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Conflicts of Interest Policy (updated December 2024)

Document Responsibilities

Role title	Name
Document Owner
Company Secretary	James Schirn
Author
Company Secretary	James Schirn
Reviewer
People Committee 4 Dec 2024

Version	Date Published	Review Due	Change Description
2.0	Dec 2024	Dec 2027	Second Version

Purpose and Scope

This policy has been established to ensure that our work is carried out free from unmanaged conflicts or improper influence, to be impartial in our decision making and to uphold effective regulation in the public interest. This policy is intended to protect our staff¹ and those operating in a non-executive capacity at the FRC²:

to ensure that we have effective arrangements for the identification and management of conflicts of interest; and
to maintain public confidence in the FRC by avoiding a perception that an individual’s decision-making on behalf of the FRC may have been compromised by their own interests or that a firm which an individual is connected to may have an unfair competitive advantage by reason of assumed access to information or policy thinking.

This document provides guidance on managing potential conflicts in relation to your duties and work undertaken for the FRC and your external interests.

It is your responsibility to consider the situation carefully and seek advice from your manager or the Governance Team if you are unsure whether to declare an interest.

Failure to adhere to this policy can result in significant detriment to the FRC, our stakeholders and individual employees.

Our Remit

Publicly listed companies and other Public Interest Entities (e.g. banks and insurers)
Asset owners, asset managers and investment service providers
Auditors, actuaries and accountants (e.g. Eligibility Criteria, the PIE Auditor Register, professional standards, UK GAAP, enforcement regimes)
Relevant professional bodies (e.g. ICAEW, ACCA)

Acting in the public interest means considering how this impacts shareholders, suppliers, employees, customers, communities, pensioners and financial institutions, all of whom have an interest in the health of companies. The FRC published its General principles for considering the public interest in our work here.

Key Principles

Setting high standards and acting in a way that promotes the success of the FRC for the benefit of its stakeholders and upholds the public interest.
Being open and acting with honesty and integrity.
Being transparent about interests and relationships which could influence judgement.
Being objective in all decision-making, never letting your personal interests influence the decisions you make for the FRC.
Being alert to actual or perceived improper influence through the receipt of gifts, hospitality or favours (please refer to the Gifts & Hospitality Policy/guidance).
Being aware of the importance and sensitivity of information which is not publicly available and how it could be beneficial to others.
Being responsible and actively identify, monitor and manage any actual or potential conflicts of interest.

The potential for conflict will depend on several circumstances, for example, the precise nature of the interest, your role, and individual circumstances. Where in any doubt, consult with your line manager or Board/Committee Chair or the Governance Team at the earliest opportunity and withdraw from the situation/discussion in which you find yourself until this is confirmed.

TIP: Always ask yourself, 'is there a chance that this potential conflict may interfere with my judgement when performing my duties for the FRC or reasonably be perceived as a negative to the FRC and/or my reputation?'. If so, disclose it.

A central conflicts of interest register is held and maintained by the Governance Team.

Training and awareness – All of those in scope of this Policy are required to review their declarations of interest and this Policy on an annual basis and update where necessary.

What is conflict of interest?

A conflict of interest may arise when your work could be affected by your access to sensitive information, personal financial matters, close personal relationships or other associations with individuals or organisations, including previous employment at companies or firms.

A conflict of interest may be “actual” whereby there is a material conflict between one or more interests or “potential” where there is the possibility of a material conflict between one or more interests in the future, or “perceived” where you could appear to be influenced by a conflicting interest.

Conflicts of interest can be both direct and indirect and may arise in different ways where there is a risk that your actions are being inappropriately influenced. See also the "Frequently Asked Questions” at the end of this Policy. Examples are as follows:

A financial interest held by you or by a commercial undertaking with which you have connections.
A personal association or relationship with those affected, or likely to be affected, by information or issues you may become aware of.
A previous association or employment with an entity affected by the information or issue in question.
External roles or activities, either paid or voluntary, at entities outside of the FRC.
Service agreements with firms within the FRC's regulatory remit, i.e. tax advice
Personal interests that may be voluntary/unpaid that could be reasonably viewed as causing potential conflict with your work/duties at the FRC

Types of Conflicts of Interest and Disclosure Requirements

Financial Interests

You should disclose your financial interests and those of individuals you have close personal relationships with (to the extent that you are or should reasonably be aware of them) in any organisation that could be subject to our regulatory work. Where you stand to benefit in any way from the information gained as part of the role at the FRC you should not take part in the project or decision.

