2 - Ethics, Rules of Conduct and Professionalism

Question 1

11 - How does RICS ensure standards of professional conduct and practice are upheld? (3)

Answer 1

1) RICS has Rules of Conduct (effective 2nd February 2022)
2) The Rules of Conduct apply to all MEMBERS (as defined in Bye-Law 5.1) and FIRMS regulated by RICS.
3) The Rules of Conduct are based on ETHICAL PRINCIPLES of honesty, integrity, competence, service, respect, and responsibility.

Question 2

12 - Please list the Rules of Conduct (effective 2nd February 2022) (5)

Answer 2

1) Members and firms must be HONEST, act with INTEGRITY and comply with their professional OBLIGATIONS, including obligations to RICS.
2) Members and firms must MAITAIN their PROFESSIONAL COMPETENCE and ensure that services are provided by competent individuals who have the necessary expertise.
3) Members and firms must provide good-quality and diligent SERVICE.
4) Members and firms must treat others with RESPECT and encourage DIVERSITY and INCLUSION.
5) Members and firms must act in the PUBLIC INTEREST, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession.

Question 3

13 - Can you provide 5 example behaviours to comply with Rule 1? (Members and firms must be honest, act with integrity and comply with their professional obligations, including obligations to RICS)? (5)

Answer 3

Shorthand: MISLEAD, CONFLICT OF INTEREST, TRANSPARENT FEES, UNFAIR ADVANTAGEOF OTHERS, FINANCIAL CRIME.

1) Members and firms do not MISLEAD others by their actions or omissions, or by being complicit in the actions or omissions of others.
2) Firms have effective processes to identify actual and potential CONFLICTS OF INTEREST, to enable appropriate decisions to be made on whether to accept work, and to keep records of decisions made about actual and potential conflicts of interest.
3) Members and firms are open and TRANSPARENT with clients about their FEES and SERVICES.
4) Members and firms do not take UNFAIR ADVANTAGE of others.
5) Members and firms do not facilitate any FINANCIAL CRIME including money laundering, tax evasion, bribery or corruption. Firms have effective processes to prevent directors, partners or employees from doing so.

Shorthand: MISLEAD, CONFLICT OF INTEREST, TRANSPARENT FEES, UNFAIR ADVANTAGE, FINANCIAL CRIME.

Question 4

14 - Can you provide 5 example behaviours to comply with Rule 2 (Members and firms must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise)? (5)

Answer 4

1) Members and firms only UNDERTAKE work that they have the KNOWLEDGE, SKILLS and RESOURCES to carry out competently.
2) Members and firms SUPERVISE any employees undertaking work for them and ensure that these employees have the necessary KNOWLEDGE, SKILLS and RESOURCES to do their tasks competently.
3) Members and firms REFLECT on the work they have undertaken and its impacts, and consider how they might apply what they have LEARNED to their FUTURE WORK.
4) Members MAINTAIN and DEVELOP their knowledge and skills throughout their careers. They IDENTIFY development needs, plan and UNDETAKE continuing professional development (CPD) activities to address them and are able to demonstrate they have done so.
5) Members and firms STAY UP TO DATE and COMPLY with relevant legislation, codes of practice and other professional and relevant technical standards. Firms ensure that their directors, partners and employees do so.

Question 5

15 - Can you provide 5 example behaviours to comply with Rule 3 (Members and firms must provide good-quality and diligent service)? (5)

Answer 5

1) Members and firms understand CLIENTS’ NEEDS and OBJECTIVES before accepting any professional work.
2) Members and firms AGREE with clients the SCOPE OF THE SERVICE to be provided and its LIMITATIONS, and TIMESCALES for the work.
3) Members and firms COMMUNICATE with clients and others clearly and in a way they can understand.
4) Members and firms understand the RISKS and BENEFITS of using relevant TECHNOLOGY.
5) Firms have effective QUALITY ASSURANCE processes for their work.

