1. Purpose
1.1 Purpose
The purpose of this Conflicts of Interest Policy (the Policy) is to set out the British Business Bank Group (the Bank’s) requirements for identifying and managing conflicts of interest.
The objectives of this policy are to:
- ensure the Bank has a defined process to deal with any actual, potential or perceived conflicts of interest;
- provide a framework for managing different types of conflicts – for example corporate conflicts within the Bank (between its entities and business units), external conflicts between the Bank and other counterparties, or individual conflicts between the Bank and Colleagues;
- seek to ensure the interests of counterparties and users of the Bank’s products and services are not damaged by conflicts of interest;
- protect both the Bank and Colleagues from suspicions of wrongdoing by providing clear guidance for the effective disclosure, reporting and record keeping of conflicts of interests; and
- ensure the Bank complies with its legal and regulatory obligations.
1.2 Legal, Regulatory and Government Obligations
A variety of legislation, guidance and regulation addresses the issue of conflicts of interest. Principles arise from a number of different sources, for example: legislation such as the Companies Act 2006 (which includes provisions applicable to company directors); and the Bribery Act 2010 and the Fraud Act 2006 (which create criminal offences for certain acts); Individual colleagues may also be bound by the rules of the professional organisations or associations to which they belong. Additionally, there are high-level central government directions on how to manage conflicts of interest with guidance and codes of conduct to outline principles and expected behaviour for board members and accounting officers, for example:
The Committee on Standards in Public Life’s ‘Nolan Principles’,
https://www.gov.uk/government/publications/the-7-principles-of-public-life
and the Civil Service Code of Conduct https://www.gov.uk/government/publications/civil-service-code/the-civil-service-code, refer to ‘integrity’ and the need to put obligations of public service above personal interests.
- The Code of Conduct for Board Members of Public Bodies and Governance Code on Public Appointments – as detailed within the British Business Bank Plc Shareholder Relationship Framework Document.
- The Treasury’s Managing Public Money, https://www.gov.uk/government/publications/managing-public-money, outlines measures Accounting Officers and Board members could take if they encounter a conflict of interest, and its Corporate governance in central government departments: code for good practice for departments mentions the need for board members to declare and record conflicts of interest.
As the Bank expands its offerings, it anticipates that certain activities will require Financial Conduct Authority (FCA) authorisation. At that point, the FCA itself may hold the Bank and relevant colleagues directly accountable for any breaches of the FCA’s Principle 8 regarding conflicts of interest - A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.
In anticipation of this, the Bank will proactively adopt these standards and has incorporated Principle 8 into the Policy.
1.3 Alignment to Risk Appetite
Risk appetite is the type and level of risk the Board of the Bank is willing to take in order to deliver its strategy and public policy objectives.
This policy sits under the Level One Risk category, People Risk. It aligns to the Level Two Risk Category, Conduct and Culture, which is defined as ‘Risk that Bank employees fail to act in accordance with end customers’ best interests, fair market practices, or the Bank’s Code of Conduct; or that our culture does not support and drive appropriate Colleague behaviours and decision making.’
The Bank’s risk appetite in relation to Conduct and Culture is set at Low.
2. Scope
This policy applies to all BBB entities, operations, subsidiaries and Colleagues.
For Definition of Terms please see section 8.
3. Key Requirements
The Bank will:
- identify and manage conflicts of interest appropriately, especially where there is a material risk of damage to its own reputation or that of its counterparties;
- manage conflicts of interest whilst recognising that the Bank’s Colleagues may have interests and affiliations beyond their work for the Bank;
- provide Colleagues with training to identify conflicts of interest; and
- enable Colleagues to report concerns regarding perceived, actual or potential conflicts of interest (please refer to the Bank’s Speak Up Policy for further information).
3.1 Declarations of Interests
All Colleagues are required to declare all material and relevant Personal or Outside Interests upon commencement of employment and when they arise during the course of their employment. Colleagues are also required to complete an annual Declaration of Interests Form. The Risk & Compliance team maintains a Declaration of Interests Register which records all Colleagues declared Personal and Outside Interests, that could give rise to an actual, potential or perceived conflict of interest.
