Conflicts of Interest

Question 1

What is a conflict of interest and when does it arise?

Answer 1

Arises when a firm’s independence and impartiality is threatened due to the existence of a conflict between two clients

Question 2

What RICS documents are you aware of relating to conflicts of interest?

Answer 2

RICS Professional Statement - Conflicts of Interest (2017)

RICS Professional Statement - Conflicts of Interest - UK Commercial Property Market Investment Agency (2017)

Question 3

When was the RICS Conflicts of Interest PS (2017) effective?

Answer 3

January 2018

Question 4

When was the RICS Professional Statement - Conflicts of Interest - UK Commercial Property Market Investment Agency (2017)?

Answer 4

January 2018

Question 5

Can you tell me about the RICS Professional Statement - Conflicts of Interest (2017)?

Answer 5

It says that RICS Members must not advise or represent a client if there is a conflict of interest (or significant risk of one), except when all parties affected or that may be affected have given their informed consent.

Question 6

What is informed consent?

Answer 6

Can only be given in writing when the parties have been provided with all the information relating to the conflict and that the party affected understands what they are doing

Question 7

Can informed consent always be sought by RICS members to combat conflicts of interest?

Answer 7

No, only if the RICS member is confident that proceeding despite the conflict of interest is in the interest of all parties affected (or who may be affected) and is not prohibited by law

Question 8

What are the three types of conflict defined in the RICS Professional Statement on Conflicts of Interest?

Answer 8

Party conflict
Personal conflict
Confidential information

Question 9

If you were faced with a conflict of interest, what would you do?

Answer 9

I would follow the 3 step approach of how to handle a conflict of interest:

1. Conflict Avoidance
2. Write to the parties
3. Conflict Management

Question 10

What is conflict avoidance (relating to conflicts of interest)?

Answer 10

Decide at this state whether to accept or decline the instruction.
When you do not accept the instruction

Question 11

When writing to both parties regarding a conflict of interest, what would you say?

Answer 11

1. Disclose the nature and background to the conflict and how you plan to manage it (information barrier)
2. Request written confirmation from both clients of their informed consent for the firm to act in accordance with the conflict management procedures

Suggest they see independent advice

Question 12

What is conflict management?

Answer 12

For example, setting up an information barrier in the way agreed with both clients.

Question 13

How should information barriers be operated?

Answer 13

Robust barrier
Surveyors must be physically separated - preferably different floors or buildings with different supper teams
Information securely stored in different folders

Question 14

What do you know about the RICS Professional Statement on Conflicts of Interest - UK Commercial Property Market Investment Agency (2018)?

Answer 14

It is a mandatory RICS document which covers Dual Agency, Multiple Introductions and Incremental Advice.

Also personal interest conflicts

Question 15

What is dual agency?

Answer 15

It is where an agent acts for the seller and purchaser on a transaction.

Question 16

Are there any circumstances where an agent can act for a purchaser and a seller at the same time?

Answer 16

No, under no circumstances since January 2018

Question 17

What is multiple introductions, are they allowed?

Answer 17

Yes they are

An agent introduces a property to multiple buyers

Question 18

What must be made clear to a client in an agents ToE?

Answer 18

It must be clear in the ToE whether the agent is acting on an exclusive or non-exclusive basis.

Question 19

If the agent is acting on an exclusive basis, what must they do?

Answer 19

Must tell all other parties that they introduced the property to that they can no longer act for them.

Question 20

If the agent is acting on a non-exclusive basis, what must they do?

Answer 20

They must obtain informed consent from the clients
Information barriers must be put in place
Must be in the ToE

Question 21

What is incremental advice?

Answer 21

It is where, for example, an agent acting for the vendor is approached by the purchaser, or its lender, to provide valuation advice or building consultancy advice etc.
I.e. the advice is incremental to the existing instruction

Question 22

Can incremental advice be provided?

Answer 22

Yes but only if consent is given and information is put in place before providing any advice

Question 23

What is a personal interest?

Answer 23

Arises when a family member or close business associate has a financial interest in the transaction (connected person)

Question 24

What must you do if there is a personal interest?

Answer 24

Full transparency is required - declare the facts before undertaking the instruction
Remember s21 of Estate Agents Act (1979)
You must not let them influence your personal judgement