Question 6

16 - Can you provide 5 example behaviours to comply with Rule 4 (Members and firms must treat others with respect and encourage diversity and inclusion)? (5)

Answer 6

Repect rights of others, no bullying, supply chains and no modern slavery, work cooperatively and develop inclusive workplaces

1) Members and firms RESPECT the RIGHTS of others and treat others with COURTESY.
2) Members and firms do not BULLY, VICTIMISE or HARASS anyone.
3) Firms CHECK that SUPPLY CHAINS do not involve modern slavery or other abuses of the workforce.
4) Members and firms work COOPERATIVELY with others.
5) Members and firms develop an INCLUSIVE CULTURE in their workplaces, support EQUAL ACCESS and OPPORTUNITY for all, and identify and address UNCONSCIOUS BIAS.

Question 7

17 - Can you provide 5 example behaviours to comply with Rule 5 (Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession)? (5)

Answer 7

1) Members and firms SUPPORT directors, partners, employees, colleagues or clients who have acted in good faith to REPORT CONCERNS.
2) Members and firms RESPOND to COMPLAINTS made against them promptly, openly and PROFESSIONALLY.
3) Members and firms do NOT DISSUADE complaints from approaching an ALTERNATIVE dispute resolution provider, RICS or any other regulatory body.
4) Members and firms manage their PROFESSIONAL FINANCES responsibly.
5) Members and firms take APPROPRIATE ACTION when they consider that the rules have been breached, and REPORT suspected significant breaches of the Rules of Conduct by themselves or others to RICS.

Question 8

18 - Please can you list the core professional obligations for members and firms detailed in Rules of Conduct - Appendix A (10)

Answer 8

Members (3) - CPD, Cooperate with RICS & provide information to Standard & Regulation Board:

1) Members must comply with the CPD REQUIREMENTS set by RICS.
2) Members must COOPERATE with RICS.
3) Members must promptly PROVIDE ALL INFORMATION reasonably requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf.

Firms (7) - Publish Complaints handling procedure, previous and current work covered by PII, Firms with Sole Principal must have arranagements in place, cooperate with RICS, provide information to Standards and Regulation Board, desingation to note they are regulated by RICS, Report issues as per Rules of Registration for Firms:

1) Firms must PUBLISH a COMPLAINTS handling procedure, which includes an alternative dispute resolution provider approved by RICS, and maintain a complaints log.
2) Firms must ensure that all previous and current professional work is covered by adequate and appropriate PROFESSIONAL INDEMNITY COVER that meets the standards approved by RICS.
3) Firms with a SOLE PRINCIPAL must make appropriate arrangements for their professional work to continue in the event of their incapacity, death, absence from or inability to work.
4) Firms must COOPERATE with RICS.
5) Firms must promptly PROVIDE ALL INFORMATION reasonably requested by the Standards and Regulation Board, or those exercising delegate authority on its behalf.
6) Firms must DISPLAY on their business literature, in accordance with RICS’ published policy on designations, a designation to denote that they are regulated by RICS.
7) Firms must REPORT to RICS any matter that they are required to report under the Rules of for the Registration of Firms.

Question 9

19 - Are you aware of any RICS Regulation on the use of social media accounts? (2)

Answer 9

1) Use of social media: guidance for RICS members. Version 1 - effective from 30th June 2021.
2) The overarching principle is - STANDARDS expected of members DO NOT CHANGE because they are communicating through social media rather than face-to-face or other traditional media.

Question 10

20 - You attend a work social event and witness two junior colleagues acting a way which could bring your firm into disgrace. What would you do in this situation?

Answer 10

I would SPEAK with them immediately and take steps to prevent reputational damage or embarrassment of my colleagues. I would then address their actions FORMALLY in working hours.

Question 11

21 - RICS professional standards - What are the various standards and what is their status? (4)

Answer 11

PROFESSIONAL STATEMENTS - These contain MUSTS - mandatory requirements, along with details of regulatory interventions if these requirements are not met.

GUIDANCE NOTES - These contain SHOULDS - Non-mandatory requirements, but recommendations of the best practice on undertaking given tasks.

