Chapter 6 PRPG Objectivity Flashcards
6.1 Objectivity
A member should maintain objectivity and independent so that they can exercise professional judgement.
6.2 Awareness
A member should be alert to any factor which affects or might affect their independence or objectivity in respect of a matter particularly regarding a long association with a client. A member should take immediate action to address any threat to their ability to exercise their professional judgement.
6.3 Managing potential conflicts of interest
Conflicts of interest are not always recognisable; however, a member should always be aware of the possibility of it occurring and the fact this may impair independence. A member must manage situations where there may be a perceived conflict of interest and their actions in the light of their own views about whether a conflict exists and how the situation will be perceived by the client and third parties. A member should acknowledge the conflict as soon as possible and then immediately seek a solution to solve it. Where appropriate a member should inform the client about the conflict. Where a conflict cannot be managed, a member should decline to act for one or more clients. How the conflict is handled should be noted on file and where possible confirmed in writing to the client.
6.4 Acting for more than one party to a transaction
A member should take appropriate steps to manage this conflict and have three choices:
• To act for only one client – generally be the first client who sought advice. If a member has acquired knowledge concerning a client in relation to a transaction and is then instructed by the other party to the transaction, the member should advise both clients of the potential conflict. A member who acts for one client must tell the other client of their decision and any knowledge acquired from previous clients should be kept confidential
• To act for both clients – this may be possible if there is adequate disclosure of all relevant facts. Both clients are given the opportunity to seek alternative representation. A member needs to be satisfied that the circumstances of the conflict can be managed, and safeguards need to be considered including separate teams for each client, who maintain ethical walls to prevent confidential information spreading. If this is not possible, they can only act for both clients if there is sufficient mutuality of interest between the parties and hence have no objection to the sharing of confidential information. Both clients agree in writing that a member can act for both parties and no preference is shown to either party
• To act for neither party – if the conflict of interest cannot be managed and acting for one party is problematic, the best solution is to decline to act for both
6.5 Financial Involvement with clients or third parties
A member should exercise care before entering into financial arrangements with a client, this includes lending money. Having a financial involvement with a client mat impair a member’s ability to act objectively. A member must always disclose to their client if they are receiving a commission, incentives or other advantages and the amount they receive from a third party relating to the matter upon which they are advising.
