Asset manager
The group that distributes its own products
“Our network places in-house funds alongside third-party funds. We need objective selection criteria and to be able to show that clients do not lose out.”
MiFID conflicts of interest policy and register: measures that hold up
Identify, prevent, manage and—only when nothing else is enough—disclose. We build your firm’s conflicts of interest policy and register from its real business: in-house products, inducements, personal transactions and the sales network’s pay structure.
Does your conflicts policy describe your real business?
Tell us how your firm makes money and we will point out the conflicts the supervisor will expect to see mapped.
- 50+ entities advised
- Reply within 24 h
- No commitment
- Third-party inducements
- MiFID II Art. 24
- PFOF ban
- Reg. (EU) 2024/791
- System steps
- 10 steps
- Key Spanish law
- Law 6/2023
Services
How we handle conflicts of interest
Six fronts to move from a generic document to a managed system: a real map, measures that work and a register that stays up to date simply by running the business.
MiFID II framework
Tailored conflicts policy
We draft or rebuild your policy from a real map of the business: services, revenue streams, in-house products, group structure and remuneration. No theoretical catalogs that would fit any firm.
Learn more →
Real mapPolicyGroupMiFID II
Inducements
Retrocessions under control
The most closely watched conflict: when you may accept payments from third parties, when you must pass them on to the client and how to prove, with documents, the quality enhancement that MiFID II Art. 24 requires.
Learn more →
Art. 24QualityDisclosureRefund
Product
Product governance
In-house versus third-party products: selection criteria and a target market that neutralize shop-window bias.
Learn more →
Target marketBias
Governance
Independent director
A voice with no vested interests on the management body strengthens oversight of the most sensitive conflicts.
Learn more →
CounterweightBoard
Senior management
Fit and proper and conflicts
The absence of conflicts is part of the fit and proper assessment of directors and general managers: assess it and document it.
Learn more →
Fit & properAssessment
Function
Outsourced compliance
We keep your conflicts register up to date, review personal transactions and report to the management body.
Learn more →
RegisterReporting
Profiles
Conflicts we see every week
Four different firms, four classic sources of conflict. None is illegal just because it exists: what gets sanctioned is failing to identify and manage it.
Investment firm
The network paid on volume
“Our agents’ variable pay rewards product placement. We know that is a conflict and we want to redesign the scheme before the CNMV flags it.”
Private bank
Retrocessions under scrutiny
“We receive inducements from the fund managers whose funds we recommend. We want to check whether the quality enhancement we claim really holds up with evidence.”
EAF
The team’s personal transactions
“We are a small team and we all invest personally. We lacked a proper procedure for reporting and pre-approving transactions.”
Where firms fail
Three ways to turn a conflict into an enforcement case
Conflicts of interest are inherent in financial business. What the supervisor sanctions is not their existence, but management that does not exist or exists only on paper.
The shelf policy: a generic document that lists theoretical conflicts and does not mention your in-house products, your inducements or your pay structure. To the supervisor, that is the same as having identified nothing.
Disclosing instead of managing: using client disclosure as the default measure. The rules reserve it for cases where organizational measures are not enough; used as an alibi, it makes the problem worse instead of solving it.
The frozen register: it was created for the authorization and nobody has touched it since. Sales campaigns, new products and pay changes create conflicts that never make it onto paper.
| Source of conflict | Mitigation measure | Expected evidence |
|---|---|---|
| In-house vs. third-party products: the network has incentives to sell the house’s own products | Objective selection criteria, product governance and oversight of the recommendations issued | Product committee minutes, documented comparisons and periodic sampling of recommendations |
| Retrocessions and inducements from manufacturers and fund managers | In independent advice and discretionary management, passed on to the client; in all other cases, documented quality enhancement and prior disclosure | Distribution agreements, calculation of inducements received, justification of the quality enhancement and ex ante disclosure to the client |
| Personal transactions and remuneration of employees and the sales network | Reporting and pre-approval of personal transactions; variable pay with no bias toward specific products | Personal transactions register, approved remuneration policy and periodic checks by the compliance function |
Turn your conflicts into a managed system
We map the sources of conflict in your business model, design organizational measures that work day to day, keep disclosure where it belongs—as a documented exception—and set up a register your team can maintain without heroics.
