EverBlu Capital Pty Ltd
SECTION A – INTRODUCTION
1.1 This Conflicts of Interest Policy (“Policy”) document outlines EverBlu Capital Pty Ltd’s (“EverBlu Capital”) policies and procedures for managing conflicts of interest of EverBlu Capital and its officers, employees and agents (“Representatives”).
1.2 A 'conflict of interest' is a circumstance where some or all of EverBlu Capital or its Representatives' interests are inconsistent with or divergent from some or all of a client's interests. This includes actual, potential or perceived conflicts of interest. The conflicts of interest to which this document relates are those that arise wholly, or partially, in relation to activities undertaken by EverBlu Capital or its Representatives in the provision of financial services as part of EverBlu Capital’s business. Examples of these conflicts of interest situations are provided in EverBlu Capital’s Conflicts Register.
1.3 This Policy has been implemented because EverBlu Capital:
(a) has an obligation under the law to have in place adequate arrangements for the management of conflicts of interest that arise wholly, or partially, in relation to activities undertaken by EverBlu Capital or a Representative in the provision of financial services as part of EverBlu Capital’s business. Where this is not done or conflicts of interest are not managed appropriately, EverBlu Capital’s Australian Financial Services Licence (“AFSL”) may be suspended or cancelled and EverBlu Capital and/or its Representatives may be liable for compensation, fines and/or imprisonment in extreme cases; and
(b) is aiming to build a strong reputation based on independent and quality advice. A key component of this success has been EverBlu Capital maintaining its independence and avoiding conflicts of interest in providing its services, or if it does have a conflict, managing it in an appropriate manner so as not to reduce the quality or independence of EverBlu Capital’s services. The success, to date, of EverBlu Capital proves this also makes good business sense.
1.4 This Policy applies to EverBlu Capital and all of its Representatives.
1.5 Refer to the Definitions (Section 3) for more information about some of the terms used in this document.
2. OBJECTIVES OF POLICY
2.1 The main objectives of this Policy are to:
(a) (identify) identify all conflicts of interest that arise in relation to EverBlu Capital’s business of providing financial services;
(b) (evaluate) have policies and procedures to enable evaluation of conflicts of interest;
(c) (monitor and manage) have processes and procedures in place to monitor,
manage and deal with conflicts of interest; and
(d) (disclosure) make adequate disclosure of conflicts of interest to clients (or other persons who receive EverBlu Capital financial services) to ensure that those people are sufficiently informed to be able to assess whether a conflict may affect the independence or quality of the financial service provided to them.
3.1 Conflicted remuneration means any benefit, whether monetary or non-monetary, given to a financial services licensee, or a representative of a financial services licensee, who provides financial product advice to persons as retail clients that, because of the nature of the benefit or the circumstances in which it is given:
(a) could reasonably be expected to influence the choice of financial product recommended by the licensee or representative to retail clients; or
(b) could reasonably be expected to influence the financial product advice given to retail clients by the licensee or representative.
3.2 Dealing includes applying for, acquiring or disposing of the relevant products or entering into an agreement to do so.
3.3 Employment includes as an employee, contractor or officer of any EverBlu Capital related entity.
3.4 Financial product advice means a recommendation or a statement of opinion or a report of either of these things that is intended to influence a person(s) in making a decision in relation to a particular financial product (or an interest therein) or class of financial products or could reasonably be regarded as being intended to have such an influence.
3.5 Financial products for the purposes of this Policy, are shares, options, derivatives, debentures, units in managed investment schemes and other securities, whether EverBlu Capital related funds or external funds, and any other financial product able to be traded.
3.6 Financial service includes to provide financial product advice or dealing in a financial product.
3.7 Insider trading is defined in the Insider Trading Policy. Reference should be made to the Insider Trading Policy for a complete definition.
3.8 Investment Decision is any decision made in respect of an investment by an entity or fund that EverBlu Capital controls or manages.
3.9 New Work means the provision of a financial service to a new client or the provision of a written report or recommendation in respect of a financial product or fund manager. New Work is taken to have commenced, if the service is first formulated for the relevant client.
3.10 Trading includes applying for, buying, acquiring, selling, or otherwise disposing of, listed financial products either on-market or off-market. Trading can be direct or indirect. Indirect trading includes trading through your spouse, partner, dependant child, controlled entity, trust of which you are a beneficiary, or a person, company or trust over whom or which you have influence.
3.11 EverBlu Capital means EverBlu Capital Pty Ltd and any related bodies corporate that might exist from time to time.
3.12 Representatives means
(a) an authorised representative of EverBlu Capital;
(b) an employee or director of EverBlu Capital;
(c) an employee or director of a related body corporate of EverBlu Capital;
(d) any other person acting on behalf of the licensee.
