The Nature and Effects of Conflict of Interests

20 Apr 2022 10:34 AM | The Institute (Administrator)

Marine surveyors are professional service providers who have several attributes to offer their clients. One is their technical skills, gathered over many years of hands-on experience in the marine industry, the other and probably the most important is their professional integrity. A client relies implicitly on the surveyor’s integrity when they read a report stating the findings of the surveyor following an inspection. Integrity gives the client confidence that the contents of any report are the independent findings of the surveyor and these findings are free from any outside influence. Such outside influence may be pecuniary, promissory or political in nature. A conflict of interest is the term most would associate with any form of outside influence.

What is a conflict of interest? All professional service providers; lawyers, accountants, medical specialists and marine surveyors all owe a duty of loyalty to their clients. Who is the client? In exploring the duty of loyalty of marine surveyors, the client is the person or body who has a contract with the surveyor to provide independent services for a monetary consideration. What does the surveyor owe the client? The surveyor owes their client, for the duration of the contract and in most cases beyond, a duty to serve the interests of their client to the exclusion of all others including themselves. How does a conflict of interest manifest itself? Any form of pecuniary, promissory or political reward that may be used to induce the surveyor to retain or change information which their client has contracted them to seek out and such retention or change would cause a detriment to the client and an advantage, no matter what the form, to the surveyor.

When identifying what is a conflict of interest, in the case of a marine surveyor, these questions need to be asked:

1) Would a reasonable and fair-minded person perceive that the surveyor’s interests might be favoured in the exercise of their duties and responsibilities to the client?

2) Do I have a contractual or familial relationship with a party other than the contracted client who may benefit from the findings or observations identified in the survey report given to that contracted client? 

3) Would your insurance cover you in the event of a claim against you that involves negligence arsing from a conflict of interest?

If the answer to any of these questions is yes, then a conflict of interest exists. A conflict of interest does not necessarily need to be direct. A perception of a personal benefit can be enough for a conflict of interest to be deemed to be present. If the trust placed in the integrity of a marine surveyor is placed into question, either from a direct or indirect perception, then the client can and will form a view that a conflict of interest is present and question the veracity of any reports presented and place the integrity of the surveyor in serious doubt.

The consequences of a finding of a conflict of interest can be severe and far reaching. The reputation of a marine surveyor, which is generally the most important commodity that a surveyor has to sell to a client, can be broken and lost in one simple action. Rarely are we remembered for our successes, but no-one forgets our failures. Even a perception of conflict of interest is a difficult stain to wash away. The stain will always be there no matter how hard we scrub. A loss of professional accreditation with either AMSA or a professional industry body such as AIMS can result in a severe loss of trade and business. Industries and regulatory bodies also have their integrity at stake if any of their members are found to have committed acts involving conflicts of interest and that body allows them to remain a member or to maintain their accreditation and not address the issue involving a conflict of interest.

Marine surveyors, like all professionals, require the maintenance of their professional integrity to continue in business. The relationship that marine surveyors have with their clients in more than a mere transactional one. The relationship is one of trust. Our clients trust us to deliver to them an independent opinion, free of outside influence, which enables them to make large financial decisions. If that trust is eroded or broken by the actions of the surveyor where those actions have been influenced by a conflict of interest, either direct or indirect, then both parties will be exposed to severe negative consequences, both financial and reputational. Such consequences can have been avoided at the beginning of the relationship by declaring the conflict to the client with an explanation as to why such a conflict exists. Identifying a conflict of interest before engaging with a client means your integrity and reputation remains intact allowing you to continue in a field which we all enjoy working in.

By Eric McIlwain

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The largest industry body in the Australasian region for professional marine surveyors. Established 1986.
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