Why conflicts of interest are a concrete risk for every fiduciary firm
A Swiss fiduciary firm handles diverse mandates — accounting, limited audit, tax advisory, corporate administration — often for clients in the same industry, the same family or linked by commercial relationships. In this context, a conflict of interest is not an abstract hypothesis: it is a situation in which the interest of the professional, the firm or another client may influence — or appear to influence — independent judgment towards the client being served.
The Code of Obligations (CO) imposes on the agent a general duty of loyalty and diligence (Art. 398 CO). For fiduciaries, this translates into an obligation to avoid conflict situations, to manage them transparently when unavoidable and to document every step. Ignoring the issue exposes the firm to professional liability claims, loss of client trust and, in the most serious cases, disciplinary sanctions from the relevant professional association (for example Treuhand Suisse, for members).
In this guide we present an operational framework for small and medium-sized fiduciary firms: how to classify conflicts, build effective internal policies, communicate with clients in a compliant manner and protect professional liability through documentation and structured processes.
The Swiss regulatory framework: obligations and industry standards
Managing conflicts of interest in Swiss Treuhand practice rests on three complementary pillars that every firm owner should know and translate into internal procedures:
Code of Obligations (Art. 394–406 CO)
The agency contract requires the fiduciary to act in the principal's interest, with faithful and diligent performance (Art. 398 CO). Art. 400 CO also imposes a duty to account and to surrender any benefit received from third parties in connection with the mandate — including commissions and kickbacks — unless there is disclosure and informed consent from the client. Conflict of interest is not expressly defined, but case law and doctrine link it to a breach of the duty of loyalty. An unmanaged conflict may constitute contractual non-performance and give rise to a claim for damages.
Professional standards (Treuhand Suisse and other industry associations)
Professional associations — primarily Treuhand Suisse — define ethical standards that go beyond the legal minimum. Members must proactively identify conflicts, inform affected clients and, if necessary, refuse or withdraw from a mandate. Even non-affiliated firms can adopt these standards as a defensive reference in the event of a dispute.
Professional liability and insurance
Professional indemnity insurance (PI) covers damage caused to the client through negligence in the exercise of the profession. However, many policies exclude damage arising from intentional conduct or from undisclosed conflicts of interest. A documented internal policy and proper disclosure are therefore tools for insurance protection, not just ethical compliance.
Types of conflict of interest in a fiduciary firm
Before drafting policies and disclosure forms, it is essential to map recurring situations. In Swiss practice, conflicts fall into four main categories:
Personal conflict of the professional
The fiduciary or an employee has an economic, family or asset-related interest linked to the client or a counterparty. Example: tax advisory to a company in which the firm owner is a silent partner, or accounting review of a real estate company owned by a relative.
Conflict between the firm's clients
Two or more clients have opposing interests in the same transaction: corporate merger, succession, tax dispute, profit allocation within a group. The firm cannot advise both parties without disclosure and explicit consent, and often must give up one of the mandates.
Structural conflict of the firm
The firm provides services that create opposing incentives: independent advisory and sale of financial products, referrals to partners who pay commissions, holdings in client companies. Even the absence of a real conflict can create an apparent conflict, sufficient to undermine client trust.
Information conflict (information barrier)
An employee has access to a client's confidential information that could influence work on another mandate. Typical in firms with multiple teams serving competitors in the same market. Requires information segregation and data access protocols.
Building an effective internal policy
A conflict of interest policy should not be a generic document filed away in a drawer. It must be operational, understandable by every employee and integrated into the firm's day-to-day workflows:
1. Conflict register and annual declarations
Every employee — including owners — completes an annual declaration on corporate holdings, personal mandates, relevant family relationships and external appointments. New client mandates are cross-checked against the register before acceptance. Accountex allows you to centralise client records and link them to internal notes, facilitating checks at onboarding.
2. Committee or conflict officer
In firms with more than five employees, appoint an independent officer (ideally a non-operating partner or external adviser) who assesses reports. In small firms, the owner may fulfil this role, but must document decisions in writing to avoid the assessment appearing arbitrary in the event of a dispute.
3. Decision matrix: avoid, mitigate or withdraw
The policy must define three levels of response. Avoid: refuse the mandate if the conflict is insurmountable (e.g. advising both parties in a lawsuit). Mitigate: client disclosure, written consent, team segregation, limitation of the mandate. Withdraw: if the conflict arises during an ongoing mandate and cannot be managed, withdraw in accordance with Art. 404 CO, assisting the client in the transition and compensating for any damage due to premature withdrawal.
4. Training and a culture of reporting
Employees must know that reporting a potential conflict is a duty, not a sign of weakness. Provide annual training sessions with practical cases — family inheritance, corporate groups, cross-border transactions — and a confidential reporting channel. Failure by an employee to report does not exempt the firm from liability towards the client.
