Conflicts of Interests: Frequently Asked Questions

We get asked a lot of questions about conflicts of interests so we have collated the most frequently asked ones and invited our conflicts of interests expert, Michael Wuestefeld-Gray, to answer them.

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What are the main types of conflicts of interests?

Conflicts of interests can be broken down into three main categories:

1. Financial and non-financial
2. Direct and indirect
3. Actual and potential

These categories do link, so an in interest could present an actual, direct and financial conflict of interests. Examples of different types of conflicts include:

Financial and Non-Financial Conflicts of Interest

Financial:
A procurement manager is involved in selecting a supplier and one of the bidding companies is owned by their spouse.
💡 The individual could benefit financially from the decision.

Non-Financial:
A board member sits on the committee deciding on a funding award for a charity where their close friend is the director.
💡 There’s no direct financial gain, but personal loyalty could influence impartiality.

Direct and Indirect Conflicts of Interest

Direct:
An HR manager is part of the panel deciding on a promotion for their own sibling.
💡 The conflict directly involves the individual’s personal relationships.

Indirect:
A senior officer’s partner works for a company that is bidding for a contract with the officer’s organisation.
💡 The officer isn’t personally involved in the company but could still be influenced by the partner’s interests.

Actual and Potential Conflicts of Interest

Actual:
A local councillor takes part in a planning decision for a development located next to property they own.
💡 The conflict exists now and directly affects the decision.

Potential:
A research scientist is asked to review a grant application from another university. The scientist is considering applying for a similar grant in the near future.
💡 The conflict doesn’t yet exist but could arise depending on future actions.

• Read more about different types of conflicts of interests here.

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What are conflicts of loyalty?

Conflicts of loyalty are an example of non-financial interests affecting, or potentially affecting, people’s professional conduct. Conflicts of interests occur when an individual’s personal interests or biases may compromise their professional judgment. On the other hand, conflicts of loyalty arise when a person’s allegiances to different stakeholders—such as employers, clients, or personal relationships—create ethical tensions. While these terms may seem distinct, the way they overlap reveals a moral landscape rife with challenges.

• Read more about conflicts of loyalty here.

How do you assess and address conflicts of interests?

Each declared interest and conflicts of interests must be assessed on its won merits. Because of the different forms interests and therefore conflicts of interests can take there are few standard outcomes to set out. Instead, to retain the confidence of both people with interests and wider stakeholders, it is important to have a clear and consistent process for identification and review.

Consistency is important in:

• Who makes decisions
• When those decisions are made
• How they are communicated
• When and how they are reviewed.

For unusual or severe conflicts, or if there is disagreement, you can bring in expert external support to help you.

• Get more about managing conflicts of interests here.

What is the best way to manage conflicts of interests?

Managing conflicts of interests is a cycle that involves declaration, decision making, communication and monitoring.

Organisations must first identify all potential and actual conflicts through regular training and comprehensive disclosure forms that all employees, board members, and key stakeholders must complete.

This identification needs to be continuous, not a one-time event. Once identified, disclosure is mandatory, allowing the appropriate governance body (like a risk committee or compliance department) to objectively assess the conflict’s severity.

Finally, the conflict must be mitigated by implementing safeguards, which may include recusals (removing the individual from the decision-making process), internal audits, increased oversight, or, if the risk is too high, outright avoidance or divestiture of the conflicting interest. The success of this process hinges on consistent application and a top-down commitment to integrity, ensuring that actions are not only ethical but also seen to be ethical by all stakeholders.

• Find out more about managing conflicts of interest here.

What is fraud by abuse of position?

Fraud by abuse of position is a crime under the Fraud Act 2006. It occurs when someone misuses a position of trust or authority to make a financial gain, or cause another to experience a financial loss. An example is someone misusing access to a relative’s finances when they have power of attorney. For this kind of fraud to happen the act must both be dishonest and there must be an intent to gain or cause a loss.

• Find out more about fraud by abuse of position here.

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Interested in Learning About Conflicts of Interests? Get the brochure here“

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