This is related to a previous question. When a university posts a public ad for a vacancy does it only have to follow its internal policy for conflicts of interest or is there also some law that applies? What is the legal framework under which the recruitment happens?
I am not a lawyer, but as I understand it, the main legislation that must be followed when hiring in the UK is the Equalities Act 2010, which states that Direct discrimination, Indirect discrimination or discrimination by association is illegal if the discrimination arises from a protected characteristic. The protected characteristics are: age, disability, gender reassignment, married or people in civil partnerships, pregnant people and those on maternity leave, race, religion or belief, sex or sexual orientation.
Beyond that Universities, like all private employers are free to set their own guidelines for recruitment. Most universities do have pretty strict codes for recruitment however, both to ensure they employ the best person for the job, but also to guard against the possibility of a case being brought under the above legislation (if you hired your white sister, rather than a black person, that might be a case of race discrimination).