For further information and guidance on what Colleagues should declare please see Appendix B.
3.2 Conflicts of Interest
Colleagues must be aware of situations that give rise to conflicts of interest or the perception of a conflict of interest and not allow a conflict of interest to:
- compromise or otherwise call into question their judgement, ability to act objectively or properly discharge their duties and responsibilities owed to the Bank and/or Delivery Partners
- give rise to the risk of reputational damage to the Bank including the risk of the appearance of impropriety around the manner in which business is awarded to or by the Bank or of the Bank having obtained an improper advantage or treatment.
It is important for Colleagues to identify and disclose any conflicts of interest. This applies not only when there is an actual conflict of interest, but also when there is a potential for others to perceive one, even if a review finds no real conflict. All identified conflicts of interest, regardless of any potential monetary impact, should be reported to the Risk and Compliance Team via declarationofinterests@british-business-bank.co.uk
This includes conflicts arising as a result of external party interactions. The conflict should also be declared together with mitigating action to the R&C team for inclusion on the Declaration of Interest Register.
A conflict of interest includes both actual conflicts (those that have arisen), potential conflicts (those that may arise), and perceived conflicts (situations that may give rise to the perception of a conflict of interest, even if no actual conflict exists). Certain conflicts are persistent and need to be managed on an ongoing basis, while others may arise in relation to a single event (e.g. a transaction) and can usually be managed by one-off measures.
Failure to identify and appropriately manage conflicts of interest could result in adverse consequences for the Bank, Colleagues and any Counterparties, such as reputational damage, damage to client relationships, loss of business, regulatory sanction and litigation risk.
3.2.1 Conflict of Interest Types
Colleagues need to be aware of the potential conflicts that can arise across the Bank during the course of our activities. Conflict types include, but not limited to:
Bank vs. Counterparty (Client) Conflicts
Bank vs. Counterparty (Client) conflicts arise when the Bank's interests may be in conflict with the interests of counterparties, potentially compromising fairness, objectivity, and client trust.
Colleague vs. Counterparty Conflicts
Colleague vs. Counterparty conflicts occur when a Bank colleague's interests may be in conflict with those of one or more counterparties, risking partiality and improper influence.
Counterparty vs. Counterparty Conflicts
Counterparty vs. Counterparty conflicts emerge when the interests of one counterparty may be in conflict with the interests of one or more other counterparties, possibly leading to biased treatment and unfair practices.
Colleague vs. Bank Conflicts
Colleague vs. Bank conflicts arise when a Bank colleague's personal interests may be opposed to the Bank’s interests, affecting the integrity of decisions and actions.
Cross-Investment Conflicts
Cross-Investment conflicts occur when subsidiaries co-invest alongside external funds, or independently in the same or related assets, leading to conflicts in decision-making, investment strategies, and prioritisation of returns.
Regulatory vs. Non-Regulatory Conflicts
Regulatory vs. Non-Regulatory conflicts arise when FCA-regulated firms, which must prioritise client interests and adhere to stricter standards, operate alongside non-regulated firms that may focus more on commercial interests, creating strategic and operational tensions.
Dual Roles and Influence Conflicts
Dual Roles and Influence conflicts occur when individuals hold senior positions across multiple subsidiaries, potentially facing conflicting loyalties and influencing decisions in ways that could lead to bias or favouritism.
Insider Information and Competitive Advantage Conflicts
Insider Information and Competitive Advantage conflicts arise when access to sensitive information from one subsidiary is improperly used to benefit another, undermining fair market practices and compromising client trust.
Investment Conflicts
Investment conflicts arise when there are competing interests related to investment decisions, allocations, or strategies within the organisation or between the organisation and its clients.
Pricing and Valuation Conflicts
Pricing and valuation conflicts occur when there are discrepancies or biases in the pricing and valuation of assets, which can impact reporting, fees, and client trust.
Information Distribution and Disclosure Conflicts
Conflicts related to the distribution and disclosure of information arise when there is unequal access to material information, potentially leading to unfair advantages or misleading practices.
