The Role of NEDs and Trustees in the Management of Conflicts of Interests

Non-executive directors (NEDs) and charity trustees have a key role in supporting and assuring the identification and management of conflicts of interests in their organisation. The focus should not be on declaring and managing their own interests and conflicts of interests (although that is part of it). Their focus should be on what they should be seeing to receive assurance and give assurance to stakeholders and regulators. They need to know the right questions to ask to check and challenge organisational systems and processes.

The Role of Non-Executive Directors and Charity Trustees in Assuring the Management of Conflicts of Interests

Alongside their fiduciary duties, and assurance role around strategy, risk management and (for charities) delivery of charitable purposes the assurance of the management of conflicts of interests is a key function for NEDs and trustees. Poorly managed conflicts can undermine decision-making, damage organisational culture, expose organisations to fraud and bribery risks, and erode stakeholder confidence.

This is why NEDs and charity trustees play such a critical role. Their responsibility goes far beyond declaring and managing their own interests. They must also provide robust oversight, challenge, and assurance that the organisation itself has effective arrangements for identifying, declaring, assessing, managing, and monitoring conflicts of interests across all levels. Doing so is a crucial part of delivering any organisation’s statutory duties around preventing fraud and bribery.

Governance Oversight Rather Than Passive Compliance

A common mistake is to treat conflicts of interests as a purely administrative exercise centred around registers and declaration forms. Effective boards understand that the real question is not:

“Do we have a policy?”

but rather:

“Can we demonstrate that conflicts are consistently identified, transparently managed, and appropriately challenged in line with out policy?”

Alongside performance measures, NEDs and trustees should therefore focus on whether the organisation’s governance framework genuinely supports ethical decision-making and organisational integrity.

What Should NEDs and Trustees Expect to See?

To gain assurance, boards should expect evidence that conflicts of interests are managed systematically and the identification of interests and management of them is embedded into organisational culture.

Key indicators include:

• A clear and up-to-date conflicts of interests policy
• Defined declaration procedures
• A regularly maintained register of interests
• Evidence of management decisions and mitigations
• Training and awareness programmes
• Internal audit or governance reviews
• Reporting mechanisms for concerns or breaches (including whistleblowing processes)
• Clear rules around gifts, hospitality, sponsorship, and secondary employment
• Evidence of leadership engagement and organisational compliance

The board should not merely receive policies. It should receive assurance that those policies are understood and applied in practice.

The Importance of the Register of Interests

One of the most important sources of assurance is the organisation’s register of interests. However, trustees and NEDs should not simply note that a register exists. They should interrogate its quality and effectiveness.

Questions to ask include:

• Is the register regularly updated?
• Are declarations refreshed annually and when circumstances change?
• Does the register include both financial and non-financial interests?
• Are indirect interests and conflicts of loyalty captured?
• Is there evidence that declarations are reviewed rather than simply recorded?
• Are management actions documented?
• Is there a process for escalating high-risk conflicts?

An incomplete or poorly maintained register is often an indicator of broader governance weakness.

Assurance Around Decision-Making

One of the key governance responsibilities of trustees and NEDs is to ensure conflicts are not merely declared but properly managed.

Boards should therefore seek evidence that:

• Decisions on declared interests are documented
• Management actions are proportionate and risk-based
• Individuals with actual or potential conflicts of interests are excluded from relevant discussions where necessary
• Procurement, recruitment, and grant-awarding processes include conflict checks
• High-risk decisions receive independent scrutiny

The board should be able to see a clear audit trail demonstrating:

1. the interest was declared;
2. the conflict was identified,
3. the risk was assessed, and
4. appropriate mitigation was implemented.

Without this, declarations become little more than a paper exercise.

Culture: The Most Important Area of Assurance

Perhaps the most important responsibility of NEDs and trustees is assessing organisational culture.

Technically sound policies and procedures are of limited value if employees are reluctant to declare interests or believe disclosures will be ignored. Boards must therefore look beyond documentation and ask whether the culture genuinely supports transparency and ethical conduct.

Important questions include:

• Do staff understand what constitutes a conflict of interests?
• Is there evidence that employees feel comfortable declaring conflicts?
• Are managers confident in handling disclosures?
• Is there a “speak up” culture?
• Are conflicts viewed as governance issues rather than personal failings?
• Are leaders visibly modelling transparency?

