January, 2003
Feature
Inspection News and Views from the American Society of Home Inspectors



Ethics Lessons: Our First Year of RFIs

DANIEL FRIEDMAN

The ASHI Standards and Ethics Committee wants to share some things we’ve learned in the course of our first year of responding to Requests for Interpretation of the Standards of Practice or the Code of Ethics (RFIs). The committee appreciates these questions from our membership. Your concern demonstrates a quest for high ethical standards and professionalism. Many inspectors fail even to ask ethical questions in a business climate where their competition proceeds apace, doing what they wish without considering the effect their actions have on clients and on the inspection profession.1  One of our RFIs, e011105, “Sale of client-information” is restated here to lead into discussion.

Query: To participate in this [name of contractor program] and receive a $15 "processing fee", a home inspector must provide what I believe to be confidential client information to [name of contractor]. Is doing so, and accepting the $15, a violation, and can complaints be filed against members for participating in this plan?

Response: Accepting payment or other consideration from a party in return for client information or special access to an inspector's client for the purpose of marketing services to the client, such as being present during a home inspection for which a member is responsible, violates Code of Ethics paragraphs #2 and #5 (requiring acting in good faith toward each client).

We also received a suggestion that the “fee” arrangement should be disclosed to the client to eliminate the violation. Such specifics do not change the underlying principles involved. Our RFI responses have already generated healthy debate at national and local levels of ASHI. We hope that the following points will be helpful and that these comments will be discussed widely.

Who decides what is ethical?

Each of us decides for ourselves what ethical standards we will follow. But membership in ASHI includes agreement to abide by its Code of Ethics. Interpretations of the Code, by the Standards and Ethics committee is guided by the interest of the home inspection client. In the Code’s view and in ours, a professional practice which hurts or deceives our client is improper.2  Naturally there are some technical exceptions,3  but that rule generally holds. The basics of ethical conduct do not change much over time. What changes are business practices which creep up on us to pounce with new ethical questions. The Standards and Ethics Committee has the task of testing your questions against our ethical guidelines and giving our interpretation of the Code in our response. Professional ethicists, research into law and study of how other associations handle these questions helped us as well.

Public trust vs. conflict of interest

Home inspectors create a “public trust” by offering a service to protect the client by making a property inspection to disclose financial and safety risks. Clients trust our competence, honesty, and lack of bias. This includes actual or potential bias from a conflict of interest arising when an inspector attempts to serve simultaneously his home buying client and home sellers, real estate agents, or third parties who stand to profit from the sale or repair of real estate property. Engaging in a conflict of interest violates the public trust and is unethical.

Conflict of interest vs. client confusion

Because many inspectors obtain client referrals from real estate agents who are expected to maximize the gain for the seller, these inspectors face conflicting allegiances: pleasing the referral source vs. pleasing the paying client. Some succumb to market pressure, compromising in meeting their obligation to their client. Others assert that their “client” is the referring agent and explain away the resulting conflict of interest as “just business.”4  Home buyers who understand that this is their inspector’s view can be expected to object. Buyers who are unaware that their inspector has this view are being deceived. Deceiving a client is unethical. The home buyer, by engaging and paying the inspector, is entitled to be served as that inspector’s client.

Why isn’t this “just business”?

Business practices are not “ethics neutral.” Business practices are almost always either ethical or not ethical. We should remember this the next time we hear someone say about a contested practice, “It’s just business.” It’s not.

Why doesn’t “disclosure” resolve these ethical issues?

Some practices are so improper that no disclosure can make them acceptable.5  In other cases disclosure may indeed resolve an ethical issue. But to be effective disclosure must be sufficiently timely as to permit the client opportunity to consider, understand, and to have a genuine, un-pressured, opportunity to choose to make alternative arrangements for service if s/he wishes. Effective disclosure must also be sufficiently explicit as to leave no doubt in the mind of the client just what the issue is and what it means to the client. Ethicists suggest that where disclosure cannot be absolutely assured to be timely and explicit, professional associations usually elect to ban the practice.