Employee Relationship Conflicts
Potential conflicts of interest may occur from personal relationships between employees, employees of suppliers and contractors that may interfere with their professional responsibilities and decision-making.
Relationship Conflicts
Relationship conflicts arise when existing business relationships or partnerships influence decision-making processes, potentially compromising the Bank’s integrity or client interests.
There are many scenarios whereby a conflict of interest could arise. Appendix A provides some examples of potential scenarios.
If an actual, potential or perceived conflict of interest is not declared and/or mitigated, this may result in:
- penalties and/or fines for statutory non-compliance;
- the impression that the Bank has acted improperly or non-impartially, which could result in an adverse reputational impact;
- a breach of the Bank’s Code of Conduct and the values it stands for; or
- a criminal offence being committed.
3.3 Corporate-Level Conflicts of Interest (COI) Register
The purpose of the Corporate-Level COI Register is to ensure that all known conflicts of interest within the Bank are recorded and managed appropriately. This register serves as a centralised resource that provides transparency and aids in the consistent application of conflict management across the Bank.
Risk and Compliance own and manage the Corporate-Level COI Register. They are responsible for maintaining the register, ensuring its accuracy, and updating it regularly. Risk and Compliance will work collaboratively with the Business Units to ensure that all relevant conflicts are identified and recorded.
Responsibilities of Business Units (BUs)
Each Business Unit is responsible for:
Identification
Proactively identifying potential or actual conflicts of interest within their respective areas.
Notification
Promptly notifying Risk and Compliance of any identified conflicts, providing comprehensive details about the nature of the conflict and any measures taken to mitigate it.
Documentation
Ensuring that all conflicts are documented accurately and submitted to Risk and Compliance in a timely manner.
Responsibilities of Risk and Compliance
Risk and Compliance is responsible for:
Register Maintenance
Creating and maintaining the Corporate-Level COI Register, ensuring it is comprehensive and up-to-date.
Collaboration
Working closely with the BUs to gather information on identified conflicts and the measures being taken to manage them.
Review and Assessment
Regularly reviewing the COI Register to assess the effectiveness of the management and mitigation strategies in place.
Reporting
Providing regular reports to senior management and the Board on the status of the COI Register and any significant conflicts.
Disclosure
Advising on whether external disclosure of a conflict may be required.
Management and Mitigation of Conflicts
For each conflict recorded in the Corporate COI Register, the following information must be captured:
Nature of the Conflict
A detailed description of the conflict of interest.
Impact Assessment
An evaluation of the potential impact of the conflict.
Management Strategy
The specific measures that have been implemented to manage and mitigate the conflict.
Responsible Parties
Identification of the individuals or teams responsible for managing the conflict.
Review Date
The date on which the conflict and its management strategy will next be reviewed.
3.4 Managing Conflicts of Interest
Where an actual, potential or perceived conflict of interest is identified it will be necessary to manage the conflict of interest. The Bank has in place a number of policies (inclusive of this Policy), procedures and controls in place to mitigate conflicts of interest. Please see Section 6 for ‘Aligned Policies and Standards’.
3.5 Conflicts of Interest at Governance meetings including Board and Board Committee meetings
A conflict of interest under the Companies Act 2006 arises when there is a conflict between the duties a director owes to the company and his/her own personal interests. The duty to avoid conflicts of interest, the duty to declare any interest in a proposed transaction or arrangement with the company and the duty not to accept benefits from third parties are embodied in the Companies Act.
Failure by a director to declare an interest is a criminal offence. There is an opportunity at all governance meetings including Bank and BPI/BPC Board or Board Committee meetings for Board members (or other attendees) to declare any conflicts of interest which may arise during the meeting.
These principles also apply to any internal meetings such as the requirement for Colleagues to make appropriate declarations at an Investment Committee.
Where an Investment Committee utilises the use of independent committee members for the purposes of leveraging independent expertise, such as BPC, consideration should be given as to whether the individual has any personal conflicts with respect to a particular deal, when selecting members each time.
