Conflicts

Overview

A conflict of interest is a situation in which someone in a position of trust has competing professional or personal interests. Such competing interests can make it difficult to fulfil their duties impartially. A conflict of interest may exist even if no unethical or improper act results from it.

RBC Brewin Dolphin is committed to identifying and preventing, or monitoring and managing all actual and potential conflicts of interest that can arise between us and our clients and between clients of all areas of our Group. Our core business is our Investment Management Division, which offers investment advice, investment management and dealing services to clients.

The purpose of this document is to provide our clients with appropriate information regarding the policies we have in place to manage conflicts of interest.

Below you will find a summary of the principal conflicts of interest that exist in our business and the steps we take to mitigate them. If you have any questions on this summary, in the first instance please raise them with your usual point of contact.

Employee dealing

It is usual for employees of financial institutions such as ours to undertake deals on their own behalf. We recognise that this can create a conflict with the duties owed to our clients. Therefore all of our employees and their connected parties must comply with our Personal Account Dealing Policy which amongst other matters prohibits:

• dealing ahead of client orders; and

• dealing in an investment where they know, or should know, that a written recommendation, or a piece of research or analysis, in respect of that investment or any related investment is due to be published.

Gifts and hospitality

We take care through internal policies to ensure that gifts or hospitality our employees receive from clients, companies or other institutions are not extravagant and are designed to enhance the quality of the service we provide to our clients. RBC Brewin Dolphin employees are not permitted to accept any gifts and or hospitality other than those considered normal in their line of business. Excessive gifts may result in a conflict of interest, something we are committed to avoiding. We maintain a register of gifts and or hospitality, whether given or received, which is subject to Senior Manager oversight.

Inducements

We have relationships with many third parties such as product providers. We have processes in place to ensure that any fees or non-monetary benefits provided by third parties do not impair our duty to act in the best interests of our client.

RBC Brewin Dolphin pays for Investment Research for a limited set of panel banks and independent research companies to support the investment process of the Investment Management Division. RBC Brewin Dolphin does not accept unsolicited research from third parties.

Remuneration

The remuneration of all permanent RBC Brewin Dolphin employees usually consists of a salary and a performance related bonus, a portion of which may be withheld and released after 3 years. Through these arrangements we strive to ensure our employees remain motivated whilst at the same time ensuring the remuneration schemes do not encourage inappropriate behaviour or excessive trading. We recognise this conflict and through our monitoring mechanisms remain alert to any potential abuse.

Investment management division

Business Interests and Suitability

Where we use our discretion to make investment decisions or provide advice, we are required to ensure that our actions are suitable for our clients.

However, we or a connected party may have an interest, relationship or arrangement that is material to the service, transaction or investment concerned. This may include matters such as:

• the retention of commissions which we receive from a third party;
• recommending that you buy or sell an investment in which one of our other customers has given instructions to buy or sell;
• uninvested credit balances we hold on your behalf and placed in the capital account may earn interest at the published rate on our website, which is paid gross. Any changes in interest rate will be notified on the RBC Brewin Dolphin website;
• any difference between the rate of interest received by us on client money accounts and the rate paid to you is retained by us;
• RBC Brewin Dolphin employees are unable to act as Trustee, Executor, Director or Power of Attorney for our clients. We may allow this in exceptional circumstances subject to senior management approval;

RBC Brewin Dolphin distributes products that are manufactured by firms within the wider RBC Group or by itself. As we act as agent in our Discretionary Investment Management, Financial Planning and Managed Advisory services we ensure we act in the best interest of our clients and that selected or recommended products meet clients’ needs and financial objectives. Whilst we consider a wide range of financial products and services to identify suitable solutions for our clients, we will not review all Retail Investment Products in the market.

The following RBC product types can be included in portfolios or recommended to our clients:

• Investment funds: RBC Brewin Dolphin is a sponsor, investment manager and distributor of certain investment funds. The charging structure of these funds is simple, designed to achieve cost efficiency, economies of scale and avoids duplicate charging.

• We operate effective decision making and monitoring processes around the inclusion of these funds within portfolios to ensure they meet the design, the objective and the target market of the relevant service category. The funds can represent a material part of the investment solution they are included in, and in certain cases can be up to 100%. We have robust conflict management and disclosure arrangements which ensure that investment recommendations and discretionary decisions regarding these products are suitable. A list of sponsored funds within our investment offering is available upon request.
• RBC in-house products: we may invest in or recommend products provided by another firm or business segment within the RBC Group. We treat these investment products at arms’ length, applying same standards of due diligence and investment tolerance levels as we do for third party investments. We also ensure that charges are competitive, simple and clearly disclosed in product and service-related documentation.
• RBC Brewin Dolphin and its employees do not receive additional remuneration or non-monetary benefits when a client invests in the above mentioned investment funds or in-house products over other products or investment solutions.

Internal Department as an execution venue in principal trading

We may use RBC Capital Markets, our internal capital markets department, to execute trades on your behalf in a principal capacity.  Where we execute your trades internally and in a principal capacity, we ensure that it is your best interests by subjecting the trades to the same rigorous monitoring and assessment as third-party venue to ensure the trades consistently deliver the best possible outcomes. We perform post-trade analysis using independent data sets to test that prices fall within tolerable benchmarks.

We have information barriers to prevent RBC Capital Markets (which may hold inside information) from influencing RBC Brewin Dolphin wealth management decisions. Equally the information barriers ensure the capital market division does not trade on its own account ahead of a large client order from RBC Brewin Dolphin to benefit from the resulting price move.

RBC Brewin Dolphin employees do not receive remuneration for using RBC Capital Markets services or products.

Aggregation and Allocation

We may combine (‘aggregate’) your orders with those of other clients. Please note that when we operate in this manner, this is purely to assist in the execution of your order. The effect of aggregation may on some occasions work to your disadvantage.

If we make an application on your behalf for a new issue be aware that if the allocation is scaled back it will be applied pro rata across all clients. Therefore clients who have, as a result, been allocated a holding which is uneconomical may be removed from the aggregated order and their allocation added back to the pool for redistribution amongst the remaining applicants. We will monitor the effectiveness and fairness of the operation of this mechanism.

Research

RBC Brewin Dolphin research analysts working in the internal research department are forbidden from managing investments on behalf of clients.

Research analysts can manage their own personal accounts and they may hold stock in the companies they research, however they are prohibited from dealing against their own recommendations. They may also hold stock in the companies they research as a result of the decisions of an investment manager when they are using discretionary portfolio management services, or for historical reasons.

Disclosure

If there is no other way of managing a conflict, or where the measures in place do not sufficiently protect your interests as a client, the conflict will be disclosed to allow you to make an informed decision on whether to continue using our service in the situation concerned.

Further information is available on request.