ASSESSMENT of PROFESSIONAL COMPETENCE (APC) - These are the requirements and guidelines relating to the entry into the profession.

DATA STANDARDS - These ensure software programmes and technology can adopt RICS standards into their offering.

Question 12

22 - Why does RICS publish guidance notes and do Chartered Surveyors have to follow them? (2)

Answer 12

1) Guidance notes outline BEST PRACTICE within the profession and provide advice to surveyors on how to complete certain activities.
2) They should be FOLLOWED; members should remain UP TO DATE to ensure they are competent. If there is ever a professional negligence claim and a member has not followed a guidance note, the courts or adjudicator may review these to determine whether the member has acted competently.

Question 13

23 - What is the “Black Book”?

Answer 13

The “Black Book” is a SUITE OF GUIDANCE NOTES that define good TECHNICAL STANDARDS for quantity surveying and construction professionals. These can be utilised as guidance throughout the entire project life cycle.

Question 14

24 - Are you aware of any regulation in association with the use of the RICS logo by regulated firms and Chartered professionals? (2)

Answer 14

1) Rules for the use of the RICS logo and designation by firms.
2) Guidelines for the personal use of the RICS logo and designations by RICS professionals.

Question 15

25 - Can you explain how you act with integrity? (6)

Answer 15

1) Being TRUSTWORTHY in all that I do.
2) Being OPEN and TRANSPARENT in the way I work.
3) Respecting CONFIDENTIAL information,
4) Not TAKING ADVANTAGE.
5) Not allowing BIAS, CONFLICT OF INTEREST or the undue influence of others to override my decisions.
6) Not offering or accepting GIFTS, hospitality, or services, which might suggest an improper obligation.

Question 16

26 - Why must you act within your professional capabilities / competence?

Answer 16

To ensure I do not ADVISE my clients INCORRECTLY which could lead to a complaint or claim of negligence.

Question 17

27 - Can you explain how you take responsibility? (4)

Answer 17

1) Be ACCOUNTABLE for all my actions.
2) Always ACT with skill, care and diligence.
3) Ensure an appropriate COMPLAINTS HANDLING PROCEDURE is in place in the event somebody makes a complaint about me.
4) If I think something is not right, I am prepared to RESPECTFULLY CHALLENGE and raise the matter with colleagues.

Question 18

28 - Can you explain how you treat others with respect? (3)

Answer 18

1) I treat everyone with COURTESY and POLITENESS.
2) I am always POLITE and CONSIDERATE to clients, potential clients and everyone else.
3) I never DISCRIMINATE against anyone for any reason.

Question 19

29 - Can you explain how you provide a high standard of service? (4)

Answer 19

1) I always ensure my client, or others to whom I have a professional responsibility, receive the BEST possible ADVICE and SUPPORT.
2) Acting within my scope of COMPETENCE.
3) Being TRANSPARENT about fees and and any other costs or payments such as referral fees or commissions.
4) COMMUNICATING with my client in a way that will allow them to make informed decisions.

Question 20

30 - Can you explain how you promote trust in the profession? (3)

Answer 20

1) Understanding how MY ACTIONS will affect others and the environment.
2) Fulfilling my PROFESSIONAL OBLIGATIONS.
3) Acting in a TRUSTWORTHY MANNER in both my processional and private life.

Question 21

31 - Can you clarify what an individual should do to maintain a high ethical standard in their profession? (5)

Answer 21

1) Keep their own actions UNDER REVIEW, inside and outside of work.
2) MAINTAIN CPD appropriate in their area of work (for example, applicable law and regulations).
3) FOLLOW ADVICE given by professional bodies on ethical behaviour.
4) Help their own organisation to DEVELOP ETHICAL ways of working.
5) NOTING any UNETHICAL behaviour by others and ADDRESSING with the individual where appropriate.

