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EK > 04 Ethics > Flashcards

04 Ethics Flashcards

1
Q

How would you define ethical behaviour for a chartered surveyor?

A

Acting in accordance with the 5 RICS professional and ethical standards

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2
Q

Why are the ethical standards important?

A

Create a clear and streamlined guide to members

Ensure that clients and anyone else who deals with the RICS has confidence in the profession

Trust enforce highest level of standards

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3
Q

Name the RICS professional and ethical standards.

A
  1. Act with integrity
  2. Always provide a high standard of service
  3. Act in a way that promotes trust in the profession
  4. Treat others with respect
  5. Take responsibility
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4
Q

What is meant by ‘act with integrity’?

A
  1. Being honest and trustworthy in all that I do
  2. Transparent, respecting confidential information,
  3. not allowing bias or pressures affect my judgement or obligations,
  4. not accepting gifts or hospitality that might suggest an improper obligation,
  5. acting in the interest of the public
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5
Q

What is meant by ‘provide a high level of service’?

A
  • Ensuring the best possible advice, support or performance is given to my clients
  • Be clear about the service being provided,
  • act within my scope of competence,
  • transparent about fees and any other costs or payments,
  • communicate with clients in a way that allows them to make informed decisions
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6
Q

What is meant by ‘promote trust within the profession’?

A
  • Act in a manner, both in professional and private life, that promotes me and my firm in a positive way
  • Promote the highest standards globally,
  • fulfil obligations
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7
Q

What is meant by ‘treat others with respect’?

A
  • Be courteous, polite and
  • consider cultural sensitivities and business practices
  • Never discriminate, encourage the fair and respectful treatment of clients
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8
Q

What is meant by ‘take responsibility’?

A
  1. Be accountable for my actions and don’t blame others if things go wrong
  2. Always act with skill, care and diligence,
  3. respond to complaints in the appropriate professional manner,
  4. prepare to question things that don’t seem right
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9
Q

Give some examples of how you reflect the RICS ethical standards in your work.

A
  1. Integrity - turning down an invitation from a contractor whilst settling the final account
  2. High standard of service - referring clients to specialists when scope is outside competence
  3. Trust - rejecting the early certification of work
  4. Respect - working with people from different backgrounds equally
  5. Responsibility - questioning unsafe working on site
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10
Q

What is the RICS Decision Tree?

A

Flowchart to help members decide how to act in difficult situations where their professional ethics may be at stake

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11
Q

What factors does the RICS Decision Tree consider?

A
  1. Sufficient facts
  2. Legality
  3. Ethical standards
  4. Consultation of appropriate people
  5. Clear reasoning
  6. Impact if actions made public
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12
Q

What is a conflict of interest?

A

Anything that impedes or might be perceived to impede an individual’s or firm’s ability to:

  1. Act impartially and
  2. In the best interest of a client
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13
Q

Give some examples of where conflicts of interest may arise.

A
  1. Personal Relationships

Involving people in a direct hierachical realtionship (i.e in the same reporting line, one person has supervisory or decision making authority over the other)

  1. Interests of your firm conflict with that of your client:

A design team is novated to the contractor under the D&B procurement route to complete the detailed design. The client instructs the firm to remain as their architect to oversee and review the contractor’s design proposals. ASM MATT

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14
Q

What should a surveyor do if a conflict of interest arises?

A
  1. Should be dealt with by implementing openness and transparency
  2. Declare any conflicts of interest clearly to all parties ASAP and offer to stand down from acting for any party
  3. All parties can then decide how they wish to proceed and if there are any objections you must stand down
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15
Q

Describe a conflict of interest you have experienced and how it was resolved.

A
  • As part of our final stage 4 deliverable. The contractor decided to offer a celebratory milestone Dinner at highly regarded restaurant.
  • However at the same time, we were settling the final account and were settling the price of a contenscious Compensation Event.
  • Due to the timing, I realised this may be percieved as an inducement to affect impartiality - chose to postpone
    • Refused to accept certain gifts/hospitality from a contractor whilst settling a contensious Compensation event. Due to timing and how this may be seen as be perceived as affecting impartiality - chose to postone

Compensation events are events which are usually not the fault of the contractor and change the cost of the work, or the time needed to complete it.

