APC Submission Questions Ethics

Question 1

What is the role of the RICS?

Answer 1

1. RICS acts as a regulator for the land and property industry.
2. They publish Professional statements and Guidance Notes and promote the highest standards of professional practice.
3. Involved in policy influence and political engagement.
4. Protects consumers through strict regulation of professional standards.
5. Is the leading source of information and independent advice on land, property, construction and associated environmental issues.

Question 2

What are Professional Statements & Guidance Notes called now?

Answer 2

1. Professional Standards - setting out mandatory requirements and expectations and best practice.
2. Practice information - support knowledge / practice / performance of RICS members and regulated firms.
3. Practice Alerts - key tools for warning or alerting the profession to emerging areas of risks.

Question 3

What are the RICS’s CPD requirements?

Answer 3

1. Members must undertake a minimum of 20 hours CPD in a calendar year.
2. Of the 20 hours, at least 10 hours must be Formal.
3. All members must maintain a relevant and current understanding of RICS Rules of Conduct during a rolling 3-year period.
4. All members must record their CPD activity using the RICS CPD Management System by 31st January each year.

Question 4

What is your understanding of the Rules of Conduct 2021?

Answer 4

1. New rules were published in October 2021 following a period of consultation.
2. They became effective from February 2022.
3. Rules apply to members and firms and RICS Rules of Conduct sets out mandatory professional obligations.

Contains 5 Rules of Conduct for members and firms.

RULE 1 - Members and Firms must be honest, act with integrity and comply with their professional obligations, including obligations to RICS.

RULE 2 - Members and firms must maintain their professional competency and ensure that services are provided by competent individuals who have the necessary expertise.

RULE 3: - Members and firms must provide good-quality and diligent service.

RULE 4: - Members and firms must treat others with respect and encourage diversity and inclusion.

RULE 5:- Members and firms must act in the public interest, take responsibility for their actions and act to prevent and maintain public confidence in their profession.

Question 5

What was the rationale in developing the new Rules of Conduct 2021?

Answer 5

1. Simpler
2. Clear examples
3. Focus on respect, diversity and inclusion
4. Understanding evolving technology
5. Tackling global challenges

Question 6

What is Rule 1 of the RICS Rules of Conduct? Can you give an example of when you have acted in accordance with the rule?

Answer 6

RULE 1 - MEMBERS AND FIRMS MUST BE HONEST, ACT WITH INTEGRITY AND COMPLY WITH THEIR PROFESSIONAL OBLIGATIONS, INCLUDING OBLIGATIONS TO RICS.

Example: TULSE HILL BRIBE
1. While marketing a unit in Tulse Hill I was offered a bribe by a potential tenant who was looking to find out the lowest rent my client would accept.
2. I declined this offer and raised the issue with my line manager.
3. I logged the incident onto my employers hospitality register and reported the incident via Speak Out as per my company’s Anti-Bribery policy.

Question 7

What is Rule 2 of the RICS Rules of Conduct? Can you give an example of when you have acted in accordance with the rule?

Answer 7

RULE 2: MEMBERS & FIRMS MUST MAINTAIN THEIR PROFESSIONAL COMPETENCY AND ENSURE THAT SERVICES ARE PROVIDED BY COMPETENT INDIVIDUALS WHO HAVE THE NECESSARY EXPERTISE

Example: TONBRIDGE CUTTING - NOT COMPETENT TO ADVISE THIRD PARTY
1. I was instructed to undertake a land access agreement in Tonbridge for my client who was looking to undertake stabilising works to a cutting.
2. During negotiations the third party queried the risks associated with the project.
3. I informed him that this was outside of my technical knowledge and advised he sought independent advice.
4. I followed up with the project manager and recommended a meeting was put in place with the third party to discuss their concerns.

Example 2:

• I undertake my CPD every year to ensure that my knowledge and skills are developed throughout my career.

Question 8

What is Rule 3 of the RICS Rules of Conduct? Can you give an example of when you have acted in accordance with the rule?

Answer 8

RULE 3: MEMBERS AND FIRMS MUST PROVIDE GOOD QUALITY AND DILIGENT SERVICE.

EXAMPLE: PECKHAM RYE (LAND ACCESS)

1. I was instructed to organise land access at a site in Peckham.
2. I met with my client to understand the scope of works so that I could determine their needs and objectives prior to accepting the instruction.
3. I entered negotiations with outside parties and arranged regular teams meetings with my client to provide updates.
4. I also undertook regular face-to-face meetings to maintain rapport.

Question 8

What is Rule 4 of the RICS Rules of Conduct? Can you give an example of when you have acted in accordance with the rule?

Answer 8

RULE 4: MEMBERS AND FIRMS MUST TREAT OTHERS WITH RESPECT AND ENCOURAGE DIVERSITY AND INCLUSION

EXAMPLE:

1. I relate most to Rule 4 - my mother is deaf and I have ADHD
2. I understand that successful team-working relies on understanding and accounting for team dynamics.
3. Different backgrounds bring different skillsets and knowledge to the table.
4. I recognise that teams which incorporate diverse memberships are more likely to be a successful team.
5. Successful teams are more likely to provide good quality service to the clients they serve.

Question 9

What is Rule 5 of the RICS Rules of Conduct? Can you give an example of when you have acted in accordance with the rule?

Answer 9

RULE 5: MEMBERS AND FIRMS MUST ACT IN THE PUBLIC INTEREST, TAKE RESPONSIBILTIY FOR THEIR ACTIONS AND ACT TO PREVENT HARM AND MAINTAIN PUBLIC CONFIDENCE IN THEIR PROFESSION

EXAMPLE - LINK TO COMPLAINTS HANDLING?

