Conduct Ethics - Conflicts of Interest

Question 1

What is a conflict of interest?

Answer 1

A situation which could impede my impartiality or professional judgement.

• the risk of bias.

Question 2

Explain a party conflict of interest

Answer 2

Situation where duty of a member or firm acts in the interest of a client is conflict by a duty owed to another client or party.

• example where same company acting on behalf of developer and contractor.

Question 3

Explain an own interest conflict of interest

Answer 3

Situation where duty of a member or firm acts in the interest of a client is conflicted by a duty owed to another client or party.

• example where I am asked to complete a feasibility study on a project where I disagree with the location, such as the land to the rear of my property where a factory is proposed.

Question 4

Explain a confidential information conflict of interest

Answer 4

A conflict between the duty of a member under paragraph 2.2 to provide information to a client and the duty of that (same) member or of a firm under paragraph 2.1 to another client to keep the same information confidential.

Question 5

What is Confidential Information as per Conflict of Interest professional statement?

Answer 5

confidential information, whether held or disseminated electronically, verbally or in hard copy.

Question 6

What is paragraph 2.1 and 2.2 definition of confidential information?

Answer 6

2.1 - Members and firms Must maintain confidentiality of Confidential Information unless disclosure is required by law or the member or firm concerned can demonstrate that the relevant party consented to the disclosure before it was made.

2.2 - Every member (sole or firm) Must provide to every client the information that is material to that client’s professional assignment of which that member has knowledge.

Question 7

What is an Information Barrier?

Answer 7

Para 4.4

The physical and/or electronic separation of individuals (or groups on individuals) within the same firm that prevents confidential information passing between them.

Question 8

Can you explain Informed Consent?

Answer 8

Para 4.5:

The consent given willingly by a party who may be affected by a Conflict of Interest, that party having demonstrated to the member or firm that they understand:

A) there Is an actual, or significant risk of a conflict of interest, and

B) the facts known by the member or firm that are material to the conflict of interest, and

C) what the conflict of interest is, or may be, and

D) that a Conflict of Interest may affect the ability to the member or firm to advise or act fully in the interests of the client.

Question 9

Does a member working for a non-regulated firm have to comply with the Conflict of Interest professional statement?

Answer 9

All members Must comply with the professional statement.

Question 10

When did the professional statement come into force?

Answer 10

• 01 January 2018

Question 11

Can a member or firm advise or provide services to a client involving a Conflict of Interest or significant risk of a Conflict of Interest?

Answer 11

• No they Must not.
• As per 1.1 of professional statement, only where all those affected or may be affected have provided their prior Informed Consent.

Question 12

What grounds would an Informed Consent be sought?

Answer 12

Under section 1.1, Informed Consent may be sought only where the RICS member or firm is satisfied that proceeding despite a Conflict of Interest is:

A) in the interest of all those who are or maybe affected, and
B) is not prohibited by law,

and that conflict will Not prevent the member or firm from providing competent and diligent advice to those affected.

Question 13

What must a member do regarding a Conflict of Interest?

Answer 13

Section 1.2

Every member either independently or within a reg/non-reg firm Must:

A) identify and manage Conflicts of Interests in accordance with professional statement

B) keep records of the decisions made in relation to accepting (and where relevant to continue) individual professional assignments, obtain Informed Consent, and any measures taken to avoid Conflict of Interest arising.

Question 14

What systems and controls should firms have in place.

Answer 14

Section 1 - Para 3

• Every firm Must have systems in place effective systems and controls appropriate to the size and complexity of its business, to enable them to ensure the firm and employees can manage their compliance with the professional statement.
• Members Must then consider their obligations under 1.1.

Question 15

Is commission based remuneration acceptable for a member/firm?

Answer 15

Yes, commission or success-based payment is acceptable although consideration should be given to potential own-interest Conflicts of Interest.

Question 16

Can a member or firm proceed on all occasions with Informed Consent in place?

Answer 16

Commentary Note 5:

No, Informed Consent may not be enough to manage the Conflict of Interest on occasions where:

A) contentious assignments
B) where a specific statutory or regulatory regime is in place
C) Where a member is taking professional assignments that conflict with each other
D) Commentary 7 warning about the inherent difficulty in obtaining Informed Consent to an Own Interest Conflict.

Question 17

How would you go implement Informed Consent?

Answer 17

Follow Appendix A and commentary note 4, using clear, direct and simple language. In writing.