As a result, the prices, key dates or the completion date may be reassessed, and in many cases the contractor will be entitled to more time or money.

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16
Q

What is a ‘Chinese Wall’?

A

An information barrier within an organisation used in order to prevent exchanges or communication that could lead to a conflict of interest

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17
Q

Can one part of a chartered surveying practice work for a client, whilst another part of the practice is working for a different client who has conflicting interests to the first?

A
  • Yes, providing a Chinese wall is effectively implemented
  • Teams should be physically separated in different parts of the building (or in different buildings)
  • Requires a compliance officer to monitor the ‘wall’ - education and training must be made available to those managing the wall
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18
Q

You’re acting on behalf of a client in a dilapidations claim and realise you know the other party personally - what should you do?

A
  • Declare any conflicts of interest clearly to all parties ASAP and offer to stand down from acting for any party
  • All parties can then decide how they wish to proceed and if there are any objections you must stand down
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19
Q

Your neighbour asks you for help in designing a loft conversion - what would you do?

A
  1. No terms and conditions
  2. No PII
  3. Potential conflict of interest
  4. Follow the RICS Decision Tree
  5. Say no and offer to set up a formal meeting with a director of my firm
  6. Alternatively, refer them to the RICS ‘Find a Surveyor’ service
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20
Q

What is a bribe?

A
  • The exchange of something of value in return for someone doing or agreeing to do something improper in a business context
  • Bribery also covers the offer or request for a bribe, even if it is not completed
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21
Q

What legislation exists in relation to bribery in the UK?

A

Bribery Act 2010

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22
Q

What is the purpose of the current UK legislation on bribery?

A

Criminalises bribery in the UK, making it a criminal offence to directly or indirectly:

  • Offer, promise or give a bribe
  • Request, agree to receive or accept a bribe
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23
Q

What are the penalties under the current bribery legislation?

A

A maximum 10 years’ imprisonment and/or an unlimited fine

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24
Q

Who does the current bribery legislation affect?

A

Near-universal jurisdiction, allowing for prosecution of UK individuals or companies doing business overseas, as well as overseas individuals or companies doing business in the UK

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25
Q

What standard are judgements under the current bribery legislation based upon?

A

Judgments are decided based on the ‘reasonable person’ test

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26
Q

What are facilitation payments and what is their legal status?

A
  • Also known as ‘grease’ or ‘speed’ payments
  • Unofficial payments made to public officials in order to secure or expedite the performance of a routine government action
  • Illegal under the Bribery Act 2010
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27
Q

How can bribes affect surveyors?

A
  • Can be vulnerable to bribes because of the role they play in facilitating transactions,
  • checking owners/contractors are complying with legislation and
  • awarding construction contracts
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28
Q

Would the offer or acceptance of gifts or hospitality amount to a bribe?

A
  • Could amount to a bribe if they are intended to induce someone to behave in a manner that breaches an expectation that they will act in good faith and impartially
  • However, bona fide hospitality and promotion intended to improve the image of an organisation, better present products and services or establish cordial relations is seen as an established and important part of doing business and is not criminalised under the Act
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29
Q

What considerations should RICS members have in relation to offering or accepting gifts and hospitality?

A

RICS members should follow these rules:

  1. Only offer or accept gifts and hospitality that are customary, proportionate and reasonable in terms of value and frequency
  2. Never offer or accept any gift or hospitality if it may improperly influence your decisions/judgement or give the appearance of doing so (e.g. consider the timing of the gift)
  3. Only offer or accept gifts and hospitality that you would be happy for others to know about
  4. Follow the policies and procedures of your employer in relation to gifts, hospitality and promotional expenditure - e.g. record in company’s gifts and hospitality register
  5. Report any concerns about bribery to your employer or to RICS Regulation
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30
Q

What procedures should RICS corporate members follow in relation to preventing bribery?

A

RICS corporate members should follow the 6 principles in preventing bribery practices:

  1. Proportionate procedures - procedures should be proportionate to the bribery risks the company faces
  2. Top level commitment - zero tolerance to bribery
  3. Risk assessment - the company should periodically assess the internal and external risks of bribery
  4. Due diligence - systematically investigate employees and business partners (the level of which should be informed by the risk assessment)
  5. Communication (including training and education) - communicate policies, operate confidential whistle-blowing service, provide training
  6. Monitor and review - periodically review procedures and make improvements where necessary
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31
Q

What would you do if a contractor offers you a gift such as a scale rule with the contractor’s name on it?