Does ethics promise profit?

We are acutely aware of the concern by some home inspectors that by strictly respecting the interest of their client and by scrupulously avoiding conflicts of interest, they may be at a “competitive disadvantage” compared with firms who take a more “caveat emptor” approach to business. Being ethical is not a promise of profit. The decision to conduct one’s business activity according to ethical rules is a decision concerning what life one chooses to follow and what relationships with one’s fellow citizens one elects to respect. We hope that in the end, being competent and ethical does have very significant business value. Certainly that is exactly the experience of many ASHI Members.

Linking “ASHI brand” to ASHI Ethics: by deserving a reputation for competence and honesty, and by promoting those characteristics to consumers, ASHI Members might profit by being ethical if profit is the goal. Informing the public of ethical issues and assuring that we handle these issues properly are appropriate steps for our profession.

Are RFI responses “law”?

No. The committee’s interpretations are not ASHI policy. However a member might elect to lodge an ethics complaint following his/her understanding of an RFI response. A separate ASHI group headed by a full-time employee receives ethics complaints, collects information, and decides if action by ASHI is appropriate. The Standards and Ethics Committee is completely separate from enforcement activity.

ASHI’s national leadership and ASHI Members will have to decide the level of monitoring and enforcement of our ethical conduct. The Standards and Ethics Committee has no pretense at serving as ASHI’s ethical enforcement arm. We encourage our Members to make these difficult ethical decisions consciously, with penetrating thought, and with a long view to the future reputation of the
profession.

ASHI Members are expected to have no intention to use unethical practices in their business. Few would knowingly choose to follow a business practice which reduces the public trust of ASHI-certified professionals. But ethics questions sneak up on us. Without consumer trust, home inspection is a mere industry, not a profession, and we would fear for its continued success.

The Table of Responses to past RFIs and the request form are available in the Members Only section on www.ashi.org.


References

1 Ethical blindness: Daniel Ellsberg, speaking about the history of the Pentagon Papers said that a conflict of interest occurs when an executive is unable even to realize that his wishes or interests are not the same as those of interests of the public [or corporation, association, or profession]. This blindness afflicts us all at one time or another. – NPR Public radio interview, 11/21/02.

2 Selling client data: For example, a professional who receives money from a third party to direct a his/her client’s business to that third party may not be acting in the client’s interest and might involve a conflict of interest. Sale of client information to third parties is widely reviled by the public as an unwelcome invasion of privacy. Such transactions also reduce the level of professionalism of the practitioner by communicating to the client that the professional’s focus is not entirely on the matter for which that expert was hired.

3 ”Hurting” the client might be ethical. The client’s interest is not to be served “at any cost.” A home inspector has a larger obligation to the public and the profession. An inspector would not be expected to maintain client confidentiality if it in the inspector’s judgment it would put other building occupants at immediate life-safety risk.

4 Realtor-referral fees paid by home inspectors are improper. An inspector might believe that s/he can pay a referral fee and still deliver an unbiased inspection and report to a client. But payment of such a fee will raise a question of conflict of interest in the mind of an informed consumer. Consumers can reasonably be expected to want to know if a real, potential, or apparent conflict of interest exists involving their inspector. Consumers can be expected to want to have an unencumbered opportunity to choose to use that inspector or a different one. Timely disclosure of a conflict of interest of this nature cannot be assured in the short-timeframe of many home inspection transactions. Moreover, a fully explicit disclosure statement would be so onerous that few inspectors could be expected to deliver it to the client. Disclosures proposed or in present use regarding referral fees are frequently unacceptably vague in wording and in manner of presentation to the client. Acceptable, effective notice and disclosure cannot be assured in all cases. Trying to permit exceptions has invited abuse.

5 I disclose to you that I am going to burn down your house.