Guidance for an immediate family member of a KPMG individual

KPMG is an Audit firm and as such is highly regulated.

Independence is basically our license to operate and our people and their family members are required to comply with the rules at all times.

Failing to comply can have a serious impact on our client relationships, our overall reputation and our relationship with our regulators, and as such any issues identified can have serious consequences for the KPMG person.

Our regulators view spouses, "spousal equivalents" and financial dependents as equivalent to the KPMG individual in a number of situations.

The regulations use the term ‘immediate family’ and this is explained in more detail in the site.

It means that if you want to make an investment or change a current investment as an immediate family member of a KPMG individual you must first check the investment is permissible.

It makes no difference if your KPMG family member works in Audit, Consulting, Deal Advisory or Tax - or any other KPMG business area - the independence requirements will apply to you both.

KPMG employees are ultimately responsible for ensuring you understand the rules that apply and that you comply with them all times.

There are dedicated compliance teams to help you get this right. KPMG has zero tolerance for getting this wrong and expects their employees to take accountability for complying with the independence rules at all times.

There are serious consequences for them if this goes wrong.

All investments must be checked in KICS before being made to ensure they are permissible.

All investment must be recorded in KICS to ensure on-going compliance.

• You cannot invest in any audited entity of KPMG worldwide
• Independence rules apply to all transactions even if the position is opened and closed on the same day (day trading). Holding a prohibited investment for less than one day is still a breach. In addition the value of the investment is not relevant, a share worth £1 can still cause a breach!
• The rules for fund investments vary depending on which business area your KPMG family member works in – regardless all investments must be recorded in the KICS system and checked prior to making a change or new purchase
• The rules can be complex, but the important thing to note is that they apply to you as well – regardless of where the KPMG individual works in the firm

If you meet the definition of an immediate family member then you will be caught by the independence rules and will need to ensure compliance.

A life trigger such as getting married or moving in together can trigger the independence rules – it is important to consider these as early as possible to avoid any issues.

You will no longer be required to comply if you no longer meet the definition. For example, if you were considered the spousal equivalent of a KPMG employee but you are now no longer in a relationship with the KPMG employee or are divorced.

Access the KICS search tool here.

Immediate family members are considered as:

• Spouse
• Spousal equivalent*

*A spousal equivalent is someone you live with in the same way you would with a spouse. It has no bearing on whether you share finances. Effectively if you live together and are in a relationship you are considered a spousal equivalent.

• Dependent children
• Other financial dependants**

**Someone who receives more than half of his or her support from the KPMG employee.

The same independence restrictions apply to all immediate family members as they do to the KPMG individual.

Maintaining independence is not a once a year check, you need to be mindful of the requirements all of the time.

Changes in personal situations can trigger an independence requirement. Failure to check or notify KPMG of the change by the KPMG employees can have serious consequences.

Here are some examples of life triggers that can impact independence.

• Getting married
• Moving in with your partner
• Starting a new job
• Retirement planning
• Starting work at KPMG

Example scenarios:

1. You are due to start a new job: Yes, you are likely to be enrolled into the employee pension scheme and the investments are likely to be required to be recorded in KICS. In addition if the company has an audit relationship with KPMG the role will need to be reported and safeguards considered to ensure the KPMG individual for who you are an immediate family member maintains their independence.
2. You are travelling on the tube for the first time in a while and a notification pops up on your phone to sign up to an online trading app. You receive a free share if you sign up and you decide to download: Yes, online trading apps such as Trading 212, Degiro, eToro etc sometimes allocate you with a free investment to start your investment journey. Sometimes you do not know what the investment is until it has been made. This can trigger an independence breach. You should only make an investment after checking it is compliant using KICS (if you are the immediate family member of a Partner or Partner Equivalent then the investment must be pre-cleared with the Partner Independence Team).
3. Your Aunt asks you to take on Power of Attorney for her. She is relatively young and in good health. You agree to take on the role: Yes - while it is inactive there will be no action you need to take. However once activated the assets held under the POA will be subject to the same independence rules that apply to you.
4. You are looking at your future financial planning and want to make some new investments: Yes – before making any new investments you will need to check that they are compliant with the KPMG independence rules. You should only make new investments after checking it is compliant using KICS (if you are the immediate family member of a Partner or Partner Equivalent then the investment must be pre-cleared with the Partner Independence Team).

The financial relationships which are relevant to the independence rules are:

• Underlying investments held in pensions schemes, privately or in an employee scheme (including former employee pension schemes)
• ISAs (including Junior ISAs)
• Child Trust Funds
• Share options as part of employee share schemes
• Employer pension schemes
• Investments under your influence as a trustee, executor, or under an active power of attorney
• Funds held via any other investment platform or financial advisor/broker arrangement
• Bank accounts
• Lending relationships such as loans and credit cards
• Mortgages

Investments held in cash, such as cash ISAs, are not included.

Immediate family members of KPMG Partners or Partner Equivalents are required to pre-clear any new investments with the Partner Independence Team.

If the KPMG individual for who you are an immediate family member is not a Partner or Partner Equivalent, then they are required to check KICS (KPMG Independence Compliance System) BEFORE investing.

If you are starting a role with a KPMG audited entity including any affiliated companies, then the KPMG individual for who you are an immediate family member has to report it to the Personal Ethics and Independence Team.

The team will review and liaise with the audit engagement team to see if any safeguards need to be applied.

The investment rules can often be complex and it can sometimes be difficult to identify which investments are permissible to invest in and which could cause an independence issue.

KPMG’s compliant portfolio network gives you access to a broad range of financial advisors who have a KPMG compliant investing option.

What is a KPMG compliant portfolio?

A KPMG compliant portfolio is a pre-approved list of investments from which you, your family member or your advisor can make investments in without having to pre-clear or double check KICS. All investments in a KPMG compliant portfolio are already pre-approved and fully compliant with the investment rules. All you need to do is to enter the one-line entry of the selected KPMG compliant portfolio in KICS (for example Nutmeg Compliant Arrangement) and sign up for the compliant portfolio that works for you! It's as simple as that...

There are a wide range of providers, varying in price and investment option.