Rudiarius Capital - Conflict of Interest Policy
15.2.1 - Scope
The General Code of Conduct for Authorised Financial Services Providers and Representatives (“the Code”) issued under the Financial Advisory and Intermediary Services Act, 2000 (Act No. 37 of 2002) (“FAIS”), requires financial service providers to have a Conflict of Interest Management Policy in place to ensure that conflicts of interest are managed appropriately in the business.
15.2.2 - Purpose
The purpose of this policy is to assist Rudiarius Capital Management (Pty) Ltd (hereinafter referred to as “Rudiarius” or “the Company”) and its employees to identify potential and actual conflicts of interest and manage it appropriately.
15.2.3 - Policy and Procedure
a. Policy Statement
The Company is committed to avoiding, and where this is not possible, mitigating any conflict of interest that may arise between the Company, as a financial services provider, and its clients when rendering financial services.
b. Who is subject to the policy?
The Company, its employees (including specifically analysts) and all individuals authorised by the Company, whether in terms of an employment agreement or a mandate, to render advice and/or intermediary services as defined in terms of FAIS (hereinafter referred to as “representative(s)”), to clients of the Company, are bound by this policy.
c. What is a Conflict of Interest?
- “Conflict of interest” is any situation, including financial interest, ownership interest, or any relationship with a third party, in which a provider or representative has an actual or potential interest that may:
This may include:
- influence the objective fulfilment of obligations to a client;
- influence the offering of unbiased and fair advice or service to a client; or
- prevent the provider or representative from acting in the best interests of a client.
In this regard Annexure A (available on request), lists the following:
- real or perceived financial gain resulting from recommendations to clients that may prejudice the client;
- an outcome of service delivery or transaction that may not best serve the interests of the client;
- non-cash incentives that may be received by the Company as a result of effecting any predetermined transaction and/ or product; and
- effecting a transaction and/ or product that may benefit a party other than the client.
- financial interests that are allowed;
- financial interests that are allowed, subject to prior approval and provided that the total value does not exceed R1 000.00 per representative during any one year;
- financial interests that are disallowed; and
- financial interests that are not subject to the Code and therefore does not require any prior approval in terms of this Policy.
d. Mechanisms for identifying Conflicts of Interest
- Avoiding conflicts of interest, or mitigating such conflicts, is primarily based on the principle of trust. In a nutshell this means that clients should trust our judgement without reservation. Whether a client would indeed trust our judgement in a particular situation or activity, given the existence of a conflict- or potential conflict of interest, is a question of fact and must be determined on a case by case basis, using objective judgement.
- Similarly, the principle of “treating clients fairly” can also be applied to identify the existence of conflicts of interest. This principle requires one to consider whether the financial recommendation, guidance or proposal furnished to a client (i.e. “advice” as provided for in FAIS), or the act performed on behalf of a client or product supplier in respect of a financial product (i.e. “intermediary service” as provided for in FAIS), will result in fair treatment of the client. In considering one’s obligations to treat clients fairly, representatives should, amongst others, consider the following questions:
Irrespective of the above principles, a conflict of interest will be deemed to have arisen if the Company, or any employee or representative, receives a “disallowed financial interest” as listed in Annexure A (available on request)
- Are we providing financial services in a manner that unfairly puts the interests of the Company, its representatives or any of its associates, ahead of their clients?
- Are we providing financial services in a way that unfairly puts the interests of one client ahead of the interests of other clients?
- Are we using knowledge about our clients in a way that is likely to advance our own interests without sufficient disclosure to the affected clients?
e. Measures for avoidance or mitigation of conflicts of interest
- Any activity that forms part of or results in an “immaterial financial interest” must be reported in terms of the Company’s Gift Policy and recorded in the relevant Gifts Register. “Immaterial financial interest” is a financial interest with an aggregate value of R1 000.00 or less, given to the same representative, in any given year;
- Each representative has a duty to keep record of any immaterial financial interest given to him or her by any product provider or other third party, and to report such interests by sending an e-mail to firstname.lastname@example.org. The custodian of the Gifts Register shall report to the Managing Director of the Company (“the MD”) as soon as the aggregate financial interest received by any one representative from that product provider or third party, as the case may be, reaches R1 000.00 in that particular year. Any gifts over and above the R1 000.00 mark, or which causes the annual limit in respect of that representative to exceed the R1 000.00 annual mark, shall automatically render the gift to fall within the ambit of this policy and the potential conflict must henceforth be addressed in terms of this policy.
- A potential conflict of interest with a monetary value of between R1 000.00 and R10 000.00, will, prior to acceptance of the financial interest, require the written consent of the Managing Director of the Company (“the MD”) and must be recorded in the relevant conflict of interest register.
- Decisions regarding a potential conflict of interest that falls within the definition of a “material conflict” of interest must be taken by the MD in consultation with the Chief Executive Officer of Efficient Group Ltd (“the CEO”), the holding company of Rudiarius. “Material conflict” is a conflict of interest, the monetary value of which exceeds R10 000.00, or which may directly impact the Company’s reputation.
- In exercising his discretion, the MD (in consultation with the CEO, if so required by this policy) must have regard to:
If it has been established that a particular situation or activity gives rise to a conflict of interest, one must avoid that situation (e.g. by allocating another representative to provide the service to the client) or refrain from that activity.
