Concept of conflict of interests
Conflict of interests are situations in which the position of a determined agent does not allow him to comply with full rigor and exemption the tasks entrusted to him by third parties.
The prevention and identification of potential conflicts of interest is a major concern of the national legislator and the Community legislator. The aim is to create exempt processes, which enhance the confidence of all those who integrate the various phases of the process. In this sense, the community and national legislative regulation and the internal regulation of various sectors play a key role.
Characteristics of conflicts of interest
Generally the conflict of interests is characterized by a situation in which someone, potentially or apparently, is confronted with a certain situation that could lead to a break in their trust as a professional, and could irreversibly jeopardize a business, a legal relationship or a simple decision.
Another situation that may be characterized as a conflict of interests is one in which someone having a personal or private interest in a certain subject influences, or attempts to, influence the performance of others, so that it acts and is partial, thus reaching the goal you want. For personal or private interest is meant any potential advantage for oneself.
Conflicts of interest in the financial world
Financial companies are now obliged to act according to principles of integrity, fairness and impartiality, so that they seek to implement measures that ensure the identification and management of potential conflicts of interest. For this they have internal regulations and codes of ethics in order to fill areas not covered by the legislation.
The constant search for more and more action within the norms of ethics makes it imperative to regulate any situations that may give rise to conflicts of interest. In this sense, whenever there is a potential conflict of interest between an institution and certain persons linked to the institution, between duties that the institution has towards the client or between the different interests that different clients may have, attention must be paid to that nobody be harmed.
These concerns are particularly relevant when it comes to investments, portfolio management, financial investments and the respective study process.
Situations of potential conflict of interest:
- when a person is in a position to make a financial gain or avoid a financial loss on behalf of the client;
- when someone has an interest in a particular result in a service provided or transaction made to or by the customer;
- when someone has a financial advantage or benefit of another nature to favor a client or several clients;
- when the institution has an interest antagonistic to that of the client;
- operations by employees of the institution with access to inside information.
Some institutions have specific departments that ensure the prevention of conflicts of interest, and even then, when this prevention does not work, they promote the treatment of any complaints that may have arisen.
In 2007, with the transposition of the Financial Instruments Market Directive (MiFID), financial intermediaries became responsible for detecting actual and potential conflicts of interest, and there was a need to take the necessary measures to prevent the interests of their clients leave injured. When this is not possible, customers have to be informed.
Measures to prevent conflicts of interest
Preventive measures can simply go through clarification and information; by exercising a profession on an exclusive basis, by separating the various stages of the proceedings, the interveners being different persons; for their greater accountability and the choice of technicians with a technical rigor in such a way that it is totally impartial and ethical.
