transaction taking place
- Gifts and Entertainment Policy managing the registration of the solicitation, offer or receipt of certain benefits and to limit the giving or receiving of inducements
The Firm maintains a record of all activities where a conflict of interest has arisen or may arise.
Training and Review
All ‘company/firm’ employees will be given training on how to be aware of conflicts of interest and how to report any new or future conflicts.
Compliance training will be conducted by consultancy firm, Thistle Initiatives Limited on an annual basis. If bespoke training is required, Thistle can be drafted in to provide this training.
Failure to Comply
Failure to comply with this Policy and procedures outlined above may result in disciplinary procedures being invoked.
Current Conflicts of Interest
Crowdstacker’s parent company has received an investment of both debt and equity from Amicus Finance Plc constituting a minority shareholding of 7%.
Amendments to the policy
We regularly review this Policy and should any amendments be made which may materially affect the way in which the firm would handle a conflict of interest on behalf of a client, the client shall be notified in writing of the nature of the changes. The client will also be provided, on request, with an up-to-date copy of the conflicts of interest policy statement.