Frequently asked questions
Conflicts of interest: questions our clients ask us
What is a conflict of interest under MiFID II?
Any situation in which your firm, someone in its group or a connected person can obtain a benefit—or avoid a loss—at a client’s expense, or favor one client to the detriment of another.
MiFID II and Delegated Regulation (EU) 2017/565 require you to identify them service by service, prevent them with organizational measures and manage them so that the client’s interests are not harmed. In Spain, the framework is completed by Law 6/2023 and Royal Decree 813/2023.
Which conflicts should my firm have mapped?
It depends on your model, but there are four usual suspects:
- In-house products competing with third-party products in recommendations.
- Inducements and retrocessions received from manufacturers and fund managers.
- Personal transactions by employees, managers and connected persons.
- Sales network remuneration linked to volume or to specific products.
Depending on the case, add own placements and issues, simultaneous services to clients with opposing interests and intragroup relationships.
Is it enough to tell the client about the conflict?
No. Disclosure is the last resort, reserved for cases where organizational measures do not ensure, with reasonable confidence, that harm to the client will be prevented. And when it applies, it must be specific: what conflict exists, what risks it entails and what has been done to mitigate it.
A firm that discloses systematically is admitting that its organization does not manage conflicts. That is exactly the opposite of what anyone using disclosure as an alibi intends.
What should the conflicts policy contain?
At a minimum: identification of your firm’s actual conflicts by service and activity, the measures and procedures to prevent and manage them, the people responsible for applying them, a restrictive disclosure criterion and the process for updates and periodic review.
The litmus test: if another firm could sign your policy without changing a comma, it does not describe your business. We work on it as part of our MiFID II compliance package.
How does the conflicts register work?
It is the living inventory of the services and activities in which a relevant conflict has arisen—or may arise. Each entry should show the source, the clients potentially affected, the measure applied and its status.
It needs an owner (usually the compliance function), clear update triggers (new product, campaign, pay change, incident) and a link to periodic reporting to the management body. A register with no new entries in years does not prove the absence of conflicts: it proves the absence of management.
Where do retrocessions fit into all this?
They are the quintessential remuneration conflict. Under MiFID II Art. 24, in independent advice and discretionary portfolio management, third-party inducements must be passed on to the client; in other services they are only allowed if they enhance the quality of the service and the client is informed.
The usual mistake is to treat “quality enhancement” as a ritual formula with no supporting evidence. We cover this in MiFID retrocessions and independent advice.
What are information barriers?
Measures that prevent confidential or sensitive information from flowing between areas whose interests may clash: physical and functional separation of teams, restrictions on system access, watch lists of securities and control of communications between departments.
They are especially critical when the firm combines, for example, placing issues with making recommendations to clients, and they connect directly with the market abuse regime.
Who oversees conflicts within the firm?
Three levels: the first line (those who sell and advise) detects and reports; the compliance function keeps the register, reviews personal transactions and checks that the measures are applied; and the management body approves the policy, receives the reports and is accountable for the system working.
Bringing in an independent director and relying on the control and risk function greatly increases the credibility of the whole system with the supervisor.
Practical guide
From ignored conflicts to managed conflicts
This is how we build a conflicts system that withstands awkward questions: first the map, then the measures and only at the end—when appropriate—disclosure.
Conflicts map
We go through your income statement and your services asking who can gain at whose expense: in-house products, inducements, placements, personal transactions and remuneration. The result is an inventory prioritized by impact on clients.
Measures and policy
For each relevant conflict, a specific organizational measure: information barriers, product selection criteria, pay redesign, pre-approval of personal transactions. The policy documents what already works, not the other way around.
Living register and control
A register with an owner and update triggers, sampling by the compliance function, training for the network and periodic reporting to the management body. Disclosure is regulated as a reasoned exception, never as routine.
A conflicts of interest system in 10 steps
- Trace your revenue: identify where every euro comes from: explicit fees, third-party inducements, in-house product margins and services to the group.
- Identify by service: go through each investment and ancillary service asking which interest of the firm, the group or employees could clash with the client’s.
- Prioritize: rank each conflict by likelihood and impact on clients so that measures and controls go where they matter.
- Put organizational measures in place: information barriers, segregation of duties and committees with an independent voice, before you even consider disclosure.
- Review remuneration: remove network incentives linked to selling specific products and document the analysis and the decision.
