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The GFSC has released its long-trailed thematic review into conflicts of interest. While the reports acknowledge that most firms have frameworks in place to identify conflicts, the regulator has also found lack of evidence that controls work in practice, and how conflicts are actively managed over time.
As regulators globally continue to shine a light on conduct, culture and governance risks, the GFSC’s report sits against the backdrop of MONEYVAL evaluation pressures and the island’s strategic aim to remain a credible, well-regulated centre.
Much to celebrate, yet more to do
The GFSC has been careful to frame the report not as a ‘gotcha’ exercise but as a set of lessons learned, with firms encouraged to benchmark themselves honestly against the report findings, which span:
Identification and awareness
Many firms map conflict types effectively and run periodic training. But the regulator still found blind spots, particularly around subtle conflicts, delegation arrangements and cross-jurisdictional activities.
Documentation and record-keeping
Almost every firm had a conflicts register, but the regulator found that too often these documents are treated as static logs rather than living records. Entries are made but not always updated when circumstances change. More importantly, the rationale for why a conflict is managed in a certain way is often missing.
Without that linkage between identification, control and outcome, the register risks becoming a tick-box rather than a genuine tool for governance.
Disclosure to clients and counterparties
The review highlighted some examples of clear and timely disclosure- where firms explained the conflict, how it was being managed, and what this meant for the client. But in many cases, disclosures were generic, tucked away in lengthy documents, or drafted in legalese that clients were unlikely to digest.
The GFSC’s message is that disclosure should be meaningful and proportionate: if clients cannot understand or act on it, it is not disclosure in substance.
Control frameworks and monitoring
Written policies are near-universal, but the regulator’s concern is that they are not sufficiently tested. Many frameworks remain static, with little evidence of stress-testing or challenge to check whether the controls actually work under pressure.
The expectation is shifting toward active monitoring – firms should be able to demonstrate that conflicts controls operate effectively in real-world scenarios.
Gifts and inducements
The GFSC recognises that most firms treat gifts and hospitality as high-risk areas, and many have clear thresholds and approval processes. However, the application of those boundaries can be inconsistent. Registers are not always complete, and the rationale for accepting or declining benefits is not always recorded.
As a result, the regulator views this as an area where firms need to tighten practice and demonstrate that their rules are more than just symbolic.
Training and culture reinforcement
Periodic training sessions are the norm, but too often these remain generic slide decks covering abstract scenarios. The GFSC highlighted a desire to see more practical reinforcement: case studies, real examples, and ongoing reminders that keep the issue alive beyond induction or annual training.
The culture test is whether staff feel confident to identify and escalate conflicts in the moment, rather than reciting definitions when prompted by compliance.
Complex structures
The most persistent challenges emerge where firms operate through complex structures. Pooled accounts, group transactions, omnibus arrangements and layered fiduciary entities create environments where conflicts are harder to identify, let alone manage. The GFSC notes that these cases require enhanced vigilance, clearer accountability, and more transparent reporting.
Simply pointing to complexity is not an excuse for weak oversight; if anything, the regulator expects stronger evidence of conflict management when structures are most intricate.
What should firms be looking at right now?
The review provides a clear set of expectations for firms to assess their approach. Firms should:
Policy updates and quick wins
Tighter thresholds for gifts and benefits, clearer disclosure templates, and more rigorous updating of registers are immediate improvements that can be made.
Conduct a broader gap analysis
Compare policies, registers and disclosure practices against the regulator’s expectations. If something looks generic or stale, assume it will be challenged.
Prepare for inspection
The GFSC has already used questionnaires and will follow with interviews and visits. Files, logs and training records should be up to date and defensible.
Capture clear evidence of testing
A policy that sits untouched will not satisfy supervisors. Show that controls are tested, escalated, challenged and followed through.
Board and stakeholder engagement
Directors need to understand where conflicts arise and how they are being managed. Passive oversight will not be enough.
The review sets a benchmark that will shape Guernsey regulation for years to come. Firms will need to invest more time, resource and systems to monitor and evidence their approach, especially where group policies don’t fully align with local expectations.
Just as important, culture is under the spotlight: tone from the top, genuine challenge and escalation are what supervisors will be looking for. Those that act early and transparently can position themselves as credible leaders; those that don’t risk not only regulatory action but also damage to hard-won reputations.
How Ocorian can help
We’re supporting our clients to review their compliance frameworks in light of the GFSC’s findings – from testing how conflicts of interest are identified and disclosed, through to strengthening record-keeping and board oversight.
Our online compliance platform, Gateway, makes it easier to manage policies, registers, monitoring and training in one place, giving firms confidence they can evidence what regulators now expect. If you’d like to make sure your approach stands up to scrutiny, get in touch
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