Independence and conflict of interest

Guiding question   

Is anything stopping the members of your governing body from making decisions that are centred on the needs and quality of life of people receiving care?   

An independent governing body member should act in the best interest of the organisation and the people it provides aged care for. It means providers have a neutral person to help make good decisions.

Independence checklist for approved providers 

When assessing the independence status of a person who is or who could become a member of a governing body, registered providers should use this checklist as a guide.  

A person may be considered independent if they and any member of their immediate family:  

Employment history

• haven’t been employed by the organisation or been an executive officer (a person who takes part in the management of an organisation) after finishing employment in the last 3 years

Professional relationships

• aren’t currently or haven’t been a principal, employee or paid consultant to the organisation and haven’t been a paid employee of a service provided to the organisation

Financial associations

• haven’t been a business partner, supplier, consultant or customer of the organisation or linked in any way to these kinds of relationships

Contractual agreements  

• don’t have paid or material contracts or agreements with the organisation

Competitive advantage  

• aren’t employed by a company that could gain a competitive or commercial advantage through knowledge shared by the governing body

Governance conflict of interest  

• don’t hold a governance role in an organisation that is currently a business partner or could gain a competitive advantage by knowing about the activities of the organisation.  

Managing conflicts of interest 

Registered providers must consider and manage conflicts of interest where a governing body member’s influence or personal connections may affect decisions or create direct benefits.  

For example, this may include a person who:  

• owns or has significant investment in a subcontracting company that the provider is thinking about engaging  
• has family members receiving care from the organisation  
• is a shareholder in the organisation and receives a financial benefit.

Conflicts of interest are not fixed and can change because of social activities such as club or organisation membership. It’s important to keep reviewing this to ensure independence and good governance.

Conflicts don’t always stop someone from joining the governing body. However, organisations should have processes to identify and manage conflicts of interest.

Key principles 

Have a conflict of interest policy that explains how the organisation will handle conflicts of interest. It should define how the governing body will address and respond to actual or apparent conflicts of interest.  

Have a register of interests to understand potential conflicts before they come up. Give the governing body time to think about how best to manage them. Develop a declaration of interest form for new governing body members to complete when they’re appointed.  

Create and promote a culture of disclosure. Declarations of interest should be a standing agenda item at meetings. This encourages members to regularly discuss, disclose and manage conflicts of interest.  

Manage conflicts of interest quickly. Depending on the circumstances, a governing body member may need to:  

• excuse themselves from discussing the conflict  
• remove themselves from the room  
• withdraw from voting on a matter.

The person with the conflict or someone else can identify a conflict of interest. Conflicts can be serious and can affect a governing body member’s ability to make decisions in the best interests of both the organisation and people receiving care. In these cases, the member needs to think about if they can continue in their role or if they need to resign.  

You could manage a conflict of interest situation by following a process like this:  

• A governing body member identifies that they have a conflict of interest.  
• The conflicted member notifies the governing body in line with the organisation’s policy.  
• The chair and other members of the governing body decide on the appropriate action to address the conflict. They document their decision.  
• The governing body tells the conflicted governing body member of the outcome.  

You can find more detailed guidance on this obligation in this Regulatory Bulletin.