A

Accept it, as it is a bona fide promotion intended to improve the image of an organisation

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32
Q

If a contractor wants to buy you lunch on the day of an interim valuation, how would you respond?

A

Reject the offer, as it may improperly influence your decisions/judgement or give the appearance of doing so

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33
Q

A contractor gives you a bottle of champagne at Christmas. Would you accept it?

A
  1. Maybe, however only offer or accept gifts and hospitality that you would be happy for others to know about
  2. Question whether the gift is proportionate and reasonable in terms of value and frequency
  3. Reject if it may improperly influence your decisions/judgement or give the appearance of doing so
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34
Q

A contractor invites you to their Christmas dinner dance - would you go?

A
  1. Maybe, however only offer or accept gifts and hospitality that you would be happy for others to know about
  2. Question whether the gift is proportionate and reasonable in terms of value and frequency
  3. Reject if it may improperly influence your decisions/judgement or give the appearance of doing so
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35
Q

If you saw a colleague at the races with a contractor in the VIP area, what would you do?

A
  1. Remind them of the RICS’ rules and procedures on accepting gifts/hospitality
  2. Report any concerns about bribery to your employer or to RICS Regulation
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36
Q

If you saw one of your team send out an interim valuation that over values the works, what do you do?

A
  1. Talk to them initially and point out the error
  2. Suggest the error is corrected before issuing
  3. Escalate to a director if the error was purposeful
  4. Consider reporting through firm’s whistleblowing procedure if necessary
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37
Q

You have put in a fee bid to a client. They contact you and say that another practice has quoted a lower fee, but they would like you to do the work. They ask you to reduce your fee to match the other practice. What should you do?

A
  1. Avoid price fixing, aggressive fee cutting or collusion with competitors
  2. Original fee quote should have been a reasonable reflection of the works required
  3. Reducing costs may mean corners are cut and quality is reduced in order to make a profit
  4. Client may be expecting the same next time as well and this will not be sustainable
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38
Q

If you were self-employed, would you consider adjusting your PII to carry out a piece of work or decline to do the work?

A
  1. Commercial decision based on the opportunity and risk
  2. Never proceed without the sufficient level of PII
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39
Q

Would you go against the recommendations of a chartered surveyor?

A

Yes providing there is reason for it (e.g. not acting within the RICS rules of conduct or ethical standards)

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40
Q

What would you do if a client says they are not paying for your service?

A
  1. Talk to client to understand why
  2. Try and find a resolution
  3. Refer back to the contract terms
  4. Pursue dispute resolution procedures if necessary
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41
Q

Can chartered surveying practices work for a client, but not charge a fee?

A
  1. Commercial decision based on the opportunity and risk (i.e. may be charitable work)
  2. Need to question quality of work and incentive if no fee is in place
  3. Legal advice required regarding the formation of a contract (i.e. no consideration)
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42
Q

What is the Law and enforcement on Bribery in Australia?

A

Division 70 of the Criminal Code Act.

Makes it an offence to provide, offer promise or provide a benefit not legitametly due to another person,

with the intention of influencing the exercise of foreign public officiants duties in order to obtain business or business advantage.

43
Q

What does the RICS Rules of Conduct Focus on?

A

Regulatory Goals

44
Q

What are the RICS five principles of better regulation?

A
  1. Proportionality
  2. Accountability
  3. Consistency
  4. Targeting
  5. Transparency

Provide strong foundation for RICS and its members, helping to protect the Public and uphold the reputation of the Industry

45
Q

How many Rules of Conduct are there for Members?

What are they?

A

NINE

  1. Interpretation
  2. Communication
  3. Ethical Behaviour
  4. Competence
  5. Service
  6. CPD
  7. Solvemncy
  8. Information to RICS
  9. Co-operation
46
Q

What does it mean to act Ethically?

