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Case Study 12

ROC Case Study - 12

These case studies are examples to help you to apply the Rules of Conduct in situations that may arise in your professional practice.

When making ethical professional decisions, you need to:

  • consider the facts
  • identify the relevant RICS standards in the Rules of Conduct and other guidance
  • use your professional judgement, which may require you to balance different interests and principles.

What matters is that you can show that you have done your best to follow the professional standards set by RICS.

Read the case study below

Scenario 12

I am a sole principal. One of my clients needs some specialist work done on their property. My property manager wants to recommend a company to do the work but it is owned by my sibling. This is their company’s area of expertise and they are well regarded, but I am worried that this is a conflict of interest. What should I do?

Summary

  • Use Conflicts of interest, RICS professional statement, to help identify conflicts of interest.
  • Be open and transparent with clients where they could perceive a conflict of interest.
  • Have processes in place to record the personal interests of principals to ensure that possible conflicts are identified and considered.

Rules and behaviours

Rules 1 and 3, and behaviours 1.3, 1.4, 1.6 and 3.8 are relevant here.

Conflicts of interest are carefully defined in Conflicts of interest, RICS professional statement. See the commentary for how we have applied these definitions to the scenario.

The ethical course of action here is to inform your client of the family connection when you make the recommendation and explain why this is not a conflict of interest and is the best recommendation for the client. This demonstrates behaviour 1.6 in being open and transparent with clients about your services, and behaviour 3.8 in ensuring that any referral made is in the best interests of your client.

This approach avoids a surprise for your client later, which might cause them to question your advice, particularly if anything goes wrong with the works. It also allows the client to ask for another recommendation or find another company themselves if they are uncomfortable with the family relationship.

Commentary

Assuming that you and your sibling are not financially dependent on each other, and your company isn’t going to be overseeing the work for the client, there does not appear to be an actual or potential conflict of interest here. You do not stand to benefit financially from recommending your sibling’s company, and an outsider who had been given all the facts of the matter would not think that you were not acting in your client’s interests if you made this recommendation.

However, there is the possibility here that your client could have a perception of a conflict of interest if they find out about your family connection to the firm you are recommending. They may think that this is the reason for the recommendation rather than the quality of the work the company does. This does not bring the matter within the scope of Conflicts of interest, RICS professional statement, but managing a client’s perceptions is an important part of providing a good-quality, diligent service.

It is important to have processes to check for possible conflicts, including having a register of personal interests of the principals of the company. If your property manager had not been aware of the family connection and had made the recommendation without disclosing the information, that might have caused avoidable problems with the client later.