How does "Best interest" apply to Treasury and Finance Teams

The concept of "best interest" has deep history across jurisdictions with and is considered a pillar of jurisprudence. At its most basic, it means making decisions that are in the "best interest" of the individual or entity. This has applicability across most categories whether in family law, healthcare and most definitely in financial services.

So, how do treasury and finance teams within organizations measure up in the best interest philosophy. From our experience, there are certain basic principles that must be incorporated into the standard operating practices or the risk management policies. Three key aspects stand out and can pay dividends not only financially but critically for compliance and auditability. These are:

1. For financial transactions such as FX or Cash investments, there MUST be a comparative process. The benefit is:

   1. Selecting the best/optimal price

   2. Reduce any bias to service providers

   3. Keep price tension alive

2. Auditability of decisions

   1. An accessible and tamper proof audit trail must be kept and be available for any of these decisions.

   2. Compliance or other stakeholders must have access to ensure that the "best interest" is adhered to

3. When using a broker/intermediary, it is critical to have visibility and warranties around how the broker/intermediary is remunerated. So, will they execute your transactions with the best outcome for the client OR the best outcome for the broker. How can you evidence that.

Financial intermediaries are most at risk acting between principal and supplier to ensure all actions are seen to be in the best interest of the client.

With these mechanism in place can finance and treasury teams be satisfied that they acted in the "best interest" of all stakeholders.

It is also the responsibility of directors (executive and non-executive) to be aware and ask the right questions.

I have witnessed a Risk Committee meeting where it was proved that a dealer was favoring a specific counterparty and receiving gifts in exchange. Don't get to that stage.

That is why the words "unconflicted" and "independent" have gravitas and that's what Likwidity brings to organizations.

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