- Organize personal transactions: a procedure for reporting, pre-approval and monitoring for employees, managers and connected persons.
- Regulate residual disclosure: define when the conflict should be disclosed to the client, with a specific and clear template, and treat it as a documented exception.
- Create the register: each entry with source, persons affected, measure, owner and status, and update triggers built into the business.
- Train the network: those who sell and advise are the ones who create and detect real conflicts: annual training with cases from your own operations.
- Report and review: a periodic report to the management body on conflicts that have arisen and how they were handled, and review of the policy when the business changes.
If you would rather we handle it on an ongoing basis, see our outsourced compliance officer service or the full MiFID II compliance package.
Free resource · PDF
Download the MiFID II Checklist
The 10 conduct controls the CNMV expects to see working in an EAF or investment firm, with the typical evidence for each. Ideal as a quarterly self-assessment with your team.
- The 10 essential conduct controls
- The evidence expected for each control
- 5 signs that a control exists only on paper
- Professional PDF · 5 pages · 11 KB
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Working glossary
Conflicts of interest glossary
Nine terms that make the difference between a decorative policy and a system that protects the firm. They will appear in your procedures and in any supervisory review.
Conflict of interestConcept
When your interest clashes with the client’s
A situation in which the firm, its group or its people can benefit at a client’s expense or favor one client over another.
Identified by service and activity.
Conflicts registerEvidence
The inventory that must stay alive
An up-to-date record of the services and activities where a relevant conflict arises or may arise, with measures and status.
Frozen, it proves the opposite of what it is meant to.
Information barrierMeasure
Walls between areas
Functional, physical and systems separation that stops sensitive information from flowing between departments with conflicting interests.
Key if you place issues and also make recommendations.
Personal transactionEmployees
When the employee invests
Investments by employees, managers and connected persons that may clash with the interests of the firm’s clients.
Mandatory reporting and pre-approval.
RetrocessionInducements
The manufacturer’s payment
An inducement the manufacturer pays to the distributor. In independent advice and discretionary management, it must be passed on to the client.
MiFID II Art. 24 regime.
DisclosureLast resort
Confessing is not managing
Telling the client about a conflict that organizational measures fail to neutralize. It must be specific and made in advance.
Used across the board, it exposes a failed system.
Remuneration policySales network
How you pay shapes what gets sold
The variable pay scheme cannot push the network toward specific products against the client’s interest.
Review it with every campaign and incentive.
In-house productOrigin
Shop-window bias
When the group manufactures what the network distributes, product selection needs objective criteria and enhanced oversight.
Linked to product governance.
Compliance functionControl
The guardian of the system
The second line that keeps the register, monitors personal transactions, samples recommendations and reports to the management body.
In-house or outsourced, with real independence.
Conflicts playbook
What the supervisor will expect in each area (and with what paperwork)
Identification and mapping
An inventory of conflicts that reflects the real business model (products, revenue, group and remuneration) and is reviewed whenever something changes.
A versioned conflicts map, analysis by service and minutes of its approval and reviews.
Organizational measures
Information barriers, segregation of duties and product selection criteria that operate in practice, not merely on paper.
Access matrices, committee minutes, selection criteria applied and controls on compliance with them.
Inducements and remuneration
Retrocessions handled in line with MiFID II Art. 24 and network pay schemes with no bias toward specific products.
Inducement calculations, justification of the quality enhancement, client disclosure and an approved remuneration policy.
Personal transactions
A reporting and pre-approval procedure applied to employees, managers and connected persons, with effective monitoring.
Personal transactions register, approvals and refusals, and incidents with the measures taken.
Register and governance
A living register with a clear owner, disclosure used as a reasoned exception and periodic reporting to the management body.
Dated register entries, disclosure notices issued and minutes including the compliance report.
Signs that your conflicts are managing you
Any of these situations points to a paper system. Better to spot them in your own review than in a request for information.
- Your conflicts policy would fit any other firm: it does not mention your in-house products or your real revenue streams.
- You receive retrocessions and nobody could explain today, with documents, what quality enhancement justifies them.
- Client disclosure appears in your procedures as a routine measure, not as an exception.
- The conflicts register bears the date of the authorization and not a single later entry.
- Your network’s variable pay depends on selling specific products and compliance has never given an opinion on it.
