RICS - Conflicts of Interest Flashcards
When did the RICS Conflict of Interest professional standard come into effect?
1st edition March 2017 - came into effect in January 2018.
Is the RICS Conflict of Interest a professional standard or practice information doc?
Professional standard.
What is a conflict of interest?
- A situation in which the duty of a member or firm to act in the interests of a client in a professional assignment conflicts with a duty owed to another client in relation to the same professional assignment. (Party conflict)
- A situation in which the duty of a member or firm to act in the interests of a client in a professional manner conflicts with the interests of that same member. (Own interest conflict)
- A conflict between the duty of a RICS member to provide material information to one client and the duty of that same RICS member to another client to keep that same information confidential (Confidential Information Conflict).
What is a Party Conflict?
When a member or firms duty to act in the interests of a client conflicts with that of another client or party in relation to the same assignment.
What is an Own Interest Conflict?
When a member or firms duty to act in the interests of a client in an assignment conflicts with the personal interests of that same member or firm.
What is a confidential information conflict?
When a conflict arises due to the duty of a member to provide material confidential information to one client and the duty of that same member to maintain that same information confidential to another client.
What is an information barrier?
The physical or electronic separation of individuals within the same firm that prevents confidential information passing between them.
What is informed consent?
Consent given willingly by a party who may be affected by a conflict of interests. The party therefore must understand the following:
a) that there is a conflict of interest or risk of one
b) knows the facts known by the member or firm that are material to the conflict of interests
c) what the conflict of interest may be.
d) that the conflict of interest may affect the ability of the RICS member to advise or act fully in the interests of the client.
Elaborate on informed consent
Giving Informed Consent is the way in which a party who might be affected adversely by
a Conflict of Interest acknowledges the existence of that risk, but instructs a regulated
firm or individual RICS member to proceed despite that risk. The affected party can only
give Informed Consent if the person explaining the position to them:
– is entirely transparent about any material factors and
– is sure that the party affected understands what they are doing (including the risks
involved and any alternative options available) and is doing it willingly.
Give an example of where an informed consent will not be enough in an assignment.
In an assignment that is contentious, informed consent is unlikely going to be able to manage a PARTY conflict.
When is the Conflict of interests professional standard most applicable?
In Valuation work. They must act independently and objectively throughout the assignment.
How can a conflict of interest be resolved in a competing bidder scenario?
Legally acting for competing bidders does amount to a conflict of interest, however it is common. It can be resolved by:
- Each bidder providing its Informed Consent
- Ensuring that no individual within the regulated firm acts for or is responsible for the work of more than one bidder.
- By putting in place an appropriate information barrier.
What is appendix A of the Conflict of Interest Professional Standard?
A sample form for obtaining Informed Consent
