Actual or potential conflicts of interest are inherent to integrated financial services groups such as UBS. A failure to identify, prevent and/or manage these conflicts of interest appropriately could harm our clients and undermine the integrity and efficiency of the financial market, as well as UBS's reputation and brand. It could also cause us to breach our legal and/or regulatory obligations.
Given the size and diverse nature of the business activities within UBS, the variety of actual and/or potential conflicts of interest is wide ranging. Prompt identification of these risks and appropriate management of them is essential. UBS must take all appropriate steps to identify and or prevent or manage conflicts of interest that arise when rendering services and pursuing its activities.
The following guiding principles apply in relation to UBS’s approach to the identification and management of conflicts of interest:
- UBS is committed to treating its clients fairly and with integrity across all its business activities;
- UBS is committed to complying with all applicable legal and regulatory requirements relating to the proper identification and management of conflicts of interest;
- UBS is committed to maintaining and operating effective organisational and administrative arrangements to identify and manage actual or potential conflicts of interest;
- UBS recognises that the most important factor allowing it successfully to manage conflicts of interest is a culture of integrity. All employees have a duty to be mindful of conflicts of interest and to take all appropriate steps to assist in their identification and proper management, including prompt escalation to relevant management and/or control functions;
- UBS expects its employees to act with independence. That is, where an employee is aware that either the employee or UBS has a material interest which could influence their dealings with or advice to a client, that interest must be disregarded and the employee must act in the interest of the client;
- UBS recognises that remuneration structures must support conflict management and independence, and will take appropriate steps to ensure UBS’s employee remuneration and reward structures are aligned with the overall goals of this policy consistent with established good practice in the relevant market;
- UBS uses the same criteria to evaluate proprietary products and non-proprietary products through appropriate application of due diligence processes;
- UBS recommends proprietary products where these are assessed as at least equivalent to non-proprietary products against an objective set of criteria.
As a universal bank that engages in many different kinds of banking and finance activities, UBS is exposed to actual or perceived conflicts of interest that might arise from UBS taking multiple roles in a transaction, or providing products and services across different desks, divisions, legal entities or UBS operated trading venues. In such circumstances:
- UBS is committed to identifying, recording and managing conflicts of interest arising from conscious or unconscious bias;
- UBS expects its employees to apply the same standards of skill, due care and diligence in its dealings with other UBS entities or divisions as they would if dealing with a third party.
Identifying Conflicts of Interest
UBS and its employees must take all appropriate steps to identify conflicts of interest that arise or could arise in the course of conducting business.
For the purposes of identifying the types of conflict of interest that arise, or may arise, in the course of providing a service and whose existence may entail a material risk of damage to the interests of client or the integrity of the financial market, UBS and its employees must take account of whether:
- UBS or its employees is likely to make a financial gain or avoid a loss, at the expense of the client;
- the interests of UBS or its employees are different to those of the client, i.e. there is an interest in the outcome of a service provided to the client or a transaction carried out on behalf of the client, which is distinct from the client's interest in that outcome;
- there is the potential for a financial or other incentive to favour the interests of one client or group of clients over another;
- monetary or non-monetary benefits provided to or received from a third party or between UBS entities or divisions in relation to a service supplied to the client;
- UBS or that person carries on the same business as the client;
- the interests of one client may be preferred to that of another client;
- business is being placed on behalf of the client with another group entity, which may not be in the client's best interest;
- UBS is considering or assuming multiple roles, or it or its employees have multiple roles or are "dual-hatting" across more than one legal entity.
These criteria (which comprise a minimum, non-exhaustive list) should be taken into account when considering whether a conflict of interest may arise, and other factors that may need to be considered on a case-on-case basis.
Measures for managing Conflicts of Interest
Organisational and administrative controls to manage any conflicts of interest within UBS must be sufficient to ensure with reasonable confidence that risks of damage to client's interests will be prevented.
Disclosure of Conflicts of Interest
Where a conflict of interest is not managed and any other measures are not sufficient to ensure, with reasonable confidence, that the resulting risk of damage to a client’s interests as a result of the conflict will be appropriately managed or disclosure is the sole measure being used to manage the conflict of interest, then subject to confidentiality obligations, UBS must promptly and clearly disclose to the client a description of the conflict of interest and potential risks of the conflict in sufficient detail and taking into account the nature of the client to whom the disclosure is being made; that the organizational and administrative arrangements established by UBS to prevent or manage the conflict are not sufficient to ensure with reasonable confidence that the risk of damage to the interest of client will be prevented; and the steps taken to manage the risk to the client before undertaking business with or for the client.
Clients may request free of charge additional information by writing to:
UBS Europe SE, Luxembourg Branch
33A avenue J.F. Kennedy
P.O. Box 2