Question 22

32 - What can employers do to create an ethical environment? (6)

Answer 22

1) Establish CONFIDENTIAL PROCEDURES for “whistle blowing”, independent of the normal chain of command.
2) Include ETHICAL EVALUATIONS in formal performance appraisals.
3) Include ETHICAL STANDARDS in employee hiring, employee contracts and training.
4) Make sure there is adequate planning, training and ethical performance MONITORING when implementing change.
5) Encouraging staff to PROGRESS THEIR APC and become chartered with RICS.
6) Promoting CPD in the relevant area.

Question 23

33 - What is the difference between ethics and integrity? (3)

Answer 23

1) Ethics are MORAL PRINCIPLES that govern a person’s behaviour or the conducting of an activity.
2) Integrity is the QUALITY of being HONEST and having STRONG MORAL PRINCIPLES and VALUES.
3) Put simply, ethics looks at the BIG MORAL PICTURE while integrity is focussed on PERSONAL CHARACTERISTCS.

Question 24

34 - What tools produced by RICS are available to help members make ethical decisions?

Answer 24

RICS ethics decision tree.

(see book for diagram of same)

Question 25

35 - What sort of decision would you consult the RICS ethics decision tree about?

Answer 25

The decision tree provides STEP-BY-STEP PRECATICAL ADVICE on how to deal with any ethical issue that I may face as a professional.

Question 26

36 - Are you aware of any rules associated with registering a Firm with RICS?

Answer 26

Rules for the registration of firms - Version 8, with effect from 2nd February 2022.

(see book for QR code to same)

Question 27

37 - When is a Firm required to register for regulation? (3)

Answer 27

A firm is required to register for regulation by RICS if;
1) The Firm PROVIDES surveying services to the public.
2) The Firm is OPERATING in Regulated Area A (UK).
3) At least 50% of the Firm’s Principals are RICS MEMBERS.

Question 28

38 - In which circumstances are Firms eligible to register for regulation? (2 rules each with 2 options)

Answer 28

Rule 4.1 - A Firm is eligible to register for regulation by RICS if;
a) The Firm PROVIDES surveying services to the public AND;
b) At least 25% of the Firm’s Principals are RICS MEMBERS.

Rule 4.2 - A Firm is also eligible to register for regulation by RICS if it meets the requirements of Rules 4.1(a) and either;
a) The Head of Regulation is satisfied that the Firm is IMPLEMENTING an appropriate plan to secure compliance with Rule 4.1(b) within a reasonable period of time OR;
b) The Head of Regulation is satisfied that the Firm is appropriately SUPPORTED AND SUPERVISED by another RICS registered Firm or Firms that fulfil the requirements.

Question 29

39 - What is a locum? (2)

Answer 29

1) A Firm which has a sole Principal (i.e. a sole practitioner or a sole director in a corporate practice) must have in place APPROPRIATE ARRANGEMENTS in the event of that sole principal’s DEATH or INCAPACITY or other EXTENDED ABSENCE.
2) A locum is effectively ANOTHER PROFESSIONAL who is APPOINTED TO “STAND IN” for the surveyor if they are unable to work, e.g. in the event of an accident / illness, unforeseen circumstances, prolonged absence (e.g. holiday or a sabbatical) or death.

Question 30

40 - Who can be a locum?

Answer 30

Typically, a locum with be ANOTHER CHARTERED SURVEYOR, although they could also be a SOLICITOR or ACCOUNTANT by trade for example (i.e. a TRUSTWORTHY PROFESSIONAL).

Question 31

41 - How does PII cover relate to locums?

Answer 31

Locums need to be COVERED for ANY WORK UNDERTAKEN whilst a sole practitioner is unavailable. This could EITHER be under their own cover, if appropriate, or under the Firm’s PII policy.

Question 32

42 - What does CPD stand for?

Answer 32

Continuing professional development

Question 33

43 - What are the CPD requirements for Chartered Surveyors? (4)

Answer 33

1) Members must undertake a minimum of 20 HOURS CPD each calendar year (January to December).
2) Of the 20 hours at least 10 hours must be FORMAL CPD. The remainder can be INFORMAL CPD.
3) Members must maintain a RELEVANT and CURRENT UNDERSTANDING of the RICS professional and ethical STANDARDS during a rolling three-year period. Any learning undertaken in order to meet this requirement may count as formal CPD.
4) Members must RECORD their CPD activity online by 31st January.