The Company Secretary or their nominee will record details of any conflicts of interest and any mitigating actions taken to resolve the conflict of interest. In circumstances where an individual has declared a conflict of interest, the chair of the meeting may decide that the individual should abstain from involvement in the relevant matter. This may require the individual to be excluded from any relevant correspondence or communication or to recuse themselves from meetings whilst the matter is discussed. The concerned matter is recorded in the minutes of the respective meeting.
4. Responsibilities
4.1 All Colleagues
All Colleagues are responsible for identifying and managing conflicts of interest continuously. To ensure adherence to this policy, the following obligations must be met:
- Declare all material and relevant personal and outside interests at the commencement of employment and as they arise during the course of employment;
- Complete the Annual Declaration of Interests Form;
- Immediately notify your Line Manager and Risk & Compliance of the existence and general nature of any conflict of interest;
- Seek guidance from your Line Manager or Risk & Compliance if unsure whether to declare an interest or if an interest creates an actual, potential, or perceived conflict of interest;
- Act with integrity, exercising sound judgement and discretion in all professional dealings;
- Maintain the requisite level of independence and objectivity when fulfilling responsibilities within the Bank;
- Make efforts to avoid situations that may lead to conflicts of interest arising from personal financial interests, relationships with family members or close personal connections, past, present, or potential future involvements in activities, or differing roles and responsibilities within the Bank;
- Disclose conflicts of interest when participating in decision-making meetings. If deemed necessary by the chairperson, remove oneself from the decision-making process and refrain from influencing such decisions further;
- Avoid being in a supervisory, subordinate, or control relationship with closely related persons, including family members, close personal relationships, suppliers and contractors. Where such relationships exist or develop, colleagues must promptly disclose them to HR via the online portal. This disclosure will enable appropriate steps to be taken to manage any conflicts of interest and ensure impartiality in workplace decisions. Employees should also inform HR when disclosed relationships end via the portal. Failure to make a relevant notification may result in disciplinary action; and
- Do not misuse information obtained during employment.
Should any Colleague have any questions or require any advice or guidance they should contact their Line Manager and/or Risk & Compliance.
4.1.1 External Appointments
Where a Colleague has an external appointment, for board positions in companies where the Bank has co-invested and/or other external appointments for developmental or personal reasons, appropriate measures must be put in place to ensure any resulting conflicts are managed appropriately.
For further detail and guidance please refer to the Bank Colleagues External Appointment Guidance Document,
4.2 Line Managers
- Review Declaration of Interest forms for new hires, resolving any identified conflicts of interest prior to commencement of employment;
- Review declarations made during annual DOI exercise or ad-hoc declarations, ensuring appropriate management of conflicts of interest;
- Report potential, actual or perceived conflicts of interest to Risk & Compliance for inclusion on the Declaration of Interest register;
- Assess any reported conflicts of interest to determine their existence;
- Conduct annual or more frequent reviews of reported conflicts of interest to ensure compliance with agreed mitigations;
- Allocate responsibilities to direct reports in a manner that appropriately considers conflicts of interest; and
- Consult Risk & Compliance, and other functions where required, to determine the best course of action for resolving, managing, or avoiding conflicts of interest, including escalation if necessary.
4.3 Senior Leaders and Managing Directors
Senior management, including Senior Leaders, Managing Directors, and Executive Directors, are responsible for overseeing the identification, documentation, escalation, and management of all conflicts of interest within their relevant areas of responsibility at the Bank. They must:
- Communicate expectations clearly and share best practices throughout the Bank;
- Take a comprehensive view to identify potential and emerging conflicts of interest within and across their Functions, making informed judgements regarding materiality and conflict resolution;
- Support the establishment of systems and controls to document, track, manage, and mitigate conflicts of interest risks, regularly assessing their effectiveness;
- Notify Risk and Compliance of any identified conflicts of interest; and
- Utilise management information to stay adequately informed about the matters listed above.