3.13 Unpublished price sensitive information is information that:
(a) is not generally available; and
(b) if it were generally available would be likely to have a material effect on the price or value of any particular relevant products (that is, the information would, or would be likely to, influence persons who commonly acquire products as the relevant products in deciding whether or not to buy or sell those products).
SECTION B – POLICIES AND PROCEDURES
4.1 Under the Policy, all Representatives are required to:
(a) comply with the Conflict Rules set out in Appendix 1;
(b) comply with the EverBlu Capital’s Personal Dealing Policy;
(c) comply with the EverBlu Capital’s Insider Trading Policy;
(d) update the Conflicts of Interest Register; and
(e) prior to EverBlu Capital providing any financial service it must be established that no Strong Conflict exists.
5. CONFLICT MANAGERS
5.1 EverBlu Capital has appointed its Responsible Managers as the Conflict Managers. The Conflict Managers oversees conflicts of interest issues that arise with EverBlu Capital from time to time. The services of an external consultant will also be engaged to ensure adequate management of all conflicts of interest.
5.2 Conflict Managers' responsibilities The Conflict Managers must:
(a) on a quarterly basis review the Conflicts of Interest Register to ensure that it is maintained and is otherwise up-to-date;
(b) where a conflict of interest exists, monitor that conflict on a monthly basis to ensure that no adverse consequence has occurred or is likely to result from that conflict of interest;
(c) prior to the situations referred to in paragraph 4.1(e) above, the Conflict Managers must:
(i) refer to the Conflicts of Interest Register maintained by EverBlu Capital in the form set out in Appendix 2;
(ii) where a conflict is identified in the Conflicts of Interest Register:
(A) evaluate the conflict according to the Conflict Rules to determine whether the conflict of interest situation is manageable or unmanageable; and
(B) direct the relevant Representative(s) on how to deal with that conflict of interest situation (i.e. avoid it or prescribe conditions);
(d) otherwise, ensure that this Policy is implemented and maintained at all times; and
(e) report to the Principal/Owners annually on whether this Policy is being complied with.
SECTION C – FUTURE OF FINANCIAL ADVICE REFORMS
6. CONFLICTED REMUNERATION
6.1 EverBlu Capital provides personal advice to retail clients under the authorisations on their AFSL and therefore, the conflicted remuneration provisions in Part 7.7A of the Corporations Act will apply from 1 July 2013. These provisions aim to more closely align EverBlu Capital’s interests with the interests of their clients.
6.2 Under section 963E of the Corporations Act, EverBlu Capital is prohibited from accepting conflicted remuneration. Further EverBlu Capital must also ensure conflicted remuneration is not given to their employees as Representatives of EverBlu Capital.
6.3 EverBlu Capital will take reasonable steps to ensure that it’s Representatives do not accept conflicted remuneration. These steps include, but are not limited to:
(a) any gifts or benefits received by EverBlu Capital’s Representatives will be disclosed to EverBlu Capital’s Board of Directors;
(b) EverBlu Capital’s Representatives will be remunerated by way of salary and discretionary bonuses linked to performance;
(c) EverBlu Capital’s Representatives will be required to disclose any activity, investment, interest or association of the Representative, or their immediate family member, that interferes with, or appears to interfere with the Representatives ability to exercise proper judgement in the advancement of EverBlu Capital’s business and the best interests of EverBlu Capital’s clients.
6.4 EverBlu Capital and its Representatives will not accept volume-based benefits and will ensure Representatives provide financial product advice on the basis of well-supported research and analysis. Please refer to EverBlu Capital’s Advice Policy for further information.
6.5 In the event EverBlu Capital has breached the ban on conflicted remuneration contained in Part 7.7A of the Corporations Act, the matter must be reported to the Principal/Owners within two days. EverBlu Capital Compliance will then report the breach in accordance with EverBlu Capital’s Breaches and Incidents Reporting Policy.
7. GIFTS AND BENEFITS REGISTER
7.1 EverBlu Capital maintains a Gifts and Benefits Register in order to comply with the obligation under the Corporations Regulations (Cth) to identify and report all gifts and benefits between One Hundred Dollars ($100.00) and Three Hundred Dollars ($300.00) received by EverBlu Capital Representatives.
7.2 The Gifts and Benefits Register contains the following information:
(a) Name of relevant Representative/s;
(b) Name of the person providing the gift or benefit (“the provider”);
(c) Nature of the providers relationship with EverBlu Capital;
(d) Details of receipt of the gift or benefit, including nature of the gift or benefit, date received; and
(e) Approximate value of the gift or benefit.
7.3 The Gifts and Benefits Register will be monitored, reviewed and, if necessary, updated on a quarterly basis by the Compliance Officer.
