However, for companies in the financial sector, client gifting could turn into a compliance minefield if you aren’t fully aware of the regulations that are put in place to prevent unfair business practices.
In addition, the growing attention given to ethics in the conduct of business means financial companies are under increasing scrutiny. Non-compliance will not only result in penalties but also erode the public’s trust in your company.
What You Need to Know About Corporate Gifting Compliance
The latest regulatory guidance was issued in 2015 by the Securities and Exchange Commission. It addresses the conflicts of interest caused by the offering of gifts or entertainment while conducting business.
Client gifting in the financial sector is also regulated by the anti-fraud provision of the Investment Advisers Act, which indicates that advisers should maintain the fiduciary duties they owe to their clients.
As such, financial advisers should not offer extravagant gifts, entertainment, or other items that could be construed as aiming to influence clients’ decision-making or make clients feel obligated to do business with the firm.
Financial firms should establish a set of compliance policies and procedures in regards to both giving and receiving gifts. There should be a pre-clearance process to help employees stay compliant with the Investment Company Act.
How to Set Up Client Gifting Compliance Policies
A typical corporate gifting policy for a financial firm should cover the following:
- A definition of “gift” or “entertainment.”
- A limit for the value of a nominal gift that will not require prior approval. Since gift giving is a common business practice, it’s often not possible or efficient to obtain approval for every gift purchased and sent. Setting a dollar figure that’s considered “nominal” can help facilitate the process while ensuring compliance.
- A clear procedure that outlines the process to obtain pre-approval for giving or receiving gifts above the pre-set nominal value. This can include a list of common and acceptable types of gifts and entertainment to aid compliance and supervision.
- An employee education program that is either part of the code of ethics training or presented as a separate module. This can either be conducted via online learning courses or regular informal training to build awareness among staff.
- A procedure for keeping a gift log, which can be presented during an SEC routine audit to address possible discrepancies from the written policies.
An Easy Way to Stay Compliant
To facilitate corporate gifting and compliance, you can use a system that allows you to offer a collection of pre-selected gifts while tracking all the items sent to clients by your company.
At Givenly, we’ve made corporate gifting a breeze. You can set up a custom catalog with gifts within the pre-approved value limit for your employees to send gifts from. This will ensure your client gift program remains within company compliance.
In addition, your organization’s gifting activities are tracked on a centralized dashboard for easy review and accurate reporting.
Contact Us to simplify your corporate gifting programs for your company.