23 Sep Inducement Agreement Deutsch
Granting and accepting the benefits that lawyers call “incentives” can create conflicts of interest. These can occur when an investment services firm, for example. B a bank, receives from a third party an incentive likely to influence the entity if it provides (complementary) investment services to the client. Portfolio management is also commonly referred to as investment management. The main difference with investment advice is that the portfolio manager has the mandate to make individual investment decisions for the client himself. The client limits the margin of decision in the portfolio management agreement that defines the investment policies or strategy. Typically, the portfolio manager reports quarterly on the performance of the client`s assets and all executed transactions. In addition, portfolio managers should not withhold incentives to compensate them later with the portfolio management fees that the client must pay. This is because the resulting liquidity advantage could encourage portfolio managers to take into account the expected incentives in their investment decisions. As a general rule, the client should therefore always pay the portfolio management fee directly. In order for the prohibition of incitement not to apply, the incentive must also be designed in such a way as to improve the quality of the service in question for the customer. The incentive scheme generally prohibits incentives: investment services firms must not accept incentives related to (complementary) investment services provided by third parties who are not the client of those services.
Stricter rules of the incentive scheme and, in particular, increased quality improvement requirements reduce potential conflicts of interest and improve transparency. They aim to protect investors and consumers. In addition, the rules take greater account of the legal policy of “prohibition of incitement except this one”. Investment services firms must record in an internal register all incentives they have put in place or received. They must also document how these incentives improve the quality of services provided to clients. These registrations allow BaFin to verify that companies meet the requirements of the incentive scheme. The regulation of the incentive scheme aims to ensure that clients nevertheless receive investment advice in the best interests. Incentives are commissions, fees and other cash payments as well as all benefits in kind, in accordance with the first sentence of Paragraph 70(2) of the WpHG. The definition is therefore very broad. It is important to know that incentives can be implemented not only in the form of cash payments (monetary incentives), but also in the form of other benefits (non-monetary incentives). Examples include the provision of computer services, hardware or software, as well as training. You can find information on common types of incentives in the “Examples of frequent incentive types” infobox.
The peculiarity of fee-based investment advice on an independent basis is that, unlike commission-based investment advice, it can only be paid by the client. Conversely, this means that paid investment advisors do not have to accept and retain incentives from the companies whose products they market. In addition, they must strive to avoid financial instruments and services that are incentivized. If, in exceptional circumstances, this is not possible, for example because a financial instrument is not available without incentives, paid investment advisors must return the incentives to the client as soon as possible and in full. Paid investment advisors may accept minor non-monetary benefits, such as information materials or participation in free training. . . .