Martin Taylor, a loan officer at First National Bank, is a long-time friend of Bill Evans, a local homebuilder. Bill would like a line of credit at the bank and discusses the potential loan with Martin. During the discussion, Martin expresses his desire to build a house one day and Bill offers to build him one "at cost plus 5 percent."
If Martin accepts Bill's offer, can he continue to act as his loan officer?
If Martin accepts Bill's offer, he cannot continue to act as his loan officer because the value of the gift is too great. Accepting such a significant gift or discount can create a conflict of interest and compromise the integrity of the loan decision-making process. The potential for bias and the appearance of impropriety would make it inappropriate for Martin to remain in his role as Bill's loan officer.
If Martin accepts Bill's offer to build him a house "at cost plus 5 percent," he should disclose this fact to the bank. Transparency and disclosure are essential in situations where a potential conflict of interest exists. By disclosing his relationship with Bill and the offer for the discounted house, Martin ensures that the bank can assess any potential conflicts and take appropriate measures to manage them.