A
  • To act in accordance with the RICS 5 Ethical Standards
  • At all times to Act with integrity to
  • avoid conflicts of interest and
  • avoid any actions or situations that are inconsistent with professional obligations
47
Q

Why is CPD important?

A

It is a commitment by RICS members to continually update their skills and knowledge to remain professionally competent.

All RICS must record minimum 20 hours a week.

48
Q

How can RICS Regulated Firms demonstrate their commitment to CPD?

A
  1. Training - firm should have in place all the necessary procedures to ensure that all staff are properly trained and competent to do they work.
49
Q

How do you demonstrate Competence?

A
  • By carrying out professional work with due skill, care and diligence and with proper regard for the technical standards expected of it.
    • CPD/Training
50
Q

Why is a comprensive training programme important?

A
  1. Competent, well trained staff to provide a good service
  2. CPD can help defend cases of negligence by clients or complaints made to avoid costly insurance claims
  3. Training for career development helps attract high calibre of staff
51
Q

Why do we have Rules for Firms?

A

Provide a strong fondation for RICS and its Firm,

helping to protect the public and

upholiding the reputation of the profession.

Aid to adopt 5 principles of better regulation.

  1. Proportionality
  2. Accountaibility
  3. Consistency
  4. Targeting
  5. Trasnparency
52
Q

What Firms are eligible to register?

A
  1. A) Firm providing surveying services to the Public
  2. B) At Least 25% of the Firms Principles are RICS members
53
Q

What are the Obligations of a Firm that has been granted registration with the RICS?

A
  1. Comply with the Rules of Conduct for Firms
  2. Act in accordance with the obligations set out in the RICS Royal Charter and bye-laws
  3. Inform RICS on any findings against it by any disciplinary, body, court, or authority
  4. Inform of solvency
  5. Inform of Material Change regarding Firm
54
Q

How many Rules of Conduct are there for Firms?

A

15

.Interpretation

Information to RICS

Indemnity

Service

Solvency

Co-operation

Communication

Competence

CPD

Complaints Handling

Clients money

  1. Professional Behaviour
  2. Advertising
  3. Arrangements to cover the incapaicty or death of a sole practioner
  4. use of designations
55
Q

What is a Contact Officer?

A
  1. Individual to be the the main liaison point between the Firm and RICS.
  2. Submit the Firm’s Annual Return.
56
Q

Why do Firms want to obtain ‘Regulated by RICS’ status?

A

Regulated and Respected, Client confidence.

  1. Practises to globally recognised standards.
  2. Behaves ethically and acts with integrity and honesty.
  3. Has the required skills and competencies to do the job.
  4. Manages conflicts of interests transparently.
  5. Safeguards the security of client money.
  6. Manages its finances appropriately.
  7. Provides adequate and appropriate indemnity for your work.
  • Handles complaints and disputes fairly.
57
Q

What parts form the RICS Structure?

A
  1. Governing Council
  2. Executive Team
  3. Regulatory Board
  4. Management Board
  5. Presidential Team
58
Q

Names RICS guidance note on bribery and money laundering?

A

Countering bribery and corruption, money laundering and terrorist financing.

Effective September 2019

59
Q

Why does the RICS take disciplinary Action?

A

To protect public interest and safeguard the reputation of the profession

60
Q

What is a consent order?

A

A formal written agreement between RICS and a member of a firm concerning a disciplinary issue arising from an identified breach of RICS rules.

61
Q

When would the RICS issue a fixed penalty?

A

When a member or regulated firm fails to provide info RICS have requested.

  • Annual returns,
  • CPD records.
62
Q

Rule 4 Code of Conduct?

A

Competence

Members shall carry out professional work with due skill, care and diligence and with proper regard for the technical standards expected of you

63
Q

Rule 3 of conduct for MemberS?

A

Ethical Behviour

members shall act with integrity and avoid conflicts of interest and avoid any actions or situations that are inconsistent with their professional obligations

64
Q

How would you deal with a situation where a Friend asks you to PM their house extension?

A
  • No T&C
  • Show understanding that without Professional Indemnity Insurance, you cannot offer advice
  • Never acceptable even out of work hours (and no fee)
65
Q

Are you familary with Professional Indemnity Insurance, and the limit of liability, when would it be used?

