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Independence and conflict of interest

Guiding question   

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

An independent governing body member should act in the best interest of the organisation and the people to whom the organisation provides aged care. This helps individuals maintain impartiality and protects the organisation, while putting the best interests of those in care first. 

Independence checklist for approved providers 

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

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

Employment history 

  • Has not 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 

  • Is not currently or has not been a principal, employee or paid consultant to the organisation and has not been a paid employee of a service provided to the organisation. 

Financial associations 

  • Has not been a business partner, supplier, consultant, or customer of the organisation, or linked in any way to these kinds of relationships. 

Contractual agreements 

  • Does not hold paid/material contracts or agreements with the organisation. 

Competitive advantage 

  • Is not employed by a company that could gain a competitive or commercial advantage, through knowledge shared by the governing body. 

Governance conflict of interest 

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

Managing conflicts of interest 

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

For example, this may include a person who:  

  • owns or has significant investment in a subcontracting company that the provider is considering 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 evolve as a result of social activities such as club or organisation membership. Continuous review is necessary to ensure impartial/good governance.  

Conflicts don’t necessarily prevent someone from joining the governing body. However, organisations should have measures in place to identify and manage conflicts of interest. 

Key principles 

Adopt a conflict of interest policy that outlines how the organisation will handle conflicts of interest. It should define the method the governing body will take to address and respond to situations. 

Create and maintain a register of interests to understand potential conflicts before they arise and give the governing body time to consider how best to manage them. New governing body members should complete a declaration of interest on appointment. 

Create and promote a culture of disclosure. Declarations of interest should be a standing agenda item at meetings so that members are encouraged to regularly discuss, disclose and manage conflict of interest issues.  

Promptly manage conflicts of interest. Depending on the circumstances a governing body member may be required to: 

  • excuse themselves from discussion on the conflict 
  • remove themselves from the room 
  • abstain from voting on a matter. 

Conflicts of interest may be identified by someone other than the person who has the conflict. In some situations, conflicts can arise that are serious or which regularly impact the ability of the governing body member to make decisions in the best interests of both the organisation and the people receiving care. In these cases, the governing body member would need to consider if they can continue or if they need to resign. 

The process of managing conflicts of interest may look something like: 

  1. A governing body member identifies that they have a conflict of interest 
  2. The conflicted member notifies the governing body in line with the organisation’s policy. 
  3. The Chair/and or other members of the governing body decide on the appropriate action to address the conflict and document the decision 
  4. The governing body informs the conflicted governing body member of the outcome. 

More detailed guidance on this obligation can be found in this Regulatory Bulletin

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