8. Conflict of Interest

Question 1

Tell me about your understanding of conflict of interest?

Answer 1

Where someone in a position of trust has competing personal or professional interests making it difficult for them to fulfil their duties impartially.

Question 2

What conflicts of interest do you know?

Answer 2

Party conflict
Own interest conflict
Confidential information conflict

Question 3

What is a party conflict of interest?

Answer 3

Situation where a member of firm acts in the interests of a client with a duty owed to another client in relation to the same or a related professional assignment

Question 4

What is an own conflict of interest? Can you give me an example?

Answer 4

The rule on own-interest conflicts contains a strict prohibition on acting in any situation where your own interests (as an individual or under the SCCF, as a firm) conflict, or there is a significant risk they may conflict, with your duty to act in the best interests of your client

For example you have, or might obtain, any personal interest or benefit in a transaction in which you act for the client

Question 5

What is confidential information of conflict?

Answer 5

A situation where the duty of RICS member to provide material information to one client and the duty of the RICS member or of a regulated firm to another client to keep the same information confidential

Question 6

Can you proceed with a service where you’ve identified a conflict of interest?

Answer 6

The RICS guidance on conflict of interest states that members must not provide a service where a conflict of interest is present unless those who are affected provide an informed consent.

Question 7

Are you aware of guidances on conflict of interest?

Answer 7

Yes, RICS published a guidance on conflict of interest that provides guidances March
2017

Question 8

What are the requirements for professional indemnity insurance?

Answer 8

RICS requires that a PII policy should meet the following standards:
* an ‘each and every claim’ basis or aggregate plus unlimited round the clock reinstatement basis
* RICS’ minimum policy wording or more comprehensive wording. As a minimum, you should ensure that your policy wording is written on a full civil liability basis and
* the minimum level of indemnity based on the firm’s turnover in the previous year (or estimated for a new firm).

If your firms turn over is up to £100,000 per year then your minimum level of indemnity is £250k
If your firms turn over is between£100,001 and £200,000 then your minimum level of indemnity is £500k
If your firms turn over is over £200,000 then your level of indemnity is £1m

Question 9

What is a conflict of interest? 

Answer 9

A conflict of interest is where someone in a position of trust has competing personal or professional interests making it difficult for them to fulfil their duties impartially

Question 10

What must you do if a conflict of interest exists? 

Answer 10

I would immeditatrl

Question 11

What is an ‘information barrier’ or ‘ethical wall’? 

Question 12

Tell me what you understand about conflicts of interest?

Answer 12

• A conflict of interest is where someone in a position of trust has competing personal or professional interests making it difficult for them to fulfil their duties impartially.

Question 13

How could the conflict of interest be managed internally if two separate departments were working for the same client?

Answer 13

• I could put in place procedures to ensure exclusivity of staff.
• This would avoid any cross over of information between the departments.
• I would also ensure that there are separate communication lines into the client.
• Separate geographical locations and secure office and data storage would also need to be provided.
• Staff could also sign up to confidentiality or non-disclosure agreements.
• I would also need to monitor the potential conflict and keep the client updated on progress.

Question 14

If the client was insistent that you worked for them despite an existing conflict of interest, how would you proceed?

Answer 14

• I would check the clients understanding around the conflict of interest.
• I would then make the client aware of the potential for reduced impartiality.
• If they were still insistent on the appointment, I would seek a letter of instruction from the client to
  continue.
• Following the appointment I would agree working procedures to manage the conflict of interest with
  the client and the teams involved.

Question 15

What conflicts of interest do you know?

Answer 15

Party conflict of interest
Own conflict of interest
Confidential information conflict of interest

Question 16

What is a party conflict of interest?

Answer 16

Situation where a member of firm acts in the interests of a client with a duty owed to another client in relation to the same or a related professional assignment

Question 17

What is an own interest of conflict?

Answer 17

A situation in which the duty of an RICS member to act in the interest of a client in a professional assignment conflict with the interests of that same RICS member

Question 18

What is confidential information of conflict?

Answer 18

A situation where the duty of RICS member to provide material information to one client and the duty of the RICS member or of a regulated firm to another client to keep the same information confidential

Question 19

Can you proceed with a service where you’ve identified a conflict of interest?

Answer 19

The RICS guidance on conflict of interest states that members must not provide a service where a conflict of interest is present unless those who are affected provide an informed consent.

Question 20

Are you aware of guidance on conflict of interest?

Answer 20

Yes, RICS published a guidance on conflict of interest that provides guidances

Question 21

Tell me what you understand about conflicts of interest?

Answer 21

• A conflict of interest is where someone in a position of trust has competing personal or professional interests making it difficult for them to fulfil their duties impartially.
• An existing relationship will result in reduced impartiality and Chartered Surveyors have an obligation to make clients aware of this and if necessary, decline work opportunities where a conflict of interest occurs.

Question 22

How could the conflict of interest be managed internally if two separate departments were working for the same client?

Answer 22

• I could put in place procedures to ensure exclusivity of staff.
• This would avoid any cross over of information between the departments.
• I would also ensure that there are separate communication lines into the client.
• Separate geographical locations and secure office and data storage would also need to be provided.
• Staff could also sign up to confidentiality or non-disclosure agreements.
• I would also need to monitor the potential conflict and keep the client updated on progress.

Question 23

If the client was insistent that you worked for them despite an existing conflict of interest, how would you proceed?

Answer 23

• I would check the clients understanding around the conflict of interest.
• I would then make the client aware of the potential for reduced impartiality.
• If they were still insistent on the appointment, I would seek a letter of instruction from the client to
  continue.
• Following the appointment I would agree working procedures to manage the conflict of interest with
  the client and the teams involved.

Question 24

What is a conflict of interest?

Answer 24

Anything that impedes or might be perceived to impede an individual’s or firm’s ability to act impartially and in the best interest of a client

Question 25

Give some examples of where conflicts of interest may arise.

Answer 25

1. Acting for two different parties with competing interests at the same time
2. Financial interests (e.g. gaining over and above your normal fee)
3. Personal relationship
4. Commercial relationship
5. Interests of your firm conflict with that of your client

Question 26

What should a surveyor do if a conflict of interest arises?

Answer 26

1. Should be dealt with by implementing openness and transparency
2. Declare any conflicts of interest clearly to all parties ASAP and offer to stand down from acting for any party
3. All parties can then decide how they wish to proceed and if there are any objections you must stand down

Question 27

Describe a conflict of interest you have experienced and how it was resolved.

Answer 27

• Refused to accept certain gifts/hospitality from a contractor whilst settling the final account due to timing and how this may be seen as affecting impartiality
• Resolved by referring to the RICS Professional and Ethical Standards Decision Tree to aid my decision to refuse

Question 28

What is a ‘Chinese Wall’?

Answer 28

An information barrier within an organisation used in order to prevent exchanges or communication that could lead to a conflict of interest

Question 29

Can one part of a chartered surveying practice work for a client, whilst another part of the practice is working for a different client who has conflicting interests to the first?

Answer 29

• Yes, providing a Chinese wall is effectively implemented
• Teams should be physically separated in different parts of the building (or in different buildings)
• Requires a compliance officer to monitor the ‘wall’ - education and training must be made available to those managing the wall