Related topics
Conflicts creep in everywhere: see also these pages
Inducements, fee models and new EU rules are redrawing firms’ conflicts maps. These pages cover the areas where the client’s interest and the firm’s rub against each other most often.
Model
Independent Investment Advice
Declaring yourself independent changes the regime: third-party inducements are passed on to the client. What it involves and who it suits.
See the model →
IndependenceFees
PFOF
Neobrokers and PFOF
Payment for order flow, a structural conflict, has been banned by Regulation (EU) 2024/791, with a transitional period until June 30, 2026.
See the analysis →
BanTransitional period
RIS
Retail Investment Strategy
The RIS, still under negotiation, puts inducements and value for money at the center: anticipate where the bar is heading.
See the RIS →
InducementsIn trilogues
Costs
Costs and charges disclosure
Costs disclosed ex ante and ex post bring inducements to light: full consistency or a guaranteed problem.
See the obligation →
Ex anteEx post
Where to start? Ask for a review of your policy as part of MiFID II compliance, rely on an outsourced compliance officer for ongoing maintenance and strengthen the board with an independent director.
Contact
Book a call
Tell us which services you provide, which products you distribute and how you pay your network: we will give you an honest picture of your conflicts and of the measures that are missing.
Conflicts of interest at financial firms: identification, measures and register
Every firm that provides investment services lives with conflicts of interest: it manufactures and distributes, receives payments from third parties whose products it recommends, pays its network to sell and employs people who invest on their own account. MiFID II (Directive 2014/65/EU), its Delegated Regulation (EU) 2017/565 and, in Spain, Law 6/2023 and Royal Decree 813/2023 do not require firms without conflicts—there are none—but three verifiable things: identify them, manage them with effective organizational measures and document everything in an up-to-date policy and register.
Identification: the map comes first
Serious identification starts with the income statement: every revenue stream is a potential source of conflict. The categories the supervisor expects to see analyzed include competition between in-house and third-party products in recommendations (linked to product governance), inducements and retrocessions received from manufacturers, personal transactions by employees and managers, sales network remuneration and, depending on the model, own placements, simultaneous services to clients with opposing interests and intragroup relationships. A map that leaves out any of these sources when they are relevant to your business shows that identification was a box-ticking exercise.
Organizational measures before confessions
The hierarchy in the rules is clear: first prevent and manage, with information barriers between areas, segregation of duties, objective product selection criteria, pre-approval procedures for personal transactions and remuneration policies that do not push the network toward specific products. On inducements, MiFID II Art. 24 draws the line: in independent advice and discretionary portfolio management, retrocessions are passed on to the client; in other services they are only allowed if they enhance the quality of the service and the client is properly informed. Each measure needs an owner and a control that verifies it is applied.
Disclosure: a last resort, not an alibi
Disclosing the conflict to the client is only appropriate when organizational measures are not enough to prevent, with reasonable confidence, harm to the client’s interests. And that disclosure must be specific (what conflict, what risk, what mitigation), made before the service is provided and easy to understand. The pattern supervisors have been criticizing is the reverse: generic disclosure clauses inserted into contractual documentation as a universal safe-conduct pass. A firm that discloses all the time is admitting, in writing, that its organization manages nothing.
Register, governance and evidence for the supervisor
The system is completed by an up-to-date conflicts register (each entry with its source, persons affected, measure and status), periodic training for the network, reporting to the management body and review of the policy when the business changes. In a CNMV inspection, the conversation will not be about theory: they will ask for the register, the minutes, the inducement calculations and the sampling. We design, review and audit this whole set for investment firms, asset managers and credit institutions, and maintain it on an ongoing basis through our outsourced compliance officer service, with support from the control and risk function.
Services for your firm
Conflicts in practice
Official sources
Key legislation, linked to the official text:
- Law 6/2023 of March 17 on Securities Markets and Investment ServicesBOE · consolidated text
- Delegated Regulation (EU) 2017/565 of April 25, 2016 supplementing Directive 2014/65/EU as regards organizational requirements and operating conditions for investment firmsEUR-Lex · Official Journal of the EU
- Royal Decree 813/2023 of November 8 on the legal regime of investment firms and other entities providing investment servicesBOE · consolidated text
Legislation and links reviewed in .