By Jenny Segal, an actuary, investment professional, workplace culture expert and author
Your reputation rests on the reputation of the managers whose funds you select. So what would happen if a manager on your buy list came under formal investigation for a significant undisclosed conflict of interest?
And then, when it came out, you kept the fund on the platform anyway because performance was strong and clients liked the story. It is unthinkable.
In fund selection, we know that our job is precisely to stop this kind of thing from happening: a good story should never circumvent a conduct question.
And yet Nigel Farage has just demonstrated that Westminster works differently. The Parliamentary Commissioner for Standards opened a formal inquiry in May 2026 into a £5m gift Farage received shortly before the 2024 general election from crypto investor Christopher Harborne, a sum that never appeared on his declaration of interests.
Rather than let the process run its course, Farage resigned his Clacton seat on 8 July and is standing again in the resulting by-election on 13 August, framing it as a chance to let voters, not the Standards Commissioner, decide his fitness to serve.
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A record 34 candidates are contesting the seat, but the other major parties are boycotting it outright, calling the move a stunt designed to convert a conduct question into a popularity contest. And the bet appears to be paying off, with Farage heavily favoured to win.
If he is re-elected, the inquiry will resume and could require him to stand down if it finds against him, but it would not prevent him from once again seeking re-election. The parallel with the world of fund selection is stark: flows trump fitness.
In fund selection, due diligence runs independently of what clients think about a manager. Yet in politics, a mandate from the people can stop it in its tracks.
This exposes a very real gap – an accountability asymmetry – between how the rule-setters are allowed to behave, compared with those who submit to the exacting rules they set.
A live conduct question would immediately trigger enhanced scrutiny to understand the probity of the manager: why wasn’t the issue disclosed, is the conflict being managed or merely explained away, does the investment process underlying the fund still hold up, is the house being straight about it and taking it seriously.
Great numbers and client flows won’t buy a manager a pass and might even raise the bar, because commercial success can cause management to turn a blind eye on an underlying problem. Probity concerns would cause a manager to go on watch, into enhanced monitoring, or off the buy list altogether, a world away from allowing their fund to remain on the platform and letting the investors decide.
Living with this discipline day-to-day can feel like friction: generating extra monitoring calls and awkward follow-up questions a house would rather not answer, a fund held back from the buy list while legal and compliance work through a disclosure that should have been made months earlier. None of that shows up in a factsheet, and none of it wins a mandate.
It is tempting to think of it as caution for caution’s sake, particularly when the numbers and the commercials are good, and particularly when a delayed decision means watching flows go to a competitor who asked fewer questions. But it is this very professional discipline that stops fund selection sliding into the position Westminster now occupies: when scrutiny can be overridden by popularity.
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It has taken a run of very public failures – funds gated and suspended, star managers whose story outran their process, houses that discovered too late that a compelling narrative and a sound process are not the same thing – to make that discipline the default rather than the exception.
We should feel pride in the high bar we set ourselves, and perhaps start asking for the equivalent from those who write the rules we abide by.
Fund flows arise from two distinct stages. First: is the fund on a buy list, and a cornerstone of this is the manager’s integrity. Are they disclosing what needs to be disclosed, are conflicts being controlled rather than explained away, can we have confidence that what we are being told is the truth.
Then, and only then, are investors given the opportunity to decide where to put their money, based on whether they think the numbers, the flows and the story stack up.
The second question should not – and cannot – be allowed to trump the first.
Westminster has just shown us what happens when popularity wins over probity. Seen through that lens, the everyday discipline you bring to your desk looks less like box-ticking and more like the reason clients can have faith in our industry.
