Conflicts of interest policy

Overview

This policy refers to Verso Wealth Management and Verso Investment Management.

Under the FCA’s Principle for Business, Principle 8 (Conflicts of interest) we are required to pay due regard to the interests of each client and to prevent or manage any conflicts of interest fairly, both between our firm and our clients and between a client and another client. The specific rules for dealing with conflicts of interest can be found under the Senior Management Systems and Controls (SYSC) rules which can be found at SYSC 10.

The FCA’s Principle for Business, Principle 12 (Consumer Duty) and the cross-cutting obligation to ‘act in good faith’ (PRIN2A.2) also have a bearing on how we identify and manage conflicts of interest in practice.

We will take all appropriate steps to identify and prevent or manage conflicts of interest, by:

1. Identifying and preventing any potential circumstances which may give rise to conflicts of interest, and which pose a risk of damage to clients’ interests
2. Establishing and maintaining appropriate mechanisms and systems to manage those conflicts and
3. Maintaining systems at all times in an effort to prevent actual damage to clients’ interests through the identified conflicts

The Senior Managers and Executive Committee fully support this and are committed to ensure that all conflicts between our firms and our clients, and between clients, are managed fairly with no party disadvantaged.

At least on an annual basis, our senior management team will receive a written report providing details of the kinds of services or activities carried out by our firms in which a conflict of interest entailing a risk of damage to the interest of one or more clients has arisen or, in the case of an ongoing service or activity, may arise. This will form part of the annual compliance report to the Board.

In addition to complying with the FCA requirements we recognise that handling conflicts fairly is a fundamental element of good business practice and is required to assist in maintaining and developing our firms’ business.

Identifying a conflict of interest

When identifying the types of conflict that arise, or may arise, we will assess whether our firms, anyone connected with our firms or (if relevant) another client has an interest in the outcome of a service provided to the client which is distinct from the client’s interest in that outcome and has the potential to influence the outcome to the detriment of the client.

As a minimum, we will consider whether our firms, anyone connected with our firm or another client:

1. Is likely to make a financial gain, or avoids a financial loss, at the expense of a client
2. Has a financial or other incentive to favour the interest of another client or group of clients over the interests of a client
3. Carries on the same business as a client
4. Receives or will receive from a person other than a client an inducement in relation to a service provided to the client, in the form of monies, goods or services, other than the standard commission or fee for that service, or
5. Is substantially involved in the management or development of policies in particular where they have influence on pricing or distribution costs

Conflicts of interest may therefore include but are not restricted to interests between:

• Our firms and our clients
• Our staff and our clients
• Two or more different clients
• Third parties and our clients
• New services / products and our clients
• Strategic changes and our clients

We have sought to identify and prevent conflicts of interest that exist in our business and have put in place measures we consider appropriate to the relevant conflict in an effort to prevent, monitor, manage and control the potential impact of those conflicts on our clients. The conflicts identified are:

a) Client Orders – Verso Investment Management Only

In order to ensure as fair treatment as possible for clients, our Best Execution Policy requires us to take all sufficient steps to achieve the best overall trading result for clients.

On some occasions client orders may have a material impact on the relevant securities price. In order to ensure our staff do not take advantage of the situation by dealing on their own account (Personal Account Dealing) or encourage a third party to deal, we operate a “No front running” policy whereby client orders will always take priority. We regularly monitor business transactions in order to ensure we meet these requirements.

b) Personal account dealing

Our staff may buy, sell or hold the same investments as our clients. We control personal account deals by ensuring that all such deals are identified and where applicable approved by management prior to execution. All staff, irrespective of their position in the firm sign on an annual basis to confirm their understanding of our procedures.

Details of our procedures for this area are covered in our Personal Dealing Policy.

c) Business model – Verso Investment Management

We operate on a restricted advice basis, recommending our in-house discretionary investment services to you. Our investment management solutions are based on a broad analysis of different types of investments including equities, government and fixed interest securities and retail investment products, such as investment trusts, unit trusts and other collective investment scheme.

There is therefore an inherent conflicts of interest between the interests of the client and that of the firm. We will always ensure that our in-house solutions are suitable for a client and in cases where we believe this not to be the case, we will not act for that client.

d) Business Model – Verso Wealth Management

We operate on an independent basis. Before we recommend that clients use the services of an associated firm, which has common ownership, we will consider other reasonable options for the client. If we do recommend the services of an associated firm, we will consider independent oversight of the suitability of our advice.

Before we recommend the use of a particular platform in which the firm or key employees hold shares, we will consider other reasonable options. If we do recommend the services of such a platform, we will consider independent oversight of the suitability of our advice. Independent oversight could include, for example, the use of an external firm, or escalation to the Board.

e) Inducements to staff

Staff are not permitted to accept gifts, entertainment or any other similar benefit (financial or non-financial) unless it enhances to quality of our firm’s service and doesn’t have a detrimental impact on the quality of service we provide.

If in doubt as to whether a benefit is allowable, all staff must consult the Chief Risk and Compliance Officer or the Group Compliance Officer before accepting it or decline to accept it.

