What is a ‘conflict of interest’?

Twice in recent months I have become involved in blogosphere debates about claimed conflicts of interest. First I disputed James Farrell’s argument that ABC TV news needed to disclose the fact that finance presenter Alan Kohler also operates a financial advice newsletter, which in turn is partly financed by a firm that had links with companies that Kohler reported on for the ABC. Then this week I questioned Andrew Leigh’s suggestion that Westpac CEO Gail Kelly had a conflict of interest when she was reported suggesting that the RBA would not increase interest rates again this year. According to Andrew L:

nowhere does the journalist mention the key commercial conflict: people who expect a rate rise will be less likely to buy a Westpac variable rate mortgage.

The basic problem behind the concept ‘conflict of interest’ is that the different roles people play can have different interests attached to them. There is said to be a ‘conflict of interest’ where a personal interest might be put ahead of the interests of those relying on the person’s words or actions.

The ‘interests’ in conflict often have different definitions. The personal interest seems almost always, as it was in the two blog cases, to be related to financial or material gain, for the individual, or those associated with the individual. Other personal interests don’t seem to classed as potential conflicts, even if they could be seen to be bad for other reasons. If someone offers commentary on interest rates because they like getting their name mentioned in the media, that isn’t going to be seen as a conflict of interest, despite that person’s interest in publicity.

The interests with which the personal financial interest is conflicting are far more varied. Continue reading “What is a ‘conflict of interest’?”