Principals and agents have begun signing up to a new protocol aimed at curbing potential conflicts of interest in investment deals.
The guidance is published by the Investment Property Forum today and has been drawn up by a cross-industry group of agents, principals, accountants and lawyers.
It aims to deal with so-called “double-dipping”, a practice that has been causing growing concern among agents and clients. This involves a firm of agents either acting for multiple bidders on the same deal or acting for both the seller and a potential buyer on the same deal.
The protocol calls for greater transparency and early disclosure of potential conflicts. It stipulates 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.
When potential dual agency situations arise, the protocol says that the “default position” is that an agent retained to sell a property should avoid acting for another principal on the buy side. However, it accepts that a firm could act on both sides of a deal in “exceptional circumstances”, such as when the firm has a pre-existing sole buying mandate for a prospective purchaser. The firm would have to invoke its barrier policy to run separate teams of advisers for each client.
Eight firms of agents have so far signed up: Savills, CBRE, JLL, Knight Frank, Cushman & Wakefield, Colliers International, GVA and Morgan Williams. IPF chief executive Sue Forster said the initial focus was on getting the biggest firms on board because their scale meant that potential conflicts were more likely to occur.
Major institutions such as Hermes, Legal & General and Standard Life are among the clients understood to be supporting the initiative.
Chris Ireland, JLL capital markets lead director, took the issue to the IPF after concerns were raised at networking group the Mothers Bunch Investment Club earlier this year.
“One of the big issues is people having no confidence that there is a level playing field,” Ireland said. “Perception is as important as reality.”
The IPF does not have any regulatory powers, but Forster said the protocol does have the support of professional body the RICS.
