Level 3 - Ethics, Conflict of Interest Flashcards
What is a conflict of interest?
When something impedes a member or a firm’s impartiality and/or duty of care.
What types of conflicts of interest are there?
1) Party Conflict - acting on both sides of a transaction
2) Own Interest Conflict - relating to a personal interest
3) Confidential Information Conflict - relating to work between two parties that is confidential
How do you undertake a conflict of interest check?
I use my firm’s internal database system to check the client name and the address of the property against all known jobs.
I will also refer this to the senior management to check the Client name and property address poses no conflict.
How would you approach a conflict of interest?
If a COI is identified –> to act with integrity and with transparency –> declare the COI to all parties involved.
Provide written advice on how this will be managed and request for written confirmation of informed consent.
If not given, then I will remove myself from the conflict.
If you are conflicted, can you still undertake an instruction if you’ve got informed consent?
This is a difficult question –>
This hinges on if I can act impartially and whether I believe that by undertaking the instruction –> would this be in the best interest for the parties involved, and whether if it is prohibited by law.
What would you do if you had a personal conflict of interest and how would you manage this?
Ensure that all parties were aware and provided informed consent.
If granted, then I would refer this to my colleague and refer to the instruction internally and ensure that the appropriate information barriers were set up.
What information barriers does your firm have in place?
Restricted access to files
Clear desk policy
Private meeting rooms
What steps should you follow when you receive instructions from a client?
1) Ensure that i’m competent in the services being requested for.
2) Conflicts of interest check
3) Issue my Terms of Engagement
Why may it be appropriate to decline an instruction?
1) You are not competent to undertake the work
2) You do not have sufficient facts on the issue
3) Proposed client will not sign the terms of engagement or complete the AML checks
4) There is a conflict of interest
5) Proposed client is on the UK Government’s sanctions lists.
What does RICS Conflicts of Interest, 2017 require all firms to have?
Must have effective systems and controls in place appropriate to the size and complexity of their business, to ensure full compliance.
Firms must keep records to show their compliance with the statement.
How should your firm operate information barriers when Conflicts of Interest are being managed?
1) “Reasonable steps” must be taken to operate an effective barrier to prevent information from passing between the two parties.
2) Surveyors acting on the two sides must be different and be physically separated
3) Information regarding the instruction should be securely stored
4) Keep an audit trail of all actions taken. Firms Compliance Officer must oversee all actions.
What is a ‘Chinese Wall’?
An information barrier within an organisation used in order to prevent exchanges or communication that could lead to a COI.
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?
1) Yes, providing a Chinese wall is effectively implemented.
2) Teams should be physically separated in different parts of the building (or indifferent buildings).
3) Requires a compliance officer to monitor the ‘wall’ - education and training must be made available to those managing the wall.