If you have a direct financial interest in an entity, you should not be involved in a project related to that entity. Nor should you be involved if a family member or someone you have close personal relationships with has a financial interest. All such matters should be disclosed.

Other commercial arrangements

The financial interests that do not need to be declared:

Interests of a value less than £5,000 unless the reasonable onlooker would consider the financial interest to be a conflict in all the circumstances.
Assets comprising goods and/or services e.g. banking or insurance services such as mortgages and loans, savings accounts, telephone services, travel and tangible assets bought on the open market on normal commercial terms available to other buyers.

Personal Relationships

Conflicts of interest can arise from many different personal relationships. The most obvious ones are spouse or partner, children or other dependent family member, close friends, or business associates. This is not a definitive list, and you should consider how any relationship might be perceived both within the organisation and externally. If there is any suggestion that any relationship could challenge your impartiality, then you should discuss this with your line manager or Board/Committee Chair or the Governance Team as a matter of urgency.

Previous Employment

The FRC is able to take action against audit firms, auditors, accountants, listed companies and Public Interest Entities (PIE). The nature of our work means that you may previously have undertaken roles in some entities. Therefore, we must ensure that past roles do not cloud any future judgements, and you are asked to declare your past employment on XCD.

If firms or companies are mentioned in relation to potential misconduct or a breach of relevant requirements, you should disclose any affiliation with them to your line manager or the Governance Team.

External roles / directorships during employment or appointment

You should carefully consider whether any proposed external appointments/directorships/ trusteeships could give rise to a conflict of interest or reputational damage to the FRC, perceived or actual. All appointments outside of your FRC role, paid or not, should be approved and you must consult your line manager and the Company Secretary before accepting any external appointment/ directorship/trusteeships and are expected to report any potential conflict of interest.

Procedures relating to the approval of external directorship roles for Directors of FRC Limited are covered within the Governance Handbook.

Given the nature of the FRC's regulatory work, you will not be able to take on any non-executive or other appointments at Public Interest Entities (PIE), AIM companies, Lloyds Syndicates, Registered Audit firms, Recognised Supervisory Bodies (RSBs), Recognised Qualifying Bodies (RQBs) and the Institute and Faculty of Actuaries.

Future Employment

The FRC is able to take action against audit firms, auditors, accountants, listed companies and PIEs. If you are successful in securing new employment in an entity within this scope consideration should be given to the potential risk of a conflict of interest and risk of damage to the FRC's reputation. You should discuss these risks with your line manager as soon as is practically possible and, if considered appropriate, active steps should be taken to exclude the departing employee from any activities that relate to, or which may impact, the entity during their notice period. In exceptional circumstances, agreed by the line manager and CEO, consideration may be given to paid leave during all, or part, of the notice period.

In such circumstances, line managers should work with the Stakeholder Engagement and Corporate Affairs team to reduce any potential risk of reputational damage.

On resignation you should discuss with your line manager to assess whether there are any potential conflicts of interest risks between the work to be undertaken, the decisions to be made or the knowledge to be gained during the duration of your notice period and the future employment.

Direct and Indirect Interest

A direct interest is broadly defined as when you have, or someone you have a close relationship with has, a vested interest in that entity and its future or a continuing connection or exposure to personal consequence or impact, including reputational or financial. This may include current or former employment or directorships, holding of direct financial securities or membership of that entity's pension scheme, or a risk of personal exposure to criticism or embarrassment. A direct interest may raise a question as to whether your judgment or decision-making in matters related to that entity can remain unbiased.

An indirect interest is defined as when you have a close association with another individual/entity who has a financial interest, a non-financial professional interest or a non-financial personal interest and they could gain personal benefit from a decision you are involved in making. This may include a historical, but now severed association with an entity/individual, or an interest in another entity/individual who then, in turn, has or has had an association/business relationship with the entity in question. You, or someone you have a close relationship with, should be unable to gain personal benefit or preferential outcome from that entity. Your indirect interest should be highly unlikely to play a part or influence your judgment or decision-making in matters relating to that entity.

'Cooling-Off' Periods

If you have worked for or had a role in an audit firm or a legacy firm, and you are working on regulatory issues/decisions, you should not work on any matter or project/be party to a decision relating to a previous employer until you have completed a 5 year 'cooling-off' period (see below). Exemptions may be granted by the relevant Executive Director for specific reasons. If you or your line managers believe that relationships with individuals within those firms remain close and could result in a perceived conflict, this 'cooling-off' period can be extended for an indefinite period, or any work associated with these firms should be limited.

