4:132 The measures taken by the firm to manage or, as the case may be, mitigate conflicts of interest should be documented. This process should include the following measures and procedures:

• establishing information barriers or ensuring the physical separation of certain departments with regard to IT matters;
• entrusting conflicting activities within a chain of transactions or services to different persons;
• entrusting supervisory and reporting responsibilities relating to (potentially) conflicting activities to different persons;
• avoiding a direct link between the remuneration of the relevant persons and the revenue generated by conflicting activities;
• avoiding situations in which persons from within or outside the firm with a conflict of interest can exercise inappropriate influence over the firm’s activity;

• establishing appropriate policies and procedures for transactions with related parties. This could include requiring, for example, that transactions be conducted at arm’s length terms, that a binding opinion be given by independent members of the statutory governing body, that exposure to such transactions be limited, etc.;
• providing that the members of the statutory governing body have a responsibility to abstain from voting on matters in which they have or may have a conflict of interest or where the objectivity or ability of the person concerned to perform the duties properly could be compromised;

• limiting the external activities of the persons concerned.

4:133 It is good practice to inform interested stakeholders of the general nature and sources of conflicts of interest and of the policy applied by the firm to identify, prevent and manage these conflicts. For more information on this subject, please see EBA/GL/2021/14, the NBB’s Fit & Proper Manual, the NBB Regulation and Communication NBB_2022_19 on external functions, and Circular NBB_2017_21 on loans to managers.