Conflicts of Interest: EU 2017/565 and Irish Rules Explained

A conflict of interest is not a failure in itself. The failure is not identifying it, not managing it, or leaning on a disclosure to cover it. This guide sets out what two primary sources say: Articles 33 to 35 of the EU's MiFID II Delegated Regulation (EU) 2017/565, and Regulations 20 to 29 of the Central Bank of Ireland's 2025 consumer protection regulations. It supports our Conflicts of Interest in Financial Services course overview and sits alongside our guide to the Central Bank of Ireland Consumer Protection Code 2025.

Article 33: when a conflict may harm a client

Article 33 of Delegated Regulation 2017/565 tells firms to consider, at a minimum, whether the firm or a relevant person is in any of five situations. These are: likely to make a financial gain, or avoid a financial loss, at the client's expense; having an interest in an outcome that is distinct from the client's; having an incentive to favour another client; carrying on the same business as the client; and receiving an inducement from a third party. The list is a minimum, so a firm needs to ask the question for its own business as well as ticking these five.

Article 34: the written policy

Article 34 requires a written conflicts of interest policy suited to the firm's size, organisation and business. Where the firm is part of a group, it must also consider conflicts arising from other group members. The policy must identify the conflicts that risk damaging clients and set out the procedures and measures to prevent or manage them.

The independence measures in Article 34 include controls on the exchange of information between people engaged in conflicting activities, separate supervision, removing direct links between the pay of people in conflicting activities, preventing inappropriate influence over how a person carries out their work, and controlling simultaneous or sequential involvement in separate services. Article 34 calls disclosure "a measure of last resort", to be used only where organisational arrangements are not sufficient to prevent the risk of client harm. The policy must be reviewed at least annually, and the article says over-reliance on disclosure of conflicts is to be considered a deficiency.

Article 35: the conflicts record

Article 35 requires firms to keep and regularly update a record of the services or activities where a conflict that may harm a client has arisen or may arise. Senior management must receive written reports on these situations at least annually. The record turns the policy into evidence: it shows which conflicts the firm found, not merely that it has a policy.

Central Bank of Ireland regulations 20 to 29

Chapter 2 of Part 2 of the Central Bank's 2025 regulations deals with conflicts of interest and remuneration, in the version published on the Central Bank's website. In summary, as we read the page:

• Regulation 22 requires a robust conflicts policy that identifies conflicts and sets procedures to manage them.
• Regulation 23 lists conflicts that must be avoided, including volume or target-based pay that ignores the consumer's best interests and referral arrangements in exchange for goods or services.
• Regulation 24 allows other conflicts to be managed only if they are disclosed in writing, the consumer acknowledges them on a durable medium and all reasonable control steps are taken. If a conflict cannot be managed this way, the service may not be provided.
• Regulations 21, 27 and 29 cover payments that must not impair the duty to act honestly and in the consumer's best interests, employee pay that must not encourage inconsistent advice, and gifts or rewards that conflict with duties to consumers.
• Regulation 28 requires information barriers between business areas and connected parties, with written procedures and staff notification.

How the two sources fit together

The EU article focuses on investment firms and the MiFID framework, and the Central Bank regulations apply to regulated entities in their dealings with consumers. Both treat disclosure carefully: the EU text as a last resort, the Irish text as acceptable only with written disclosure, acknowledgement and other control steps. In our reading, both also push firms to look at pay structures, not just individual transactions.

Using this in a compliance role: our suggestions

These steps are our suggestions, not requirements in the sources.

• Check that the conflicts record names specific activities, not generic categories.
• Ask whether each disclosure in use is backed by an explanation of why organisational arrangements were not enough.
• Review bonus and target structures against the types of pay arrangement the sources single out.
• Check that the annual policy review and the annual management report both happened and were minuted.

For structured learning, browse our CPD courses.

What we could not confirm

We read the consolidated text of Delegated Regulation 2017/565 dated 14 December 2017, so later amendments may have changed wording. We could not read FCA Handbook SYSC 10, so this post does not cover the UK rules and does not say how the UK version of these requirements differs. We read the Central Bank page only as far as its first section, and we did not read its guidance. This post is general information, not legal advice.