VIDEO: Avoiding Conflicts of Interest
 

Kerry Horsley

Head of Risk and Compliance

March 2020

VIDEO: Avoiding Conflicts of Interest

Article Summary

Kerry Horsely, Head of Governance, Compliance and Risk at Prudential, discusses conflicts of interest within the asset management industry, and shares with us her views on how to mitigate this risk within the workplace.

Key take-aways

  • Asset managers have certain rules and business structures in place to ensure they avoid conflicts of interest with their clients; for example, never trading with their own clients, and using independent brokers for trading assets rather than associated brokers (those within the same group). Otherwise there would be opportunities for asset managers to overcharge, to trade at unfair prices, and to leave clients with unfavourable assets at a loss, among other conflicts of interest.
  • There was a recent instance in SA which an asset manager who traded with their client (without the client’s knowledge) through an associated broker lost R349 million in the client’s pension fund investments – a very unfortunate case that would never have happened should the appropriate structures have been in place.
  • In safeguarding clients’ assets, humans can stumble in their everyday work, which is why top asset managers like Prudential have set up strict rules and structures in their own businesses which work to help ensure our actions are free from conflict of interest across the entire value chain.

This article is from the Quarter 1 2020 edition of Consider this. Click here to download the complete edition.

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