7.4 EverBlu Capital Representatives will be instructed to report the receipt of any gift or benefit within 24 hours of receiving the gift or benefit.
8. OTHER BANNED REMUNERATION
8.1 Asset-based fees on borrowed amounts: EverBlu Capital will ensure that asset-based fees are not charged on borrowed amounts that are to be used to acquire financial products by or on behalf of a client. In the event a EverBlu Capital Representative discovers, during course of making inquiries into client’s relevant circumstances, the client is seeking to acquire financial products using money that the client has borrowed. In these circumstances EverBlu Capital will keep records of the net value of portfolio and the amounts borrowed and repaid.
8.2 Soft dollar benefits: EverBlu Capital and its Representatives will not accept soft dollar benefits which are valued over three hundred dollars ($300.00) where it could be expected to influence the financial advice given by Representatives. In the event a Representative of EverBlu Capital receives a soft dollar benefit under three hundred dollars ($300.00) it will be recorded in the Gifts and Benefits Register in accordance with section 7.
9. PERFORMANCE BENEFITS FOR EVERBLU CAPITAL EMPLOYEES
9.1 The conflicted remuneration provisions do not prohibit employees of EverBlu Capital who provide financial product advice to clients from receiving performance pay. In order to ensure compliance with the conflicted remuneration provisions, EverBlu Capital will not pay its employees volume-based benefits but will reward employees on the basis of the following criteria:
(a) compliance with the statutory and regulatory obligations;
(b) meeting EverBlu Capital’s compliance and corporate policies;
(c) quality of financial advice given by the employee;
(d) client satisfaction with the employee;
(e) the number of new clients the employee has brought to the business;
(f) the value of investable assets of the employee’s clients;
(g) the amount of time-based fees generated by the employee;
(h) the training undertaken by the employee; or
(i) the number of complaints received about the employee.
9.2 EverBlu Capital will keep records of how an employee’s performance benefit has been calculated.
10.1 EverBlu Capital will ensure that it does not enter into, or carry out a scheme which is designed to avoid the provisions relating to conflicted remuneration in Part 7.7A of the Corporations Act.
SECTION D – ENFORCEMENT
11. ENFORCEMENT AND REVIEW
11.1 Non-compliance with this Policy may result in disciplinary action being taken against the Representative involved and may also result in prosecution under the law where that act is illegal. This may include re-assessment of bonus qualification, prohibition from trading, termination of employment and/or fines and imprisonment (in cases that contravene for instance the Corporations Act 2001 (Cth)).
11.2 EverBlu Capital’s Principal/Owners and Compliance Department, in consultation with an external compliance consultant, is responsible for monitoring the implementation and ongoing compliance with this Policy. Refer to the Breaches and Incident Policy for further information.
12.1 In extreme circumstances, a Representative may be concerned that a serious breach of this Policy has or will occur but is in a position where they believe that it would be personally damaging to pursue their concerns through normal channels.
12.2 In such circumstances, the individual should, in the first instance, contact the Managing Director who will do all that is possible and practicable to deal with the matter in a way that protects the confidentiality of the person raising the concern.
12.3 In doing so, provided the Representative is acting in good faith, they will be afforded anonymity, confidentiality and immunity, where permitted under the law.
13. AUDITS AND RECORDS
13.1 The policies and procedures outlined in this document must be audited as part of the EverBlu Capital compliance audit.
13.2 All records of these audits and any other records in relation to this Policy must be kept for seven (7) years, or as otherwise stipulated in EverBlu Capital’s Document Retention Policy.
Issued by EverBlu Capital Pty Ltd October 2017
APPENDIX 1 – CONFLICT RULES
1. GENERAL OBLIGATION
1.1 Each Representative as an employee of EverBlu Capital must act in an honest, fair and professional manner.
2.1 The remuneration of a Representative, except in their capacity as an officer or shareholder of EverBlu Capital, must be primarily determined according to their salary, or wage (as the case may be) and/or their individual performance.
2.2 The remuneration of a Representative must not be determined in a material way by the earnings or performance of another individual within EverBlu Capital.
3. FINANCIAL PRODUCT ADVICE
3.1 All financial product advice provided by EverBlu Capital or its Representatives must:
(a) be directed at the best interests of the recipient which should be placed ahead of the Representative;
(b) reflect the actual opinion of the adviser, or if not, the consensus of the relevant group;
(c) be based solely on the merits of the person or security being evaluated and not based on any other relationship that EverBlu Capital or its Representatives may have with that person or security (as the case may be); and
(d) not be made in order to affect the trading price of a security.
4. IDENTIFYING CONFLICTS
It is the responsibility of each Representative to be alert to, aware of and identify any conflicts of interest (whether perceived, actual or potential) in relation to their employment with EverBlu Capital.