A record of all allowable benefits is made and retained on the firm’s inducements register anything which falls above the minimum within the policy.

Similarly, our staff are not allowed to place undue pressure on clients to persuade them to trade through the firm to the extent that this gives rise to a conflict of interest between that client and another client.

f) Segregation of duties

We strive to ensure that the performance of multiple functions by relevant persons does not and is not likely to prevent those persons from discharging any particular functions soundly, honestly and professionally. Our policies concerning the segregation of duties within the firm and the prevention of conflicts of interest are laid out below.

We are aware that effective segregation of duties is an important element in the internal controls of a firm in the prudential context. In particular, it helps to ensure that no one individual is completely free to commit the firm’s assets or incur liabilities on its behalf. Segregation also helps to ensure that the firm’s senior management receives objective and accurate information on financial performance, the risks faced by the firm and the adequacy of its systems.

We ensure that, in general, no single individual has unrestricted authority to do all of the following:

1. Initiate a transaction
2. Bind the firm
3. Make payments, and
4. Account for it

Where we are unable to ensure the complete segregation of duties due to a limited staff base, we have adequate compensating controls in place including the frequent review of an area by relevant senior managers. The firm ensures that its relevant persons are aware of the procedures which must be followed for the proper discharge of their responsibilities.

g) Remuneration policy

All relevant staff are paid a basic salary including those who hold key support areas such as compliance, finance and operations. This salary is not dependent on business performance. Relevant persons involved in the compliance function will not be directly involved in the performance of services or activities they monitor.

A bonus structure does exist which is linked to business performance, team performance or the individual’s performance. The firm has a remuneration committee and, considering our size to date, there is currently no formal policy on this matter, This is being reviewed as a Group based process and a policy will be formed in due course. Any bonus payment is at the discretion of the senior management and notified only on payment. In addition, we have implemented monitoring which includes reviewing of advice given to clients, the frequency of transactions and portfolio performance.

h) Disclosure

There may be occasions where we are not, in our opinion, reasonably confident that the risks of damage to the interests of the client will be prevented. As a last resort, where there is no other means of preventing or managing a conflict, we will disclose clearly, in writing, sufficient details, considering the nature of the client, to enable the client to make an informed decision with respect to the service in the context of which the conflict of interest arises.

This disclosure will also:

• Clearly state our firm’s arrangements to prevent or manage that conflict are not sufficient to ensure, with reasonable confidence, that the risks of damage to the interest of the client will be prevented
• Include specific description of the conflicts of interest that arise in the provision of providing our services, and
• Explain the risks to the client that arise because of the conflicts of interest

i) Declining to act

Where we consider we are not able to prevent or manage the conflict of interest in any other way, we may decline to act for the client.

Managing & disclosing conflicts

The measures for dealing with conflicts are designed to ensure that relevant persons engaged in different business activities involving a conflict of interest carry on those activities at a level of independence, appropriate to the size and activities of the firm and of any group to which it belongs and to the of the risk of damage to the interests of clients.

Examples of procedures for managing conflicts include:

• Effective procedures to prevent or control the exchange of information between relevant persons engaged in activities involving a risk of a conflict of interest where the exchange of that information may harm the interests of one or more clients.
• We regularly review the distribution arrangements of the products and/or services the firm manufactures and/or distributes to ensure that they support a proper management of conflicts of interest.
• The separate supervision of relevant persons whose principal functions involve carrying out 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 firm.
• Allocated responsibility for conflict of interest management to the Chief Risk and Compliance Officer and recorded this obligation in their statement of responsibilities.
• An independent member on our Board to represent investors’ interests.
• An independent member on our investment committee to challenge investment decision making.
• We also prevent or manage conflicts of interest by the establishment and maintenance of internal arrangements restricting the movement of information within the firm. This requires information held by a person in the course of carrying on one part of our business to be withheld from, or not to be used by, persons with or for whom we act in the course of carrying on another part of our business. Such an arrangement is referred to as a ‘Chinese Wall’ and can include hierarchical separation and physical barriers between the activities likely to involve conflicts of interest, thereby aiming to prevent any undue transmission of information.
• Where, despite the above procedures we identify a conflict of interest which may present risks of damage to the interests of a client, we will clearly disclose, in writing, to the general nature and / or sources of conflicts and the steps taken to mitigate those risks, to the client before undertaking business with the client.

This disclosure will take place as follows:

• The Chief Risk and Compliance Officer will be advised of the potential conflict of interest in writing or via email to Compliance@versowm.com
• We will advise our client in writing, of the potential conflict of interest and ask them to provide their written consent to proceed
• The client’s written consent along with the request will be passed to the individual who oversees compliance within our firm who can then provide approval to proceed as appropriate
• Copies of both letters, together with the written authorisation to proceed will be retained on the client file

Review of conflicts of interest policy

This policy will be assessed and reviewed on at least an annual basis.

We also maintain a Conflicts of Interest register and review this annually.