A
  • limitation of liability clause can limit the amount of damages (i.e. compensation) you will be required to pay.
  • It Can be an aggregate or per claim CAP
  • E.g Design firm requirement to provide Professional Indemnity Insurance at a specified level. Might be 5 Mill.
  • Wording important - if you are being asked to provide in aggregate, if the figure is exceed in claims nothing is left.
  • RICS - Each and every claim basis 5Mil per claim.
66
Q

How does Net contribution relate to Professional Indemnity Insurance?

A
  • ensures consultant’s liability is only for the work he is carrying out and affecting.
  • means that the consultant will only be held liable for work he has done or influenced
  • cannot be held liable for someone else’s mistakes.
67
Q

What is net contribution clause?

A

2 or more parties involved in a project are each jointly liable for the same loss or damage,

the liability of each party will be limited to the amount which would be apportioned to that party by a court.

68
Q

Discuss Net contribution clause in context of ProjecT?

A
  1. -Problems on construction project often fault of 2 parties
    • If problem on D&C resulting in loss to Client, both Architect and Contractor can be 100% liable for damages whatever share of blame

WITH CLAUSE

  1. - liability of each party is limited to the amount which would be aportioned to that party by a court

NO CLAUSE

  1. If contractor insolvent, and claim made. Architect made to pay liable for 100% of damages even if they were only responsible for 50%
69
Q

Who needs professional indemnity insurance

A

A business that sells advice, design. specifications, supervisions etc.

Duty of care owed is of ‘reasonable skill and care’

70
Q

When would Professional Indemnity Insurance be used?

A
  1. If a professional fails to exercise a duty of ‘reasonable skill and care’ i.e. is negilgent
  2. May be liable for losses incured by their client of third prarties.
71
Q

What is Indemnity?

A

Insures against loss - compensates for money to be paid to the Client or Injured Party

72
Q

Three types of Professional Indemnity Insurance are:

A
  1. Negligent act, error or omission
  2. Breach of Duty - as defined by profession and/or specific terms of conract
  3. Civil Liability: Loss of breach, libel and slander (linked to employers liability and public liability - claims against you in civil court)
73
Q

Employer Liability insurance?

A

Protects employers from financial loss if a worker has a job-related injury or illness arising from employment.

74
Q

Public Liability Insurance?

A

Employer protection if found to be legally responsible for personal injury to a third party or damage to their property

75
Q

Give examples where you have applied Ethics

A

I identified a conflict of interest when…..

I read my employer’s policy on hospitality and checked this against legislation and RICS guidance

76
Q

Why should you avoid conflicts of interest?

A

To avoid anything getting in the way of my duty to advise and represent each client independently and objectively.

A conflict of interest can cast doubt on my integrity’ it can also have a damaging effect on your firm and the profession as a whole.

77
Q

How would you consider whether there was a conflict of interest?

A
  • Could it be perceived to imply a lack of integrity
  • Could it cause embrassment to my profession

Could it mean I was unable to advise and represent each client objectively and independently

  • If so - must not proceed
78
Q

Can you proceed if there has been a conflict interest raised?

A

Only, if I obtain prior Informed consent from all affected parties.

79
Q

In the event of a conflict of interest would you always seek informed consent?

A

No, only proceed if satisfied all parties involved interests will be served by you doing the work (as opposed to another firm doing it).

Dont seek Informed Consent in order to proceed because your firm’s interests are served by doing so.

80
Q

Describe process of Obtaining Informed Consent

A

process that requires proper consideration, professional judgment, and careful execution with every affected party

81
Q

What does Informed Consent mean?

A

Consent given willingly by a party who may be affected by a Conflict of Interest

82
Q

When could a conflict of Interest Arise?

A

If required to provide material to one client, and on a duty to another Client asked to keep that information confidental

83
Q

Why should you avoid conflicts of Interest?

A

They may affect the ability of the RICS member to advise or act fully in the interests of a Client.

84
Q

What does it mean to be sued in ‘torte’

A
  1. Torte is an umbrella term for all civil wrongs recognised by the law, other than breach of contract
85
Q

What must PII comply with for the RICS

A
  1. must be ‘adequate and appropriate’
  2. comply with Rules of Conduct
  3. comply with RICS Minmum Terms
86
Q

What is a conflict?

