-CUSTOMER VALUE-

Conflicts of Interest Introduction A bank that provides asset management services for clients may be required to manage a variety of actual or potential conflicts of interest. Conflicts of interest and self-dealing transactions normally arise whenever the bank’s ability to act exclusively in the best interest of account beneficiaries or clients is impaired. A fiduciary is required by a long history of case law to put the interests of account beneficiaries before the interests of the bank. The fiduciary owes its beneficiaries undivided loyalty and must administer each trust for the exclusive benefit of account beneficiaries and the purposes for which the account was created. Conflicts of interest are not limited to instances in which the bank is acting as a fiduciary. In fact, as the trust business increasingly becomes an asset management business, the opportunities for a bank to find itself in a conflict of interest increase. Asset management — the management of third-party assets for a fee or commission — includes fiduciary services (personal, employee benefits, and corporate), investment advisory services, the retail sales of nondeposit investment products, and agency arrangements including custody of assets. When a national bank provides these services, the best interests of the client and the bank are not always the same. This booklet provides guidance to examiners evaluating the risk management practices banks have in place to control conflicts of interest and self-dealing. The booklet’s introduction provides an overview of risks and controls associated with conflicts of interest. The appendix contains a more in-depth discussion of certain transactions that may result in conflicts of interest or selfdealing. The procedures are designed to be used in large banks and, as needed, in community banks. In community banks, the procedures supplement the Comptroller’s Handbook booklet “Community Bank Fiduciary Activities Supervision.” For additional information, see this booklet’s “References” page. The Employee Retirement Income Security Act of 1974 (ERISA) views certain transactions as conflicts of interest and self-dealing. This booklet does not discuss those conflicts of interest in depth. Rather, it clarifies selected topics. The planned Comptroller’s Handbook booklet “Retirement Plan Services” will contain a comprehensive discussion of conflicts of interest and self-dealing activities in accounts subject to ERISA. In the interim, examiners with As of January 6, 2012, this guidance applies to federal savings associations in addition to national banks.*