Conflict of Interest Management Policy — X Underwriting Managers

01 — Introduction

Purpose & Scope

X Underwriting Managers (Pty) Ltd ("the FSP") is required to maintain effective organisational and administrative arrangements to identify, disclose and manage conflicts of interest. The FSP aims to avoid, and where not possible mitigate, any conflict of interest in the rendering of financial services between itself, its representatives and clients.

This policy gives effect to Section 3A of the General Code of Conduct for Authorised Financial Services Providers and Representatives (GCOC) and provides for management of conflicts of interest in compliance with both the FAIS Act and the GCOC.

GCOC Definition — Conflict of Interest

Any situation in which a provider or representative has an actual or potential interest that may, in rendering a financial service to a client:

Influence the objective exercise of obligations to a client; or
Prevent the rendering of an unbiased and fair financial service, or acting in the interests of that client

Including but not limited to: a financial interest; an ownership interest; or any relationship with a third party.

02 — General Principles

Our Commitment

Proactive Identification

We identify and manage potential or actual conflicts of interest before any client becomes aware, ensuring clients are not unduly prejudiced.

Client Disclosure

When engaging with a new client we inform them of this conflict-of-interest management policy via our disclosure document and how it may be obtained.

Integrity & Professionalism

Conflicts of interest affecting clients could undermine the integrity of our business. Early identification is vitally important.

03 — Roles & Responsibilities

Who Is Responsible

Management / Key Individuals

Responsible for oversight of the FSP and all representatives
Implement appropriate processes and procedures for effective COI risk management
Implement the conflict-of-interest policy, procedures and controls
Assess seriousness of identified conflicts and determine how they are managed
Review COI procedures and their efficacy at least annually

All Employees / Representatives

Obliged to report actual, perceived or potential conflicts of interest
Failure to notify management may result in disciplinary action
Must report conflicts even when confident an objective service will be provided
Complete annual COI Declarations and update the Register of Interests
Seek advice from the Compliance Officer where uncertainty exists

Compliance Officer

Assists management in handling COI situations
Evaluates complaints received about failure to disclose a relevant interest
Prepares COI management reports for management consideration
COI is a standing agenda item for all management meetings

04 — Identification

Identifying Conflicts of Interest

A conflict exists where the interests of the FSP or its associates compete directly or indirectly with the interests of clients, and which could significantly prejudice the client. In determining whether a conflict exists, we consider whether the FSP, a representative, associate or employee:

Is likely to make a financial gain, or avoid a financial loss, at the expense of the client
Has an interest in the outcome of a service that is distinct from the client's interest in that outcome
Has a financial or other incentive to favour another client, group of clients or third party over the client
Receives an inducement from a person other than the client in relation to a service provided
Is involved in the same professional activity as the client

Common examples of conflicts

Related Payments

Remuneration, benefits or incentives paid by product suppliers to the FSP.

Privileged Information

Use of sensitive or privileged information about a client.

Competing Client Interests

Acting for different clients whose interests conflict materially.

Confidential Information

Holding client information which, if disclosed or used, would affect services provided.

05 — Declaration

Declaring Conflicts of Interest

Relevant employees (including Key Individuals, Representatives, Management and Directors) must declare any private interests that might affect the performance of their duties. Declarations are made via annual COI Declarations and maintained in the Register of Interests.

Types of conflicts to declare

A

Other Employment

Employees may not engage, directly or indirectly, in any other business, enterprise or employment without prior written consent. Such activity may create a conflict or risk disclosure of confidential information.

B

Service on Boards & Committees

Employees must obtain approval before accepting any position on a board of directors, advisory board or committee of any entity, unless the appointment is at the request of the FSP.

C

Investment in Private Companies

Employees who find themselves able to invest in clients, partners or suppliers of the FSP must understand the potential conflict and disclose accordingly.

D

Gifts & Financial Interests

No employee may obtain material personal benefits because of their position. All gifts received from a product provider or associate must be approved and entered in the Gift Register regardless of monetary value.

06 — Acceptable Financial Interest

What Financial Interests May Be Received

In terms of Section 3A(1) of the GCOC, the FSP and its representatives may only receive or offer the following financial interests from or to a third party:

Commission authorised under the Long-term Insurance Act, Short-term Insurance Act or Medical Schemes Act
Fees authorised under the above Acts, if reasonably commensurate to the service rendered
Fees for financial services where commission is not paid, if agreed to in writing by the client and stoppable at the client's discretion
Fees or remuneration for services rendered to a third party, if reasonably commensurate to the service
An immaterial financial interest (not exceeding R1 000 per calendar year from the same third party)
A financial interest for which fair value or remuneration reasonably commensurate to its value is paid at the time of receipt

Important condition

Financial interests may only be received or offered if they are reasonably commensurate with the service rendered; do not result in double remuneration for a similar service; conflicts are effectively mitigated; and payment does not impede the delivery of fair outcomes to clients.

07 — Avoidance

Avoiding Conflicts of Interest

The FSP does not permit the offering of financial interests to representatives for:

Giving preference to the quantity of business secured to the exclusion of service quality and fair client outcomes
Giving preference to a specific product supplier where more than one may be recommended
Giving preference to a specific product of a supplier where more than one product may be recommended

Where a conflict is so serious that it cannot be adequately managed, it must be avoided entirely. All conflicts must be assessed for impact and reported to the Compliance Officer and/or Key Individual, who will determine how to proceed — either with caution, with appropriate disclosures, or by avoiding the conflict altogether.

Sign-on bonuses

No Key Individual or representative may receive a sign-on bonus from any person. No person may offer or provide a sign-on bonus to any person within the FSP.

08 — Control & Disclosure

Controlling & Disclosing Conflicts

Where a conflict is identified and proceeding is appropriate, it is normally managed through a combination of internal controls and disclosure. Depending on the circumstances, it may be appropriate to:

Disclose

Disclose the conflict of interest to the client in writing at the earliest reasonable opportunity.

Reassign

Allocate another representative to provide the service to the affected client.

Decline

Decline to provide the service to the client where the conflict cannot be adequately managed.

Escalate

Initiate internal or external disciplinary action, including referral to the Regulator where warranted.

Disclosures must include: the measures taken to avoid or mitigate the conflict; any ownership or financial interest held; and the nature of any third-party relationship that gives rise to the conflict, in sufficient detail for the client to understand its exact nature.