Question 10

What is included in Appendix A (Professional Obligations) in the new Rules of Conduct?

Answer 10

1. Appendix A sets out professional obligations which must be followed by members and firms.

RICS MEMBERS MUST:
1. Comply with CPD requirements
2. Co-operate with RICS
3. Promptly provide all information requested by the SRB (Standards & Regulations Board)

RICS FIRMS MUST:
1. Publish a CPH including an RICS approved ADR mechanism.
2. Maintain a complaints log.
3. Ensure appropriate PII cover.
4. Co-operate with the RICS
5. Promptly provide all information requested by the SRB (Standards & Regulations Board)
6. Display a designation to denote they are regulated by the RICS.
7. Report any matters they are required to under the Rules for the Registration of Firms.

Question 11

When must a firm register for regulation?

Answer 11

1. When 50% of Principals are RICS members.
2. If 25%+ can apply for regulation.

Question 12

What is an annual return?

Answer 12

1. Firms must annually make a return to the RICS confirming their compliance with their obligations.

Question 13

What is a responsible principal?

Answer 13

1. A nominated person who is obliged to ensure all reasonable steps / systems are in place to ensure compliance with regulatory and RICS requirements.
2. incl. reporting to RICS as required.

Question 14

What information is required by the RICS for registration?

Answer 14

1. Type of business and staffing details.
2. Name of the responsible principal
3. Statutory regulated activities
4. Nature of clients
5. CPH details and records
6. PII details
7. whether the firm holds client’s money.

Question 15

What do you need to do if you set up in practice?

Answer 15

1. Comply with RICS requirements & Statutory requirements

RICS REQUIREMENTS;
1. Inform RICS of new practice by completing Firms Detail Form
2. Appoint Responsible Principal
3. Register with RICS for Regulation of Firm
4. Arrange PII and send details to RICS
5. Set up procedures for Client Money Handling requirements
6. Register for RICS Valuer Registration Scheme (if doing Red Book vals)
7. Obtain RICS approval for CHP
8. Set up a complaints log
9. Appoint a complaints handling officer (if sole practitioner will be surveyor in another practice).
10. Use a logo kit from the RICS to comply with designation ‘‘Regulated by RICS’’
11. Plan for succession / future running of business
12. Ensure CPD logged on CPD Management System
13. Set up training plan for staff
14. Ensure completion of RICS Annual Return at end of each year.

Statutory Requirements:

1. Disclose business name
2. Inform HMRC for VAT and Tax registration (threshold = £85,000 pa)
3. Appoint a Money Laundering Reporting Officer (Money Laundering Regulations 2017)
4. Register for Data Protection (Data Protection Act 2018)
5. Ensure Compliance with:
   - Asbestos legislation (Control of Asbestos Regulations 2012)
   - Bribery Act 2010
   - Equality Act 2010
   - Estate Agency (Estate Agents Act 1979, Consumer Protection Regulations 2008, Misrepresentation Act 1967)
   - Employment law
   - Financial Services compliance
   - Fire Safety Compliance (Fire Safety Order 2005)
   - Health & Safety Compliance (Health & Safety at Work Act 1974)

Question 16

Why would you require PII if you were to set up in private practice?

Answer 16

1. Surveyors have a duty of care to clients and third parties.
2. When this is breached, and there is a loss, a claim for damages arises
3. PII protects clients, surveyors and third parties against negligence claims when there is a duty of care breached and a claim for damages arises.

Question 17

What case law relates to negligence?

Answer 17

1. Yianni v Edwin Evans (1981) - Case established that a residential valuer instructed by a mortgagor lending institute could owe a duty of care to a mortgagee purchaser relying on a valuation.
2. Scullion v Bank of Scotland plc (2010) - Court of Appeal held that a surveyor who provides advice on value to a lender in respect of BtL purchase does not owe a duty of care to the borrower. Overturned Yianni v Edwin Evans (1981) in the case of a ‘‘commercially astute’’ borrower.
3. Burgess v Lejonvarn (2010) - Established that professionals providing pro-bono advice and without a contract owe a duty of care, however they are not liable for work they do not do and are not under a duty to advise or give warnings.

Question 18

What are the limitation period for negligent claims?

Answer 18

1. Contract: 6 years from the date of act or 3 years from knowledge of damage (15 years long stop)
2. Tort - 6 years from the date claimant suffered loss.

Question 19

How would you assess the level of PII you would need when setting up in private practice?

Answer 19

1. Level of PII is dependent on firms turnover the previous year.
2. If I was a new practice I would estimate the turnover and adjust in due course accordingly.

Question 20

Would PII indemnity levels increase as your business expanded?

Answer 20

Yes - the minimum requirements are based on the previous year turnover of the firm.

£100,000 or less = £250,000 minimum level of indemnity
£100,001 - £200,000 = £500,000
£200,001+ = £1,000,000

Also the maximum levels of uninsured excess chang:

Up to £10,000,000 = Greater of 2.5% of sum insured or £10,000
Over £10,000,000 = no set limit

Question 21

How can you avoid negligence claims?

Answer 21

1. Clear understand client objectives and confirm precise instructions in writing the terms of engagement.
2. Ensure you are competent to undertake the instruction
3. Undertake the work in accordance with the relevant professional standards and practice information.
4. Make detailed file notes and take photos.
5. Keep up to date with market knowledge and legislation.
6. Undertake and record your CPD.