Question 34

44 - How is CPD recorded once a surveyor is qualified (MRICS)?

Answer 34

CPD can be recorded on RICS’ website or by the app.

Question 35

45 - How do you define between formal and informal CPD? (7)

Answer 35

FORMAL - STRUCTURED LEARNING that has clear learning objectives and outcomes;
1) Professional training course.
2) Structured online training.
3) Learning that includes an assessment measure.
4) This can include self-managed learning as long as it has a clear learning outcome which is linked to the member’s development needs.

INFORMAL - SELF-MANAGED LEARNING that is relevant or related to your professional role;
5) Private study.
6) On the job training.
7) Attendance to informal seminars or events where the focus is on knowledge sharing.

Question 36

46 - What sort of professional development have you done during your training period? (5)

Answer 36

1) In-house training courses.
2) External training courses.
3) Personal reading of relevant articles.
4) Mock final assessment interviews.
5) Seminars and lectures.

Question 37

47 - How will you go about selecting CPD subjects over the next 12 months? (4)

Answer 37

1) Consider WEAK and LIMITED areas of my knowledge to develop (GAPS).
2) Consider “HOT TOPICS” that may be relevant for the next 12-18 months.
3) Consider FUTURE PROJECTS and / or project requirements.
4) I will target my CPD to develop knowledge in these areas.

Question 38

48 - How do you keep up to date with topical issues? (5)

Answer 38

1) Regularly review RICS’ website and journals.
2) Register to mailing lists with key CPD providers.
3) Discussions with colleagues.
4) I regularly read construction relates news.
5) I keep in touch with employer’s research & development team.

Question 39

49 - What tools are available to determine if CPD is formal or informal?

Answer 39

RICS CPD decision tree

(see book for diagram)

Question 40

50 - Can you accept a gift from your client or contractor? (5)

Answer 40

1) I would not accept gifts, hospitality, or services, which might suggest an IMPROPER OBLIGATION.
2) Gifts and hospitality can be accepted in CERTAIN CIRCUMSTANCES, the key is to consult the ethics decision tree and make an INFORMED DECISION.

Key points to note;
3) TIMING of the gift or hospitality.
4) PROPORTIONAILITY of the gift or hospitality.
5) Consideration to the IMPARTIALITY, or perceived impartiality of the gift or hospitality offered.

Question 41

51 - What things would you consider when assessing if a gift or hospitality is appropriate to accept? (7)

Answer 41

1) What is the VALUE of the gift or hospitality?
2) Is the gift or hospitality offered at an APPROPRIATE TIME? (is the offer presented just before tender award for example)
3) Is it PROPORTIONATE to the working relationship?
4) Will the gift effect my ABILITY to act IMPARTIALLY?
5) Is it PROPORTIONATE to gifts being offered to others?
6) WHO is the gift or hospitality being given to? (Is it just one person or a range of people from different organisations?)
7) Is it in line with RICS Rules of Conduct and professional standards?

Question 42

52 - Can you explain what a conflict of interest is?

Answer 42

A conflict of interest arises in a situation where there may be an actual, perceived or potential risk that the PROFESSIONAL JUDGEMENT of an RICS-regulated firm or member will be COMPROMISED when undertaking an assignment.

Question 43

53 - Has RICS published any information on Conflicts of Interest?

Answer 43

Conflicts of Interest, 1st Edition, March 2017

(see book for QR code to document)

Question 44

54 - Is the Conflicts of Interest, 1st Edition, March 2017 a guidance note or professional statement?

Answer 44

Professional statement

Question 45

55 - Can you name 3 types of conflict outlined in the 2017 professional statement?

Answer 45

PARTY CONFLICT - A situation in which the duty of an RICS member or regulated firm, acts in the interests of a client or other party in a professional assignment which conflicts with a duty owed to another client or party in relation to the same or a related professional assignment.

