FSA has published a guidance consultation setting out its view on payment for order flow (PFOF) arrangements. The paper looks at how PFOF arrangements work and what SYSC and Conduct of Business (COBS) rules apply to it. FSA is concerned that these arrangements create a clear conflict of interest between clients of the firm and the firm itself and so are unlikely to be compatible with its inducement rules and risk compromising compliance with best execution requirements. Among the questions in the consultation is a question on what the likely impact on clients would be of ending the practice. FSA wants comments by 9 November and plans to finalise the guidance in the first quarter of 2012. (Source: Guidance Consultation on PFOF Arrangements)