– Code of ethics for collective investment schemes and individual investment management mandates : PROVISIONS: Per the decision of the AMF Board, these rules have become standards which now apply to the entire asset management industry, including AFG’s members, non-member asset management companies and other investment service providers managing portfolios on behalf of third parties.
– Code of ethics for collective investment schemes and individual investment management mandates : RECOMMENDATIONS: These recommendations, despite the fact that they lack regulatory power, may serve as guidelines for implementing these provisions.
Financial Good Practice
Financial good practice is defined as the duties and rules that professionals must comply with when carrying on their business. Good practice is a critical element in the quality of service that the asset management industry needs to provide its customers.
Regulations obviously contribute to setting the rules of good practice. However, asset management industry professionals also play a decisive role in setting the rules through the AFG. Article 314-2 of the AMF General Regulation stipulates that professional organisations can draw up a code of conduct, thus contributing to self-regulation of the industry.
Following the findings of a working group chaired by Gilles Brac de la Perrière, financial good practice is based on two cardinal principals:
- The primacy of the customer’s interest,
- Market integrity.
These principles entail an obligation to ensure proper disclosure and transparency in relation to customers, prevent and manage conflicts of interest, treat all customers equally, control employees’ transactions, and prevent money laundering.
A decisive role for the AFG
Our good practice rules
The AFG has played a decisive role in setting the rules of good asset management practice since 1990, when it first drew up the codes of good practice.
These rules are submitted to the AMF, which ensures that they are compatible with its General Regulation. The AMF also officially approved the rules, which makes them professional standards that apply to the entire industry under Article 314-2 of the AMF General Regulation. Violations of these professional standards may be sanctioned by the AMF.
Every AFG member undertakes to comply with a number of good practice rules and principles that are specific to its business, regardless of its activities or the legal framework in which it operates. The Compliance and Internal Control Officer of each management company is responsible for ensuring compliance with these professional standards and contractual commitments.
The principles may be applied in different ways, as warranted by the investors’ interest or specific regulations, but the spirit of the principles cannot be altered.
Today, Chapter IV of Book III – Title I of the AMF General Regulation is devoted entirely to the rules of conduct for investment services providers, including asset management companies. This means that good-practice rules for the asset management are increasingly founded on regulations.
The AFG has also drawn up various codes of good practice dealing with specific management issues, such as socially responsible investment, performance presentation, corporate governance and compensation of market intermediaries for services rendered, in order to improve the transparency, governance and, consequently, the practices of our industry.
- Since 1990 the AFG has published an investment fund code of good practice that is updated periodically to keep pace with changes in the industry and in products.
- In 1997 the AFG drafted a code of good practice for individualised management under a mandate.
- In 1998 the AFG published a code of good practice for presenting investment fund performances and rankings
- Since 1998 the AFG Corporate Governance Commission, chaired by Jean-Pierre Hellebuyck, has published recommendations on corporate governance that are updated periodically.
- In 1999 the AFG published a code of good practice for employee investment funds.
- In 2001 a code of good practice for authorised venture capital fund management companies was drawn up in partnership with the French Venture Capital Association (AFIC).
- In 2005 the AFG, the French Socially Responsible Investment Forum (FIR) and the European Social Investment Forum (Eurosif) drafted transparency guidelines for retail SRI funds.
- In 2006 the AFG and the French Association of Investment Firms (now the Association Française des Marchés Financiers, AMAFI) published a good practice charter for broker compensation by investment managers (in English or in French).
- In 2009, AFG revised Code of Ethics is recognised as a professional standard by French Authorities.
The first section comprises a set of provisions, which have been recognised as professional standards by the AMF Board. These provisions apply to the entire profession, including AFG Members, non-member investment firms and other providers of asset management services. The second section consists of non-binding recommendations for implementing the Code of Ethics.