OWN INTEREST CONFLICT - A situation in which the duty of an RICS member or regulated firm, acts in the interests of a client in a professional assignment which conflicts with the interests of the same RICS member / firm.

CONFIDENTIAL INFORMATION CONFLICT - A conflict between the duty of an RICS member or regulated firm, to provide material information to one client and the duty of that RICS member / firm to another client to keep that same information confidential.

Question 46

56 - Can you provide working examples of a conflict, or potential conflict of interest? (2)

Answer 46

1) Acting for BOTH the developer and contractor on the same project.
2) Having other obligations or pressures that DETRACT you from or AFFECT your relationship with the client (e.g. acting as an expert witness where you / your firm has an interest in the outcome of the proceedings).

Question 47

57 - What is informed consent?

Answer 47

Informed consent occurs when a PARTY who might be ADVERSLEY AFFECTED by a conflict of interest ACKNOWLEDGES the existence of that risk but still AGREES to instruct an RICS-regulated firm or RICS member to PROCEED with the assignment.

Question 48

58 - What action should you take if a conflict of interest situation (or potential situation) arises?

Answer 48

As soon as you become aware, DISCLOSE to the client IN WRITING and detail the nature of the conflict.

Question 49

59 - You are instructed to work on a proposed development which would require the removal of a nature reserve. You have very strong views of protecting the environment. What should you do? (3)

Answer 49

1) Ask myself the QUESTION could I work on the project without bias or conflict of interest?
2) NOTIFY the client in writing of the potential conflict of interest.
3) I may need to RESPECTFULLY DECLINE the commission and offer up somebody else in the business who could work on the commission without bias or conflict of interest.

Question 50

60 - What is a bribe?

Answer 50

An INDUCEMENT or REWARD offered, promised, or provided to GAIN any commercial, contractual, regulatory, or personal ADVANTAGE.

Question 51

61 - What is the Bribery Act 2010? (with 4 main offences)

Answer 51

The Bribery Act 2010 covers CRIMINAL LAW relating to bribery. The Act contains four main bribery offences;
1) Bribing another PERSON.
2) BEING bribed.
3) Bribing a foreign public OFFICIAL.
4) Failure by a commercial organisation to PREVENT bribery.

Question 52

62 - What are the 6 principles of the Bribery Act? (6)

Answer 52

1) PROPORTIONALITY - The action take should be proportionate to the risk and size of the organisation.
2) TOP LEVEL COMMITMENT - Those in senior positions are best placed to ensure the organisation conducts business without bribery.
3) RISK ASSESSMENT - Many organisations will have little or no risk of bribery, but a risk assessment will show the nature or extent of exposure to bribery.
4) DUE DILLIGENCE - Due diligence procedures must be applied, taking a proportionate and risk based approach, with regards to individuals who perform services on behalf of the organisation.
5) COMMUNICATION - Employers will need to communicate their policies and procedures to staff and others who perform services, additional training may help raise awareness (proportionate to the size and type of the organisation).
6) MONITORING AND REVIEW - As an overarching principle, organisations should monitor and review procedures designed to prevent bribery by persons associated with it and make improvements where necessary.

Question 53

63 - Who does the Bribery Act 2010 apply to?

Answer 53

The Bribery Act will apply to an INDIVIDUAL if;
1) A British citizen has committed a bribery offence anywhere in the world.
2) A British associate with a connection to the UK, such as through business, conducts a bribery offence in or outside of the UK.

The Bribery Act will apply to an ORGANISATION if;
1) The organisation is incorporated in the UK and has committed a bribery offence anywhere in the world.
2) An organisation or partnership that has carried out business in the UK.

Question 54

64 - What is your position for compliance with the Bribery Act? (2)

Answer 54

1) My COMPANY has an anti-bribery and corruption POLICY which applies to me as an employee. I strictly follow the procedures in the policy.
2) I would REPORT any act of bribery to the Serious Fraud Office or National Crime Agency.

Question 55

65 - What are the potential consequences for not adhering to the Bribery Act? (2)

Answer 55

1) There is a maximum penalty of 10 years’ IMPRISONMENT and / or an unlimited FINE for individuals.
2) Corporates face an unlimited fine.

