The UK Financial Conduct Authority (FCA) recently reported that private markets firms are managing conflicts of interest inconsistently. This sector, which includes asset managers, alternative investment fund managers (AIFMs), and investment advisers, is expanding and becoming more complex. Some firms aren't identifying conflicts adequately or keeping their controls up to date, and they need to demonstrate they're treating investors fairly.
This finding shouldn't surprise anyone involved in training. Conflicts programs often get built once and then left untouched. The beliefs below explain why that happens. Each one sounds reasonable, yet each leaves a gap.
Myth 1: "If we have a conflicts policy, we're covered."
Reality: A policy describes intent. The FCA's concern is about execution: firms that fail to identify conflicts or let their controls go stale. A policy written for a smaller, simpler business can look fine on paper while missing the conflicts created by new fund structures, new investor types, or new service lines.
Ask your team a straightforward question: when did we last test whether this policy matches how the business actually operates today? If the honest answer is "when we wrote it," you have a document, not a control.
Myth 2: "Conflicts are rare, obvious events."
Reality: In private markets, conflicts are often built into the structure. One firm may manage several funds, advise different investors, and hold interests alongside clients. Each of these relationships can pull in different directions. They rarely announce themselves.
The practical consequence is that identification can't depend on someone noticing a problem. It needs a repeatable process. Map the points where your firm's interests, one client's interests, and another client's interests can diverge. Allocation of opportunities, valuation, fees and expenses, and cross-fund transactions are natural starting places. Then review that map whenever the business changes.
Myth 3: "Disclosure solves the problem."
Reality: Disclosure is one tool, and a weak one when used alone. Telling investors a conflict exists doesn't show you're managing it. The FCA's expectation that firms prove they treat investors fairly points toward evidence of outcomes, not just evidence of notice.
For your training content, this changes the lesson. Don't teach employees that the answer to a conflict is "disclose it and move on." Teach them to ask three things: Can we avoid it? If not, how do we manage it? And if we disclose it, is the disclosure specific enough that a reasonable investor would understand it? Conflict of Interest Disclosure matters, but it sits inside a larger decision about recusal, separation, or restructuring the activity.
Myth 4: "Technology will catch what people miss."
Reality: Technology helps, but it only finds what you've taught it to look for. Tools can automate conflict of interest disclosure collection, flag overlaps between personal holdings and deal activity, track outside business activities, and keep an auditable record of approvals and recusal decisions. For a growing firm, that's a real advantage over spreadsheets and email.
But software can't identify a conflict nobody has defined. If your rules don't cover a new fund structure, no alert will fire. Treat technology as the way you apply and evidence your controls consistently, not as a substitute for the judgment that sets them. When you evaluate a tool, ask whether it can be updated quickly when your business changes. A system that's expensive to reconfigure will drift out of date just as a policy does.
Myth 5: "Annual training keeps people aware."
Reality: One yearly module produces a completion record, not awareness. People forget generic examples, and generic examples don't reflect the specific conflicts your teams face. Controls that need to keep pace with a fast-changing sector need training that keeps pace too.
Better training is specific and frequent. Build scenarios around your actual business lines. Consider a deal team member who learns that a family member has a stake in a counterparty; training should walk through what they report, to whom, and what happens next. Add short refreshers when your products, structures, or rules change. And make sure the people who approve and review conflicts are trained on how to evaluate them, not just the people who raise them.
What to Do Instead
Start from the FCA's message: firms must be able to show fair treatment of investors, not just claim it. Build your program around that standard of proof.
- Refresh your conflicts inventory on a schedule and on triggers. Review it on a set cadence, and again whenever you launch a fund, add a service, or change a fee arrangement.
- Assign owners. Every identified conflict should have a named person responsible for its controls and a date for the next review.
- Keep a decision record. Document what was identified, what was decided, and why. That record is your evidence.
- Use technology to apply controls consistently. Automate collection, routing, and recordkeeping, and keep the rules behind it easy to change.
- Tie training to your real conflicts. Update scenarios when the inventory changes, so training and controls stay in step.
- Test and learn. Sample past decisions, check whether controls worked as intended, and feed what you find back into both the policy and the training.
None of this requires a bigger program. It requires a living one. The firms the FCA is worried about aren't necessarily careless; they're running controls designed for a simpler business. Keeping those controls current is the work, and it's work your training team is well placed to lead.
