2
Related Party Transaction Risk
2.1
A firm must enter into transactions with related parties at market value or on terms no more favourable than would be agreed if the transaction was not with a related party.
- 01/02/2014
2.2
2.1 does not apply to beneficial terms that are part of an overall remuneration package such as favourable interest rates for employee loans.
- 01/02/2014
2.3
A firm must establish, implement and maintain effective policies and procedures to identify, evaluate and manage risks arising out of transactions with its related parties.
- 01/02/2014
2.4
- (1) prevent a related party from taking part in the firm’s decision making process in relation to any transactions with that related party;
- (2) set a materiality threshold above which transactions with related parties receive prior approval from the firm’s management body;
- (3) ensure that the firm records and monitors the details and amounts of any related party transactions using an independent credit review or audit process; and
- (4) only permit exceptions to those policies and procedures if reported to the firm’s senior management or management body as appropriate.
- 01/02/2014