A

Clash of interest

87
Q

What is the RICS view on conflict of interest

A
  1. If allowed to arise they act against the public interest
  2. Damage confidence in the market place
  3. Threaten the integrity of the profession
88
Q

What is my duty as a professional?

A
  1. to advise and represent clients, impartially, objectively and independently
  2. Without regard to the consequences of a third part of the professional
89
Q

What is PII and what is its purpose?

A

Protects firms against losses resulting from professional negligence, errors and/or omissions which cause financial loss to a third party

Ensures a firm’s clients do not suffer financial loss which the firm cannot meet

90
Q

What does the RICS State about PI insurance?

A

Rule 9 of the RICS Rules of Conduct for Firms requires all regulated firms to be covered adequate and appropriate PII which meets the standards approved by the Regulatory Board

91
Q

What should a PI policy contain?

A
  1. Must be on a claims made basis
  2. Must be on an each and every claim basis
  3. Policy wording is written on a full civil liability basis
  4. Underwritten by a listed insurer
  5. Covers past and present employees
  6. Run-off cover
  7. Minimum level of indemnity required by the RICS
92
Q

Explain the term ‘claims made basis’

A

The policy at the time the claim is made will respond, not the policy in place at the time of negligence

93
Q

What does having the PII policy written on a full civil liability basis mean?

A

A full civil liability basis means if a claim isn’t specifically excluded, it’s included (as opposed to a ‘negligence only’ policy, where if a claim is not specifically included, it’s excluded)

94
Q

What happens to PII when you retire?

A

Run-off cover ensures firms, members and customers are not exposed to financial detriment in the period following a firm ceasing to trade or a member’s retiremen

95
Q

How would you determine what is sufficient in terms of PII runoff cover?

A

Should be for a minimum of 6 or 12 years, depending on how the contract was executed,

however negligence claims can be made up to 15 years after work was undertaken -

advice from an insurance broker should be sought as to whether to maintain for the full 15 years

96
Q

What are the minimum levels of PII based on?

A

Minimum level of indemenity is vased on the fir’s turnover in the previous year (or estiamted for a new firm)

97
Q

What are the minimum levels of PII required?

A

£100,000 or less turnover = min. £250,000 indemnity

£100,001 to £200,000 turnover = min. £500,000

£200,001 and above turnover = min.£1,000,000 indemnity

98
Q

What is meant by the term ‘maximum level of uninsured excess’?

A

The part of the claim the firm must first pay itself

99
Q

What is generally excluded from PII cover

A
  • Work carried out prior to the inception of the policy
  • Insurved v insured claims (i.e. company suing employee for professional negligence)
  • Theft
100
Q

What is the RICS Assigned Risk Pool

A

Insurance facility for regulated firms that find themselves unable to obtain PII in the normal market.

Firms can remain in the ARP for a maximum of 3 years, where they will be audited and guided in how to amend their business procedures/practices ready to obtain market PII again.

101
Q

What should you do in case of a potential claim on your PII?

A

Must notify insurer in the event of:

  • An actual claim
  • A written or verbal threat of a claim
  • Any circumstance that the firm has reason to believe may result in a claim
  • Any complaint notified via the firm’s CHP
102
Q

How can negligence claims be avoided?

A
  • Good communication
  • Clearly understand client’s objectives and confirm precise details
  • Check you are competent to perform the instruction Undertake work in accordance with any relevant RICS guidance
  • Keep up-to-date notes - demonstrate acted appropriately
  • Be aware of changes in legislation
  • Try and resolve any complaints as soon as possible
103
Q

What were the implications of the Merrett v Babb case?

A

A professional surveyor was found to be personally liable for advice he gave

Usually, the claim would have been brought against the surveyor’s company, who would have had PII in place to cover the claim, however they had since gone out of business and no longer carried insurance

Recent case law however has indicated the courts are now favouring professionals and have since rejected the decision in Merrett v Babb on a number of occasions

104
Q

Professional indemnity insurance is?

A

Provides the client and practictioner with protection against claims for:

  • financial loss,
  • personal injury

FROM AN

  • act, error or omission in the
    • performance of professional services.

EK (10 decks)

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