A mature organisation understands that you cannot eliminate interests, so actual or perceived conflicts of interests are inevitable. What matters is whether they are identified early and managed appropriately.

Key Risk Areas Trustees and NEDs Should Assure

Boards should pay particular attention to high-risk organisational activities where conflicts, where they do arise, could pose greater operational, financial or reputational threats.

Procurement and Contract Management

Questions may include:

• How are procurement conflicts identified?
• Are tender panel members required to declare interests?
• How are supplier relationships monitored?
• Are there particular rules around the offers of hospitality and gifts from suppliers?

Recruitment and Promotions

Boards should ask:

• How are personal relationships managed in recruitment exercises?
• Are candidates, recruiting managers and HR required to make declarations around personal relationships and, where appropriate, secondary employment?
• Is there oversight where senior appointments are involved?

Gifts, Sponsorship, and Hospitality

Trustees and NEDs should seek assurance that:

• There is an expectation of reporting of offers (with evidence this is actually done)
• Thresholds for acceptance, if any, are clearly defined
• Registers are maintained
• Where appropriate activities like procurement, finance and IT have stricter controls
• Trends and repeat offers are monitored (because of the cumulative effect gifts etc. may have)

Other Interests to Seek Assurance On

Boards should understand be assured about:

• How outside interests are identified, evaluated and managed
• Whether conflicts involving competitors, suppliers, or regulators are considered
• How confidential information risks are managed. For example, people with access to highly sensitive commercial information could be more susceptible to bribery.

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How to Use Data and KPIs for Assurance

Assurance comes best from robust data, both of the current picture and trends over time. reassurance.

Examples of useful conflict-of-interest indicators include:

• Percentage of staff completing annual declarations
• Number of conflicts identified by department
• Trends in gifts and hospitality declarations
• Time taken to review declarations
• Number of breaches or late declarations
• Training completion rates
• Internal audit findings
• Whistleblowing concerns linked to conflicts

These metrics help boards identify whether systems are functioning effectively or whether there may be hidden cultural or compliance problems.

The Role of Internal Audit and Governance Committees

NEDs and trustees should ensure conflicts of interests form part of internal audit and governance scrutiny. Audit or governance committees should receive:

• Regular reports on declarations and breaches
• Thematic analysis of trends
• Reviews of high-risk decisions
• Assurance on compliance with policy
• Recommendations for improvement

It is important to avoid becoming complacent simply because no issues are reported. In governance, the absence of declarations can sometimes indicate under-reporting rather than low risk. Audit or governance committees can focus on the numbers and drill down into the real picture.

Questions Effective Trustees and NEDs Should Ask

Strong boards ask probing but constructive questions, such as:

• How do we know staff understand conflicts of interests?
• What evidence demonstrates our policies and procedures work in practice?
• Which areas of the organisation present the highest risks?
• How do we identify undeclared conflicts?
• What themes or trends are emerging?
• Have any recent incidents revealed weaknesses in our processes?
• Have we taken action on a failure to declare?
• How are lessons learned communicated?
• How do we compare against good governance practice elsewhere?

These questions move governance discussions beyond compliance and into assurance – and evidence of it.

Giving Assurance to Regulators and Stakeholders

Ultimately, trustees and NEDs are accountable not only internally but externally. Regulators, funders, auditors, donors, shareholders, and the public increasingly expect organisations to demonstrate robust ethical governance.

Strong oversight enables boards to provide credible assurance that:

• decisions are fair,
• resources are used appropriately,
• risks are identified,
• and integrity is protected.

In sectors such as charities, healthcare, public services, and financial services, this assurance is particularly important because public trust is fundamental to organisational legitimacy.

Further Reading for NEDs and Trustees

• Charity Commission guidance on conflicts of interests
• Benchmark your conflicts of interests systems with this free maturity matrix
• Read about different types of conflicts of interests here

Conclusion

Non-Executive Directors and charity trustees play a pivotal role in ensuring conflicts of interests are not merely documented, but actively governed.

Their responsibility extends beyond personal compliance into organisational assurance, scrutiny, and cultural leadership. By challenging systems, reviewing evidence, probing risks, and fostering transparency, they help create organisations where ethical decision-making becomes embedded rather than aspirational.

Good governance is not about pretending conflicts do not exist. It is about ensuring they are recognised, understood, and managed in a way that protects integrity, accountability, and trust.

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