4.2 Pecuniary Interests
Employees and agents must disclose any ‘pecuniary interest’ of which they are aware that relates to the provision of a financial service by EverBlu Capital as soon as practicable after the earlier of the employee or agent becoming aware of the financial service or the pecuniary interest.
A ‘pecuniary interest’ is an interest that an employee or agent has because of a reasonable likelihood or expectation of appreciable financial gain or loss to the employee or agent directly or indirectly because of the interests of certain persons or entities who are ‘associated persons’ of the employee or agent.
Associated persons’ include immediate family members (e.g. spouse, parent, children and siblings) and entities in which immediate family members have an interest (e.g. family companies, family trusts and self-managed superannuation funds).
4.3 Identified Conflicts
A Representative must immediately inform the Conflict Managers if they have or become aware of any conflicts of interest in relation to their employment with EverBlu Capital and ensure the Conflicts of Interest Register is updated to reflect this. This will be in the form of a Conflict Notification Document (refer to Appendix 3), which is sent to the Conflict Managers. This should be done even if the Representative believes that the conflict is not important or unlikely to have any adverse consequences. The notification must list the:
(a) name of the proposed client;
(b) nature of transaction;
(c) nature of EverBlu Capital’s participation;
(d) transaction sponsor;
(e) nature of conflict not addressed by the Conflicts of Interest Policy; and
(f) proposed conflicts of interest management strategy / augmentation of the Conflicts of Interest Policy.
4.4 Examples of Actual, Potential or Perceived Conflicts of Interest
(a) EverBlu Capital or a Representative provides:
(i) a recommendation that is inconsistent with the trading by EverBlu Capital or a Representative; or
(ii) a financial service in a manner that put EverBlu Capital’s or the Representative's interests ahead of the interest of the recipient of that service;
(b) A Representative, or associate of a Representative, being on the board of or holding an investment in, a client.
(c) EverBlu Capital allocating assets when providing investment management services to a number of clients as well as on balance sheet.
5. CONFLICT RATINGS
Conflict ratings are to be determined by the Conflict Manger as follows:
(a) SC (Strong Conflict) - there is a conflict of interest that in the reasonable opinion of the relevant Conflict Managers could (and is not unlikely to) result in:
(i) an Extreme Consequence; or
(ii) have a significant disadvantageous consequence for another person having regard to the objectives of this Policy; or
(iii) result in a material breach of this Policy;
(b) MC (Manageable Conflict) - there is a conflict of interest that in the reasonable opinion of the relevant Conflict Managers:
(i) is very unlikely to result in an Extreme Consequence;
(ii) could result in a Significant Consequence;
(iii) can be managed by putting in place arrangements to ensure that the conflict does not result in adverse consequences for a client and that the financial service they receive is not compromised; or
(iv) result in a minor or technical breach of this Policy; and
(c) NC (No Conflict) - no conflicts of interest exists.
(a) Any outcome listed in the following table is an 'Extreme Consequence'.
- Breach of EverBlu Capital’s AFSL conditions.
- Contravention of any law (eg the Corporations Act 2001 (Cth)).
- Dishonest or unethical behaviour.
- Deceptive or misleading conduct.
- EverBlu Capital would not be able to provide the relevant financial service in an independent and objective manner.
- Breach of this Policy.
- A conflict of interest that, if it were treated as a MC, would be difficult for EverBlu Capital to manage for the purposes of preventing an Extreme Consequence, a Significant Consequence, or another adverse consequence.
(b) Any outcome listed in the following table is a 'Significant Consequence'.
- Damage to EverBlu Capital’s reputation
- EverBlu Capital’s financial service being of less benefit to an intended
- A reasonable person would perceive the conflict as preventing EverBlu Capital from providing the relevant financial service in an independent and objective manner.
6. ACTING ON CONFLICTS
6.1 Conflict Rating Action
If a conflict rating of:
recipient of that service.
(a) SC (Strong Conflict) exists, then the financial service relating to that conflict must either:
(i) not be provided; or
(ii) be provided only after the relevant conflict has been removed and a Conflict Report (in relation to the service) has been signed by the respective Conflict Managers. A further Conflict Report must also be completed prior to the provision of the financial service;
(b) MC (Manageable Conflict) exists, then a Conflict Report must be signed by the Conflict Managers before commencing the relevant work/New Work (as applicable) and again prior to the provision of that financial service. Completing the Conflict of Interest Form will require the Conflict Managers to determine what arrangements (if any) need to be put in place to mitigate the risk of adverse consequences resulting from that conflict; or
(c) NC (No Conflict) exists for any financial service, then that service may be provided. However, all endeavours should still be made to ensure that any potential conflict of interest is identified and dealt with according to this Policy.