What must a firm do regarding conflicts of interest according to FCA's Principles?

The firm is required to manage conflicts fairly between itself and its customers according to the Financial Conduct Authority's (FCA) Principles. This principle emphasizes the importance of ensuring that when conflicts arise—whether they are between the firm and its clients or among different clients—the interests of customers must be prioritized. Fair management of conflicts helps maintain trust in the firm and ensures that customers receive fair treatment, aligning with the FCA's overall goal of promoting integrity in financial services.

By managing conflicts effectively, a firm can demonstrate its commitment to putting customer interests first and maintaining a high standard of conduct. This principle obliges firms to establish policies and practices that identify potential conflicts and address them proactively. The focus is on transparency and ethical behavior in all dealings with clients to promote confidence in the financial markets.

In contrast, minimizing advertising or limiting customer interactions could hinder a firm’s ability to effectively communicate with clients and understand their needs, which ultimately could lead to more conflicts rather than fewer. Similarly, regular training, while beneficial for awareness, is not a direct response to managing conflicts in practice; rather, it supports the overarching goal of ethical and fair treatment.