Client disclosure: content, timing and consent
Disclosure is the heart of transparent conflict management. In Switzerland, the principle is clear: the client has the right to know every situation that may compromise — or give the impression of compromising — the fiduciary's independence, and to decide knowingly whether to continue the relationship.
When to communicate
Before accepting the mandate, if the conflict is already known. Within a reasonable period (ideally 10 business days) if it arises during an ongoing mandate. Before each specific transaction that heightens the conflict — sale of a holding, corporate reorganisation, transaction with another client of the firm.
What to include in the communication
A clear and understandable description of the nature of the conflict, without excessive legal jargon. Identification of the parties involved and the interest at stake. Mitigation measures adopted (separate team, limits on the mandate, information barrier). Invitation for the client to ask questions and to consult an independent adviser, if they wish.
Written informed consent
Verbal consent is not enough. Draft a letter or an addendum to the agency contract in which the client declares that they have been informed, understand the conflict and nevertheless accept continuation of the relationship. Keep the signed original — in written form or with a valid electronic signature under Swiss law — in the client file, with a copy in the firm's conflict register.
An effective disclosure template distinguishes between a potential conflict (a situation to monitor) and an actual conflict (interest already in collision). For the former, notification alone is sufficient; for the latter, explicit consent or withdrawal from the mandate is essential.
Protecting professional liability
Rigorous documentation is the most effective defence in the event of a dispute. A client who has signed a complete disclosure and informed consent will find it difficult to claim they were not warned — but only if the procedure was followed in substance, not just on paper.
Documentation file for each conflict
Record: date of identification, person who reported it, analysis by the conflict officer, decision taken (avoid/mitigate/withdraw), copy of the disclosure, client consent, any limitations on the mandate. Retain for at least ten years from the end of the relationship, in line with the ordinary limitation period under Art. 127 CO.
Contractual clauses in the mandate
Include in the agency contract a general clause committing the firm to inform the client of every conflict and the client to cooperate in reporting. Avoid clauses that exclude all liability for undisclosed conflicts in advance: they are often void and can worsen the position in litigation.
Coordination with PI insurance
Inform the insurer promptly if a conflict has led to a dispute or threat of legal action. Verify that the policy covers the activities actually performed and that limits are adequate for the size of the mandates handled. Some policies require advance notification of structural conflicts.
Periodic policy review
Review the policy at least every two years or after a significant incident. Update the decision matrix based on the evolution of the firm's activities — new services, acquisitions, partnerships — and regulatory changes or Treuhand Suisse standards.
Practical scenarios and operational response
Three recurring situations in Swiss firms, with the recommended response:
Family succession with heirs in disagreement
The firm provides tax advisory to a family business and is asked to support two heirs with opposing positions on the allocation. Response: do not accept competing mandates. Choose a single principal (e.g. the holding company), inform the others in writing of the conflict and recommend independent advice. Document every refusal of additional assignments.
Owner's holding in a client
The owner holds minority shares in a client AG from an investment made before the firm was founded. Response: immediate disclosure to the board of directors and other shareholders, written consent, exclusion of the owner from audit decisions and from valuations that affect the value of the shares. Consider selling the holdings if the conflict is structural.
Referrals to commercial partners
The firm receives commissions from a bank or software provider that it recommends to clients. Response: general disclosure in the engagement letter and specific disclosure for each referral. Under Art. 400 CO, the client must be informed of the remuneration received by the firm from the third party and, unless there is express and informed waiver, has the right to restitution of economic benefits connected to the mandate. They must be free to choose another provider.
Checklist: implementation in 30 days
A concrete path for firms that do not yet have a structured policy:
- Week 1: Map all active mandates and identify overlaps (same industry, same family, same counterparties). Activate a conflict register — even a protected shared spreadsheet — and collect employees' annual declarations.
- Week 2: Draft the internal policy (2–4 pages) with a decision matrix and appoint the conflict officer. Prepare disclosure and informed consent templates, validated by a lawyer if possible.
- Week 3: Integrate the conflict clause into standard agency contracts. Communicate with existing clients where conflicts have been identified. Train the team on practical cases and the reporting channel.
- Week 4: Build conflict checks into the new client onboarding process. Verify alignment with PI insurance. Plan the annual review of the register and policy.
Managed conflicts = strengthened trust
A conflict of interest is not necessarily the end of the client relationship. On the contrary: honest, timely and documented disclosure demonstrates professionalism and strengthens trust over the long term. A client who knows they can rely on a transparent firm is a client who stays — and who will have no reason to challenge professional liability.
The key is systematic approach: clear policies, an up-to-date register, standardised forms and a culture of reporting. Tools such as Accountex, which centralise client records and mandate documentation, reduce the risk that a conflict goes unnoticed during onboarding or handover between employees. Investing in conflict management today means protecting the firm's reputation and insurance coverage tomorrow.