In UK local authority politics, the term prejudicial interest is used to describe a particular type of conflict of interest involving councillors. When a councillor has an interest in a topic under debate that may affect their ability to fairly and objectively consider the subject, he or she is said to have a prejudicial interest. An example would be a councillor discussing a planning application for a company in which he or she has an interest. The councillor has an interest in the plans being approved and is therefore considered to have a "prejudicial interest".
The Standards Board for England is the body responsible for investigating allegations of undeclared prejudicial interests. It is the responsibility of the councillor to declare their interest prior to discussions or votes and, once declared, they must leave the room for the duration of the discussion or vote.
Anyone can make an allegation of an undeclared prejudicial interest although the Standards Board for England can only investigate reactively rather than proactively - i.e. they cannot intervene to stop an offence from taking place, only investigate the offence once it has taken place.
Councillors and members of other local authorities in England are governed by a Code of Practice which is enforced by the Standards Board for England. In Scotland, the Standards Commission for Scotland carries out a similar function but also regulates members of devolved bodies. In Wales, it is the Public Services Ombudsman for Wales that carries out the equivalent function.