Chapter 7: Managing conflicts of interest

What is a conflict of interest?

There are a number of resources that will help you identify what is a conflict of interest, including a guidance note and a compliance update.

Conflicts of interest can undermine an officer’s responsibility to act in the best interests of the registered organisation and its members. 

A conflict of interest may involve:

  • an officer’s direct personal interest
  • an interest belonging to an officer’s relative or friend 
  • an interest belonging to another organisation that the officer is involved in
  • or a perception that one of these applies.

Is it enough that someone thinks there’s a conflict?

Good governance is equally focused on protecting the appearance of proper decision making. External trust in the organisation’s processes is essential so that members and other officers can see decisions as legitimate. Officers should consider how a situation or decision may be perceived by members, and act appropriately. It’s important to remember that a conflict can exist even if the officer feels their decision making is not being influenced by the relationship, it must still be declared.

Conflicts of interests must be carefully managed through disclosure procedures and other governance controls. The duties of officers under the Fair Work (Registered Organisations) Act 2009 (the RO Act) are also designed to help organisations manage conflicts of interest (see chapter 6: Officers’ duties).


Useful tip: Have a conflicts of interest policy and register

Organisations should have a conflicts of interest policy that sets out expectations about how conflicts of interest are dealt with in the organisation. It should explain what officers need to disclose and when to make disclosures. It should also provide instructions about how these conflicts of interest are recorded as well as any consequences for failing to disclose interests.

Organisations can maintain registers to keep track of the interests that people hold and record disclosures that have been made. 

How to encourage officers to identify conflicts of interest

Many officers have not been in corporate decision-making positions before and may require support and education. Make sure identifying conflicts is part of your officer induction process.

You can then build processes that lead to a culture where disclosures are easy and a matter of habit:

  • Have a clear policy that explains what a conflict is, how to disclose it and why it is important. Include restrictions on the person’s behaviour as a result of the conflict.
  • Have a standing item at meetings and make sure senior leaders are seen to share their interests. Make sure you ask around the meeting, some people are nervous to speak-up in groups.
  • Create a form that makes disclosing interests easy and self-explanatory, rather than leaving it to an officer to guess what must be included.
  • Share the interests that have been made as standing disclosures where relevant or encourage officers to reiterate them on the day if relevant.
  • Provide practical (anonymised) examples of conflicts that need to be disclosed that have arisen in your organisation.
  • Have transparency over other people’s disclosures: this teaches what must be disclosed and builds pressure to make disclosures.
  • Have a standard form that is sent around ahead of big decisions being made (especially financial ones) that jogs officers’ minds on shares, super, property, trusts, businesses, friends or relatives that might have interests tied to the decision.
  • Collect any NIL disclosures.
  • Encourage and welcome questions, some people aren’t sure when their interest is big enough or important enough.
  • Have a conflict champion who can sit down with an officer and answer questions, explain the decision-making restrictions and record keeping requirements.
  • Remind officers these protocols are for the protection of members and effective decision making, having a conflicted officer involved in the decision could cause the decision to be questioned or overturned.
  • Send routine reminders: when officers change their personal interests, telling their organisation isn’t always front-of-mind.
  • Have a standard form as part of your new officer induction to capture standing disclosures from day one.
  • Consider personal reminders to officers with financial duties, such as the Committee of Management, letting them know you have the following list of interests disclosed and asking do they want to update them?
  • Have a person who is responsible for monitoring and updating conflict of interest registers.

There are many ways for organisations to implement systems and processes around conflicts of interest and related parties.

How to deal with a conflicted officer

Good governance processes and policies don’t stop when it is identified that someone has an interest. Your conflict policy should contain:

  • steps on how conflicts are recorded
  • how you record when someone has left a meeting or excused themselves from decision making because of a conflict
  • when decision makers are reminded about the conflict 
  • how information about the conflict is kept up to date.

The RO Act prohibits officers with material personal interests from being present during any discussions that are actually or potentially affected by their interest. An officer with a conflict of interest can be involved in decision-making in limited circumstances following a resolution by the Committee of Management. 

Best practice is that usually this officer wouldn’t be involved in decisions that affect their interest, but sometimes the Committee of Management will want the officer involved. In this case the committee should take every step possible to ensure transparency: the committee has to know the details of the interest and decide to let the officer stay.

If the committee does decide to let a conflicted officer stay, you must keep very good records of what exactly they were allowed to do, what they were not allowed to do (for instance debate but not vote), whether the restrictions were complied with and what the committee knew about the interest when they made their decision.  It is all about transparency.


Case study

Acknowledging a conflict and working with it

An organisation had a committee of management member who had particular knowledge of the work of an IT company and had personally invested some of their own funds in it as a commercial transaction. The organisation was considering selecting that company to enter into a joint venture with the organisation to develop a product for members.

The committee member disclosed their interest in the company and the committee then sought specific advice on whether, and in what circumstances, the particular committee member could be involved in the process.

The committee then followed the steps set out in section 293F(4) of the RO Act: recording details of the disclosure (including the specific details of the personal interest) and setting out the conditions on which the committee member could participate. The committee then voted to let them remain in the meeting, on the conditions set, because their specific knowledge of the product and the project was considered essential and the committee was made fully aware of the nature and extent of the interest.

Conflicts of interest are sometimes inevitable, but how they are managed can define their impact. The following practices can help protect your organisation and its officers from the effects of conflicts of interest:

  • enforce a conflict of interest policy that sets expectations about disclosures and how potential conflicts of interest will be managed
  • keep detailed records about disclosures in a register of interests
  • promote a culture of disclosure where officers are actively encouraged and reminded to make disclosures.

The failure of an officer to disclose a conflict of interest can cause harm to the organisation and may have legal consequences for the officer!


Further resources


Go back to:
Good Governance Guide introduction


Next chapter 8: 
Record-keeping and decision making