The Board and its Committees

As directors, Board members have a duty to avoid a situation in which they have, or can have, a direct or indirect interests that conflicts, or may conflict, with the interests of the FRC. The Board, may, however authorise a matter which might otherwise have given rise to a breach of this duty.

Board Members are only eligible to serve on the FRC's Conduct Committees once a period of five years had passed since their employment at any audit or actuarial firm (or legacy firm) or a Recognised Supervisory Body. To safeguard fair and due process, Board Members and Senior Advisors should not participate in any decisions regarding a person or entity which may give rise to a potential or perceived conflict of interests.

In addition, members of the Conduct Committee may not participate in any decision relating to their former audit firms until a period of ten years has passed since that employment. Information relating to enforcement action against their former firm will be redacted from their meeting papers.

Exemptions to the Policy

There may be limited instances when an exemption to the policy is agreed and disclosed. A decision to exempt an individual should be determined on a case-by-case basis and consider the risk to both the FRC and individual.

All exemptions should be approved by the relevant Executive Director and periodically disclosed to the Executive Committee.

Breaches of this Policy

This policy must be followed by all staff and non-executives. Any concerns or breaches must be identified and reported as soon as the breach of risk becomes apparent, to your manager, or the Governance Team in the first instance in order to minimise the risk/impact, as the responsibility is both on the individual and all the staff and members to report it.

Breaches of this policy could pose a serious risk to the reputation of the individual involved and the FRC. Failure to comply may result in such action as the FRC considers appropriate in the circumstances, such as, disciplinary action, dismissal, or termination of appointment. If you believe someone may be of breach of this policy and it has not yet been reported, please refer to the following policies:

Counter-Fraud Policy
Bribery and Anti-Corruption Policy
Whistleblowing Policy

What you should do

Identify

Staff	Managers	Non Executive
All new joiner staff must complete a Register of Interest form and disclose any conflicts or potential conflicts on the XCD Database. This form must be approved by your line manager, who may wish to discuss parts of it with you.	Must discuss the conflicts of interest policy with all new members of the team and highlight the requirement for everyone to be responsible for disclosing and updating information.	You will be asked to declare any conflicts, or potential conflicts on a two-part Register of Interests Declaration Form.
As soon as any new potential conflict becomes apparent act swiftly, tell your manager and update the database.	Approve changes to employee disclosures on the database.	If you think you may have conflict of interest in relation to a particular agenda item, discuss this immediately with the relevant Chair.
If you think you may be conflicted as the project progresses remove yourself immediately and discuss with your manager.	Ensure team members understand this policy and how it affects them on a daily basis.
If you have concerns about other staff or you are unsure whether you might be conflicted, discuss with your manager or Governance team in confidence.	Ask HR to run reports as required to consider the make-up of the team for a specific project/ piece of work.

Monitor

Staff	Managers	Non Executive
Confirm annually that you have read the policy and that the information held regarding conflicts is true and accurate and update your details as necessary should your circumstances change, and new potential conflicts are identified.	Ensure all team members annually reaffirm their conflicts of interest and declare no new issues have been identified.	You are responsible for keeping their own entries in the register up to date. Any changes to your interests should be notified to the Board/Committee Chair or the Governance Team so that your declaration can be updated.
Complete a compliance statement which asserts that each individual has complied with the policy for the year.	Assess the make-up of your team to ensure that there is a broad spread of backgrounds to compensate for any individuals that are conflicted or subject to the 5-year 'cooling-off' period.	Review and confirm your declaration form annually.
Consider any changes in your personal circumstances in relation to your role and any internal or external positions you may apply for and whether the application process or working a period of notice could impact on your work.	Be aware when team members reach the end of the 'cooling-off period' and discuss whether it is appropriate to work on projects where they would otherwise have been conflicted.
	Monitor changes to individual circumstances and make sure they are input into XCD in a timely manner by each individual.
Make staff aware of what may constitute 'insider information' and market sensitive information and remind them of their responsibilities in how they use and share information in line with the FRC's Market Sensitivity Information policy.