Once it is decided that a conflict of interest is inevitable, the Company’s MD (in consultation with the CEO, if applicable) must ensure that the effect of such conflict is mitigated by disclosing the conflict of interest to the relevant client(s).
Where a conflict is identified and a decision is made in respect of the management thereof, the nature of the decision must be communicated to the representative in writing within 3 business days. The representative must in turn disclose the conflict to the client, if deemed necessary by the MD / CEO, in the format and to the extent prescribed by the MD / CEO. This applies regardless of whether the decision was made to cease with the relevant activity or continue therewith despite the existence of the conflict or potential conflict. It is important for the preservation of the corporate integrity of Rudiarius that these disclosures are made at all times.
If disclosure of a specific conflict of interest is indeed required, the extent and nature of that disclosure, as prescribed by the MD / CEO, must enable the client to make an informed assessment about how the conflict of interest might affect the representative’s product recommendations and/or advice.
- this conflict of interest policy and the requirements for updating the conflicts of interest register;
- any commission regulations or other legislation which may be breached by the receipt of such gift or entertainment;
- a written statement from the giver explaining the reason for and purpose of the entertainment or gift (which must accompany any request for authorisation, if so required by the MD);
- the extent of the conflict;
- the estimated direct financial impact that a particular situation or activity would have on the Company;
- the effect that the financial interest is likely to have on the client; and
- the value that internal or external discussions (e.g. referring the matter to the Group management committee or a professional body or regulator) may add.
f. Conflict of interest internal controls
- To manage conflicts of interest, the Company must maintain a conflict of interest register.
- The conflict of interest register must be accessible by key employees identified by the MD from time to time. The Group Legal and Compliance Manager (“the Compliance Manager”), as compliance champion of Efficient Group and its subsidiaries, shall at all times have access to the register and all correspondence and deliberations in respect of conflicts- or potential conflicts of interest.
- The Compliance Manager shall at all times assist the MD, CEO and all employees and representatives of the Company to implement and enforce this policy and to address conflicts- or potential conflicts of interest that may arise from time to time.
- The MD, as the principal Key Individual of the FSP, shall be responsible for the maintenance of the register, and may accordingly be consulted by all employees and representatives prior to concluding transactions which might include conflicts of interest.
- All employees and representatives must disclose, to the MD, any immaterial- or other financial interest, as defined above, received from a product provider or other third party. This disclosure must be made within one week after the relevant activity has taken place or have come to the attention of the employee or representative. Details regarding supporting documentation, if applicable, must also be disclosed and recorded in the conflict of interest- or gifts register, as the case may be. All conflicts of interest must be submitted via the email@example.com e-mail address.
- The MD, or his duly appointed delegate, must record disclosures made in accordance with paragraph (v) above in the register, without delay.
- The conflict of interest register will be audited by the Company’s registered, external Compliance Officer as and when required for the purpose of determining whether any financial interest given or received exceeded the aggregate value of R1 000.00 per representative per annum and whether each conflict of interest has been addressed as required in terms of this policy.
g. Reporting of conflicts of interest
- The outcome of the conflict of interest register audit shall be reported to the MD, the CEO and the Compliance Manager.
- All activities that resulted in conflict of interest situations must be disclosed to the Group Audit and Risk Committee, including the detail pertaining to such activities and the mitigation measures taken. This will be done on a quarterly basis and must include recommendations regarding steps that will be taken to avoid a recurrence of such conflict of interest situations.
- Discussions regarding conflicts of interest by the Group Audit and Risk Committee during their meetings must be recorded in the minutes of such meetings. The relevant extracts of the minutes must be made available to the Company’s Compliance Officer upon request, for the purpose of enabling the Compliance Officer to report on compliance with this Policy, as required by the Code.
h. Consequences of not adhering to this policy
Violation of this Policy by an employee or representative may result in disciplinary action being taken against the employee / representative, in accordance with the Company’s Disciplinary Code as amended from time to time.
i. Rudiarius’ Associates
Conducting business with or via an “associate” (defined in Board Notice 58 of 2010 as any subsidiary or Holding Company of Rudiarius, any other subsidiary of the said Holding Company and any other company of which the said Holding Company is a subsidiary) may inherently give rise to a conflict of interest, thus the Company is required by the Code to make a list of its associates available to interested parties, together with this policy.
j. Staff training and general awareness
- All the company’s staff will be trained on this policy.
- A copy of the policy will be provided to each staff member and representative, and updated versions must be circulated as and when they are updated.
- Moreover, all clients – existing and future, must be made aware of the existence of this policy.
k. Financial interest provided
Notwithstanding that this policy has been prepared from the point of view of receiving financial interests, the policy shall equally be applicable to the provision of financial interests to clients, product providers or other third parties (“stakeholders”). Any employee or representative who wishes to provide a financial interest to a stakeholder must submit a formal request, including supporting documents, via the firstname.lastname@example.org e-mail address, for permission to provide the financial interest.
l. Review of the Policy
This policy shall be reviewed annually and any changes to this policy shall be communicated to all staff and representatives. For this purpose representatives and Key Individuals shall annually be required to provide feedback, in respect of this policy and any conflicts- or potential conflicts of interest that may exist.