Question 56

66 - What is money laundering?

Answer 56

Money laundering is the generic term used to describe the PROCESS by which criminals DISGUISE the original ownership and control of the PROCEEDS of criminal conduct by making such proceeds APPEAR to have derived from a legitimate source.

Question 57

67 - How do you report suspicious money laundering behaviour?

Answer 57

If you suspect that money laundering may be taking place, you are LEGALLY OBLIGATED under the Money Laundering Regulations to submit a SAR (Suspicious Activity Report) to the National Crime Agency.

Question 58

68 - A client asks you to take responsibility for making interim payments to the contractor. The client gives you half a million pounds in cash to make the payments. What would you do in this situation? (2)

Answer 58

1) I would NOT ACCEPT the cash. I would encourage my client to pay the cash INTO A BANK account (the responsibility then rests with the bank to check the legitimacy of the cash).
2) If I had concerns about the source of the money (from illegal activity for example), I would REPORT to the National Crime Agency.

Question 59

69 - What is corruption?

Answer 59

The ABUSE of entrusted power for private gain.

Question 60

70 - What is a price fixing cartel?

Answer 60

A cartel is a COLLECTION of otherwise independent businesses or countries that act together as if they were a SINGLE PRODUCER and thus can fix prices for the goods they produce and the services they render, without (or reduced) competition.

Question 61

71 - What is terrorist financing?

Answer 61

The solicitation, collection, or provision of funds with the intention to SUPPORT terrorist acts or organisations.

Question 62

72 - What is a facilitation payment?

Answer 62

A payment made to a public or government official that ACTS AS AN INCENTIVE for the official to complete some action or process expeditiously, to the benefit of the party making the payment.

Question 63

73 - What is modern slavery? (2)

Answer 63

1) Modern slavery is the ILLEGAL EXPLOITATION of people for personal or commercial gain.
2) It covers a wide RANGE of abuse and exploitation including sexual exploitation, domestic servitude, forced labour, criminal exploitation and organ harvesting.

Question 64

74 - What is the relevant legislation in relation to modern slavery?

Answer 64

Modern Slavery Act 2015

Question 65

75 - Can you give some examples of modern slavery? (5)

Answer 65

1) FORCED LABOUR - any work or services which people are forced to do against their will under the threat of some form of punishment.
2) DEBT BONDAGE or BONDED LABOUR - the world’s most widespread form of slavery, when people borrow money they cannot repay, and are required to work to pay off the debt.
3) HUMAN TRAFFICKING - involves transporting, recruiting, or harbouring people for the purpose of exploitation, using violence, threats, or coercion.
4) CHILD SLAVERY - Child slavery occurs when a child’s labour is exploited for someone else’s gain. It can include child trafficking, child soldiers, child marriage and child domestic slavery.
5) FORCED and EARLY MARRIAGE - when someone is married against their will and cannot leave the marriage. Most child marriages cane be considered slavery.

Question 66

76 - How would you report modern slavery?

Answer 66

Call the modern slavery HELPLINE or POLICE.

Question 67

77 - What is professional indemnity insurance?

Answer 67

Professional indemnity insurance (PII) covers the policyholder for the costs of legal action made against them in respect of financial loss which occurs due to the NEGLIGENCE, ERROR, or OMISSION in professional advice or services provided.

Question 68

78 - Has RICS published any information on PII requirements?

Answer 68

Yes - UK professional indemnity insurance requirements, Version 9 with effect from 1st April 2022

(see book for QR code to document)

Question 69

79 - What is the purpose of having professional indemnity insurance? (3)

Answer 69

1) Ensures that if the firm faces a claim, it is PROTECTED from FINANCIAL LOSS that it cannot meet from its own resources.
2) Protects the insured member or firm against the CONSEQUENCES of its liability to PAY DAMAGES to third parties for BREACHES of professional duty that it commits through its professional activities.
3) Ensures that the firm’s clients do not SUFFER financial loss, which the firm cannot meet.

