RICS launches conflict of interest consultation

RICS has launched a consultation on new conflict of interest guidelines following concerns about agents “double-dipping” on UK investment deals. Dual agency, defined as where an agent advises both buyer and seller, is prohibited “under any circumstances” in the proposed rules, which will come into force in January 2018. The existing rules state that dual agency should not be undertaken as a “general rule” and only if both contracting parties have given their express consent. The UK-specific guidelines come after industry professionals questioned the lack of tough rules on the practice in the RICS global consultation last summer. They address potential conflicts of interest through dual agency, multiple introductions (where an agent competes for contracts with several buyers for investment opportunities) and incremental advice (where an agent is approached to provide advice related to a purchase or disposal that is incremental to an existing instruction to advise the buyer or seller.) RICS associate director Nigel Sellars said: “In response to demand, we have developed UK-specific mandatory requirements, building on the good work of the IPF protocol that outlines the best practice that we expect RICS members and firms to adhere to.” The Investment Property Forum’s protocol, published in 2014, called for greater transparency and early disclosure of potential conflicts. It stipulated that agents can act for multiple bidders only with their clients’ consent and only if they can maintain confidentiality at all times through a barrier policy, which must include separate teams and password-protected IT. Click here to read the consultation, which closes on 10 February. New proposed rules Dual agency Under the proposed guidelines, dual agency also includes where advisers advise a company considered to be a related company of an agent. In those circumstances, it is prohibited unless the following rules are satisfied: the firms are separate legal entities there are no directors, partners of employees in common between the firms there is no direct or indirect fee sharing between the firms there is no access to information or common internal data sharing arrangements relating to the area of conflict. Multiple introductions RICS members must only undertake multiple introductions for commercial investment real estate opportunities where both or all the clients have given auditable informed consent, confirmation of which is to be provided to the vendor on request. Terms of engagement must make it clear whether the agent is acting on an exclusive or non-exclusive basis. As soon as an agent is appointed on an exclusive basis, other prospective buyers with whom there has been an ongoing dialogue concerning the purchase of the same property should be advised that the agent is no longer able to advise them. Incremental advice RICS members must only provide incremental advice where: information barriers are in place to maintain confidentiality at all times in the case of a purchase, the agent has obtained prior informed consent from any prospective buyer from whom the agent holds a pre-existing sole-buying mandate in the case of a disposal, the seller has been notified, although informed consent is not required. • To send feedback, e-mail louisa.clarence-smith@estatesgazette.com or tweet @LouisaClarence or @estatesgazette