4.4 Risk and Compliance Team
The Risk and Compliance Team is responsible for:
- Establishing and maintaining appropriate policies, procedures, systems and controls to manage conflicts of interest adequately;
- Maintaining the Bank’s Declaration of Interest Register;
- Maintaining the Bank’s Corporate-Level Conflicts of Interest Register;
- Providing advice and guidance to Mine Managers (in the first instance) on the effective management of conflicts of interest;
- Updating the Declaration of Interest register and recording any identified conflicts of interest and how they are being managed or have been resolved;
- Reporting on conflicts of interest to the Board/Board sub-committees on an annual basis and by exception when required;
- Assisting senior management in dealing with conflicts of interest situations as they arise;
- Provide the CEO/Chair with an opinion as to whether declared interests by Board Members present an actual, perceived or potential conflict to inform their decision. Including recommendations for any mitigating actions where applicable; and
- Facilitating adequate training for Colleagues relating to conflicts of interest.
4.5 HR Team
The HR Team is responsible for:
- Issuing and storing copies of new starter Declarations of Interests;
- Providing a copy of each new starter declaration to the relevant Line Manager, to facilitate a review, prior to commencement of employment; and
- When applicable, and jointly with Risk and Compliance, provide advice on conflicts of interest which may arise during the course of employment and/or during a breach of this policy.
4.6 Legal and Governance Team
The Legal and Governance Team is responsible for providing or obtaining legal advice when required in relation to conflicts of interest.
The Company Secretary or their nominee is responsible for:
- Recording (in the minutes) conflicts of interest declared at Board and Board Committee meetings and other internal decision-making committees and meetings such as Investment Committee, and where required, the mitigating action taken and escalating to the Risk and Compliance team, for inclusion on the Declaration of Interest Register.
4.7 Board Members
- Board Members must appropriately consider conflicts of interest, particularly if they have dual roles across multiple Bank subsidiaries. They need to proactively identify any conflicts that may arise from their positions, either internal or external, and disclose them as required. Significant conflicts of interest should be properly documented, discussed, and managed by the respective boards.
- Board Members must make sure their decisions aren't influenced by any conflicts of interest. They should actively identify any conflicts that arise from their position on the board and disclose them as required. Any significant conflicts of interest should be documented, discussed, and managed properly by the board.
- Board Members shouldn't be involved in any business that competes with the Bank without getting approval first.
- When existing Board Members are considering a new board appointment outside of the Bank, they should firstly discuss it with the Board Chair of the Bank, BBI OR BPC to identify any obvious conflicts. The Board Chair may request that appropriate due diligence is completed by the Risk & Compliance team to support an informed decision.
5. Non-Compliance
All identified breaches of this policy must be reported via the Risk Incident Portal on the Bank’s Intranet. Breaches will be assessed by the Policy Owner to determine the further action required and may include disciplinary action in accordance with the Bank’s Disciplinary Policy.
6. Aligned Policies and Standards
Our aligned policies and standards support the broader and holistic control environment pertaining to the management of conflicts of interest, such as:
Code of Conduct
outlines the expected behaviour and ethical standards for employees within the Bank. It explicitly addresses conflicts of interest and emphasises the obligation of employees to disclose conflicts, maintain impartiality, and act in the best interest of the organisation.
Recruitment Policy
outlines the guidelines and procedures for hiring new employees. It includes guidelines on conducting background checks, that may involve verifying financial interests, relationships or other relevant information that could potentially create conflicts.
Speak Up Policy
encourages employees to report suspected conflicts of interest and protects them from retaliation. It provides clear procedures for reporting and assures employees that their concerns will be thoroughly investigated.
Anti-Bribery & Corruption Policy
outlines colleague obligations relating to the acceptance of gifts and/or hospitality through the Gifts and Hospitality Standards
Supplier Management Policy
outlines all potential or apparent conflicts of interest related to procurements must be declared to Commercial Operations and managed accordingly with the presumption that any conflicted Employee will not take direct part in any Procurement process.
Bank Colleagues External Appointment Guidance Document
Further aligned policies:
- Delegated Financial Authorities
- Market Abuse & Insider Dealing Policy and Standards
- Fraud Policy and Standards
- Financial Risk Policy
In addition to these it should be noted that staff contracts include a requirement to declare all conflicts of interest.
