UK fund managers view duties to clients and handling conflicts of interest as the most challenging aspects of the CFA Institute’s Code of Ethics and Standards of Professional Conduct.
A poll of 650 UK fund managers showed that 38% found meeting their duty to clients a significant ethical challenge. These duties encompass loyalty, prudence and care, fair dealing, suitability and performance presentation. This number is up from 33% in 2013.
The survey also found that 32% of fund managers struggled with conflicts of interest from a personal perspective – up from 29% last year – and more than half (54%) regarded this as a challenging area for the industry as a whole. Conflicts include covering disclosure, referral fees and priority of transactions. Respondents said that following best practice set by the CFA is difficult.
However, other areas have seen a decline in levels of concern. Duties to employers and integrity of capital markets have both seen falls in the number of investment professionals who consider them to be challenging ethical areas. Twenty-one per cent of respondents found maintaining their duties to employers a challenging area, down from 30% last year, whilst the number of respondents who believe that maintaining the integrity of capital markets is a challenge for the profession as a whole has fallen by 12% since 2013, though only to 47%.
“Investment professionals believe it is becoming easier to meet their duties to employers, but more challenging to adhere to their duties to clients and to navigate conflicts of interest,” says Will Goodhart, chief executive of CFA UK.
“As ‘duties to employers’ emphasises members’ involvement in supervision, the improvement in that area is welcome as it suggests that employers are improving frameworks to support members’ responsibilities to detect and prevent violations of laws, regulations and the Code and Standards.”
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