Question 70

80 - What is the difference between “any one claim” and “aggregate” policies? (2 plus example)

Answer 70

1) “Any one claim” and “aggregate” refer to the BASIS OF COVER on a professional indemnity policy.
2) An “any one claim” policy provides cover up to the full limit for EACH individual claim made in the period of insurance, whereas an “aggregate” policy provides cover up to the full limit for ALL claims made in the period of insurance.

Working example;

Any one claim policy - If two £75,000 claims are made against a £100,000 any one claim policy, the insurer would cover the costs of both claims, as they are both under the £100,000 limit.

Aggregate policy - If two £75,000 claims are made against a £100,000 aggregate policy, the insurer would only pay up to the £100,000 limit. As the claims total £150,000, the remaining £50,000 would need to be covered by other means.

Question 71

81 - What is a fully retroactive PII policy? (2)

Answer 71

1) PII policies work on a “CLAIMS MADE” basis. This means the policy covers claims that are first made against the insured during the PERIOD OF INSURANCE regardless of when the negligent act occurred.
2) If the retroactive date of the policy is stated as “NONE” then the policy is fully retroactive and ALL FORMER WORK carried out by the firm will be covered.

Question 72

82 - What measures do you take to avoid professional indemnity insurance claims? (8)

Answer 72

1) Keep full and detailed RECORDS of meetings, conversations etc.
2) RECORD recommendations and advice given.
3) Use proper LETTERS OF ENGAGEMENT, appointment contracts and follow the scope of service.
4) Avoid providing advice on specialisms OUTSIDE my field of experience / knowledge.
5) Follow RICS guidance and professional statements.
6) Avoid EXCESSIVE WORKLOADS.
7) Follow RICS Rules of Conduct.
8) Follow company PROCEDURES and POLICY.

Question 73

83 - Tell me about Merrett v Babb? (Court case in 2001) (4)

Answer 73

1) Babb completed a VALUATION as an EMPLOYEE of a company for a house purchased by Merrett.
2) The valuation was later found to be NEGLIGENT.
3) The original company NO LONGER EXISTED and the professional indemnity policy had been CANCELLED.
4) The Court ruled Merrett could PURSUE the INDIVIDUAL (Babb) for losses.

Question 74

84 - What are the minimum limits of indemnity (for regulated firms)? (3)

Answer 74

Firms preceding year turnover / min limit
1) £100k or less / £250k
2) £100,001 to £200k / £500k
3) £200,001 and above / £1M

(from RICS UK professional indemnity insurance requirements, Version 9)

Question 75

85 - What is the maximum level of uninsured excess (for regulated firms)? (2)

Answer 75

Firms preceding year turnover / max uninsured excess
1) £10M or less / Greater of 2.5% of sum insured, or £10k
2) £10,000,001 and above / No limit set

Question 76

86 - If you make a mistake, what would your insurance company expect you to do next? (4)

Answer 76

1) NOTIFY them at the earliest opportunity.
2) COMPLY with any conditions and procedures set out in the insurance policy.
3) ADVISE the client of the error.
4) ASSESS the level of mistake and take steps for correcting it.

Question 77

87 - Assuming you are MRICS, how would you deal with the following situation; A friend asks for your help on a private house extension, they ask for technical advice, for free, outside business hours? (3)

Answer 77

1) My firm’s professional indemnity insurance would not cover me for private advice; therefore, I would POLITELY DECLINE to provide.
2) I would also need to consider a potential CONFLICT OF INTEREST (giving professional advice to a friend).
3) I would suggest my friend contacts the firm I work for in business hours to discuss a FORMAL APPOINTMENT.

Question 78

88 - What is professional indemnity insurance run-off cover?

Answer 78

“Run-off” is a form of professional indemnity insurance which covers the historic liabilities of a business after it CEASES TO TRADE (the policy covers LEGACY ISSUES).

Question 79

89 - How long should run-off cover be in place?

Answer 79

RICS expect run-off cover to be maintained for a minimum period of SIX YEARS from the cessation of the practice.