Conflicts of Interest

Question 1

What is a conflict of interest?

Answer 1

• A conflict of interest is anything that impedes or may impede an individual’s or firm’s ability to act impartially and in the best interests of a client.

Question 2

What are the three types of conflict of interest?

Answer 2

• Party conflict - arises when the duty of an RICS member or regulated firm to act in the interests of a client (or other party) conflicts with the duty owed to a different client (party conflict) on that professional assignment.
• Own interest conflict - arises when the duty of an RICS member or regulated firm to act in the interests of a client (or other party) conflicts with the interests of the same RICS member or regulated firm.
• Confidential information conflict - arises when the duty of an RICS member or regulated firm to provide the client with all information relevant to the professional assignment conflicts with the duty to maintain confidentiality of confidential information.

Question 3

How would you handle a conflict of interest?

Answer 3

• Determine if the conflict of interest should be avoided or managed.
• I would avoid all conflicts of interest unless proceeding with the conflict of interest was in the interests of all parties affected, is not prohibited by law and would not prevent myself providing competent and diligent advice.
• Disclose the nature of the conflict of interest to the client, and if appropriate, disclose the conflict of interest and proposed measures to manage the conflict of interest (such as information barriers) to all affected parties.
• If managing the conflict of interest, obtain the written informed consent of all parties which may be affected by the conflict of interest, ensuring I advise all affected parties to obtain independent professional advice if required.

Question 4

What is an information barrier?

Answer 4

• The physical and/or electronic separation of individuals or groups of individuals with the same information in order to prevent the flow of confidential information between the selected individuals who are “in the know”, which is a method of managing party conflicts or confidential information conflicts.
• The information barrier can be achieved by ensuring affected individuals work in different locations i.e. different buildings or floors), have different support staff, have password-protection to relevant documentation and ensure the firm’s compliance officer oversees the process.

Question 5

What is a personal interest and how would you handle an own interest conflict of interest?

Answer 5

• Personal interest relates to professional assignments, which may have direct implications on the member, member’s family and friends or the firm.
• Disclose the nature of the conflict of interest to the client and explain that the conflict of interest may compromise my professional integrity and prevent me from representing the client objectively.
• May suggest alternative options to the client, such as referring the assignment to a colleague, maintaining an information barrier between affected individuals and obtaining written informed consent from all affected parties.