Manage

Staff	Managers	Non Executive
When working on cases that will lead to potential enforcement action declare prior to taking on the role that you are not conflicted.	Maintain a general oversight of the interests that exist within your team and keep these in mind whenever assigning work.	You should remove yourself from discussions, meetings and decision making you have a conflict of interest or perceived conflict of interest. The Governance Team should ensure that agenda item papers for meetings are not circulated to non-executives with a declared conflict on specific matters.
Do not openly discuss cases with conflicted team members and do not use information you have access to for your own benefit (e.g. investment decisions).	Implement procedures for evaluating and managing conflicts that have been identified in a way that ensures that decisions are not compromised by the conflicted team members.	If you receive a paper in relation to a matter you consider having an interest in, you should not review the paper, disregard any contents and immediately notify the Company Secretary / relevant Secretary so that arrangements can be made to remove you from circulation lists that relate to the matter.
	Ensure that you have signed copies of any declaration forms attached to specific projects prior to individuals beginning work on the project.

Conflicts of Interests – Frequently Asked Questions

How do I identify if a conflict needs to be declared?

The situation is likely to interfere or appear to interfere with your independent judgement when performing your duties for the FRC
Your colleagues, stakeholders, manager may not trust your professional judgement if they knew you was in this position
Members of your close family (spouse, children, parents, partner, brother or sister) have a relationship with the FRC or those firms that the FRC regulates
Closely associated persons/family members may benefit personally/financially because of a decision you are taking on behalf of FRC
A close personal relationship with a colleague could be seen to compromise your working relationship
Involved in a decision that could lead to the appointment, recruitment or promotion of close family or closely associated person
The position will could affect your remuneration or benefits

This list is not exhaustive as it is not possible to anticipate every situation, and further judgement may be required on a case-by-case basis.

What are the different types of interest that need to be declared?

Personal interests – where you have relevant close family or personal relationships which influence your objectivity
Financial interests – where you stand to gain financially from the role you are undertaking or you use your status to deliberately prevent someone else from gaining financially
Private shareholdings – where you hold shares or other direct financial interests in firms where the FRC has a regulatory role
Outside occupations – all remunerated work outside employment, work and appointments should be declared, whether or not considered relevant
Voluntary roles – where an individual works in an organisation that holds regulatory or procurement responsibilities for a separate organisation, they hold a voluntary role for or where they have access to information which be of benefit to the organisation for which they volunteer
Previous employment, appointment or other outside roles – where you have previously held roles, or formed close working relationships that might be relevant to your current role
Business interest – where you hold an interest in any organisation and use your current position to further your business interests
Insider Dealing – if in the course of your work you come into possession of information that could be used for financial or other types of gain
Procurement – where you have direct or indirect financial, economic or other personal interest which might be perceived to compromise the FRC's impartiality and independence in its procurement process

What financial interests do I need to declare?

Direct Financial Interests

Staff and non-executives are asked to declare any direct shareholdings or other direct financial interest over £5,000 in companies within the FRC's regulatory scope, which includes:

Direct shareholdings, stocks, debentures or bonds over the value of £5,000 in public listed companies or FRC regulated firms or listed parent companies of FRC regulated firms. Please indicate the type of holding - you are not required to declare the value.
Equity in private equity backed FRC regulated audit firms (for e.g Grant Thornton)

You are not required to disclose indirectly held investments, for example collective investment schemes such as OEICs and unit trusts. You are also not required to disclose discretionary managed investments – i.e. where you don't choose which securities to buy.

If your holdings change over time (for example if you buy/sell an interest, or the value grows above / falls below £5,000 this needs to be declared. No pre-authorization is required for any trades.

Indirect financial interests

This occurs where you are a connected to a person or an organisation that has a financial interest that is directly relevant to the FRC and you could benefit from a decision that they or the organisation are involved in making.

Pensions

Please declare any pensions or annuities held with an audit firm

Which financial interests do not need to be declared?

Interests of a value less than £5,000 unless this would be considered a conflict in all the circumstances.
Assets comprising goods and/or services e.g. banking or insurance services such as mortgages and loans, savings accounts, telephone services, travel and tangible assets bought on the open market on normal commercial terms available to other buyers.

The terms 'staff and/or employees' includes all permanent and temporary staff members and executives, including staff of the UKEB and FRC secondees. It also applies in relation to staff members spouses, partners and dependants. ↩
The term Non Executive includes FRC Non-Executive Directors, Senior Advisors, Advisory Panel and UK GAAP members, members of our Appointments Committee, Tribunal Panel, Enforcement Committee Panel, Technical Advisory Committee(s). ↩

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