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18 MAR 2018

Use of confidential information in valuation reports

The way valuers use confidential client information may lead to a breach in their ethical requirements. The following guidance will provide valuers with the practical steps they must take to ensure client information is used in line with global standards.

When producing a valuation report, valuers are often exposed to confidential information, either that which is provided by the client as part of the information packet, or obtained independently, during the inspections, investigation and records (VPS2) stage of the valuation process.

How valuers treat this confidential information may lead to breaches in their ethical requirements under International Valuation Standards, and RICS Valuation Global Standards (“Red Book”) (PS2 Para 3), particularly in commercial property valuations where transaction data is not publicly available in Australia.

Professional steps to take during valuations

  1. Valuers must not disseminate information provided in confidence by the client, beyond its stated purpose, or without prior informed consent. Particular attention should be paid to the use of comparable evidence which may be considered confidential. It is not always clear the level of confidentiality comparable evidence holds.
  2. Valuers must consider whether, by supplying a detailed analysis of a transaction, they put themselves in breach of the valuation standards. Accordingly, valuers should carefully consider the level of information that they include within their valuation reports in order to safeguard the confidentiality. “In accordance with the RICS professional statement Conflicts of interest, the duty of confidentiality will always take precedence over the duty of disclosure, subject to legal override.” RICS Red Book PS2 Para 3.6.
  3. Furthermore, valuers should ensure that within the working papers that the evidence is clearly sourced and identified as confidential, so as to ensure that the information is not inadvertently shared.The production and implementation of a hierarchy of confidentiality matrix could assist valuers in determining what level of detail can be shared with the client.
  4. Valuers make themselves aware of the content of the RICS Professional Statement Conflicts of interest, global, 1st edition, which will be mandatory for all RICS Members and Registered Valuers from 1st January 2018.
  5. Valuers are required to use their professional judgement as to what information they may share with their clients, and must be fully aware of the jurisdictional, and RICS requirements for protection of confidential information. Intellectual property clauses requiring all contents of the valuation report to become the property of the client, without consideration of confidential data, cannot be supported by International Valuation Standards and the RICS Valuation Global Standards.

Watch: Stay updated on the manadatory statement