7. Key Controls
A key control or a combination of controls which manages the inherent exposure of a risk to an accepted residual level and within the defined risk appetite. The key controls relevant to this policy are contained in the table below:
| Library Reference | Control Title | Control Objective |
|---|---|---|
| C_LIB_GOV_01_3 | Declaration of Interest | To ensure all colleagues comply with the Bank's conflict of interest policy by declaring any interests/conflicts as they arise during their employment and if conflicts do occur, these are appropriately mitigated. |
| C_LIB_RM_01_7 | Completion of mandatory /E-Learning training | To enable all members of BBB to be aware of and understand the key BBB policies they must comply with. They are designed to raise awareness and to help improve colleagues’ skillset and understanding |
| TBC | Corporate Level COI Register | Ensure that all known conflicts of interest within the Bank are recorded and managed appropriately. |
8. Definition of Terms
Personal or Outside Interest
Any external employment (whether paid or voluntary), business activity or significant investment outside of your normal employment duties and responsibilities with the Bank or its subsidiaries. This is not limited to but can include directorships, trusteeships, partnerships, external employment or financial investments.
Connected Persons
Include the spouse, civil partner, children, parents or any other person you have a close personal relationship with.
Counterparty
The Bank’s past, existing and potential counterparties including the Bank’s delivery partners, direct customers or customers of the Bank’s programmes, service providers and suppliers.
Appendix A - Conflict scenario examples
| Scenario | Example |
|---|---|
| Potential for Biased Decision-Making by colleagues. | Colleagues may not always make an objective decision because of information they possess which may drive inappropriate decision through facts and analysis undertaken. |
| Conflict of interest arising from interim roles, secondments and internal moves. | Interim arrangement allows access to sensitive HR information which could influence decisions due to conflicts of interest. |
| Lobbying Influence for external third parties (i.e. government ministers). | Lobbying by interested parties to the Bank could lead to bias in investment decision making. |
| Diverging objectives with Delivery Partners. | Relationships with DPs can be affected by diverging objectives within the Bank e.g. oversight of application of the terms of the covid scheme loans vs wholesale relationship. |
| Relationship manager bias in supporting poor decisions. | Relationship manager may have a close relationship with a counterparty and have a bias towards supporting a poor decision to continue to support an investment or a customer. |
| Information shared with the shareholder / government. | Information shared with the shareholder / government departments can be sensitive e.g., that used as part of the Limited Partnership Advisory Committee (LPAC). |
| Inappropriate sharing of information by Board Members holding positions in similar institutions. | Board members may hold positions in other institutions with similar objectives and information may be shared inappropriately or inadvertently. |
| Dealings with Connected Persons | A conflict of interest may arise if a colleague deals with a Connected Person (see definition below) in the course of conducting business for, or on behalf of, the Bank the dealings may compromise or otherwise call into question the colleague’s judgement and ability to act objectively in those dealings. |
| Misuse of confidential or non-public information | A conflict of Interest may arise between the Bank, a colleague, a counterparty if the bank and/or colleague is in possession of confidential information relating to a counterparty, and the Bank or colleague has an interest in the use of that information that is divergent from, and may be detrimental or advantageous to, the interests of any party. |
This is not an exhaustive list of the potential conflict scenarios that could exist across the Bank and its operations. Conflicts can also occur in areas such as Procurement and the handling of market sensitive information. Please see aligned policies and standards for further details.
Appendix B – Colleague Declarations
| External Appointments / Employment | This includes, but is not limited to:
Freelance or contract work |
|---|---|
| Personal Investments | Disclose any investments held by you or an immediate family member covering equities and shares – Holdings in publicly traded companies.
|
| Close Personal Relationships |
|
| Political Activities | Any formal positions or engagements within political parties, at local or national level, where individuals exert influence, make decisions or represent specific political interests. |
| Connected Persons | Connected persons include family members, close friends or business associates whose interests might influence or be perceived to influence your decisions at the bank. |