Background to the RICS Flashcards
1
Q
When was the RICS founded?
A
1868
2
Q
The RICS has Royal Charter. When was this granted and by who?
A
Granted by Privy Council in 1881
3
Q
What set out the governance of the institution?
A
RICS Regulations and Bye-Laws
4
Q
How many members of the RICS are there?
A
113,000 qualified and 28,000 trainee (Dec 2023)
5
Q
What are the four levels of membership?
A
- RICS Fellow - FRICS
- Chartered Member - MRICS
- Associate Member - AssocRICS
- RICS Student
6
Q
What do you have to provide to to become a Fellow?
A
Evidence of achievement of FOUR fellow characteristics:
- 5 or more years at MRICS
- Leadership role
- Professional/technical achievement
- Academic achievement
- Raising profile of the RICS
AND
A portfolio of professional achievement to support application (incl. CPD)
7
Q
What is the Governing Council and what does it do?
A
Has 29 members and is the RICS’s highest governing body
Provides management and strategic direction to ensure the RICS fulfils to Royal Charter obligations
8
Q
Who reports to the GC?
A
The Standards and Regulation Board and the Management Board
9
Q
How many specialist professional groups are there?
A
17 covering property, land and construction.
Each group has an elected board and is responsible for outlining standards of competence and practice.
10
Q
Who is the current Chief Executive Officer?
A
Justin Young
11
Q
Who was the president?
A
Justin Sullivan
12
Q
Who is the president elect?
A
Nicholas Maclean
13
Q
What are the 3 main roles of the RICS? (2015)
A
- To maintain the highest ethical standards of education and training
- To protect consumers through strict regulation or professional standards
- To be the leading source of information and independent advice on land, property, construction and associated environmental issues
14
Q
Who carried out a review of the internal governance failings of the RICS?
A
Alison Levitt QC 2021
15
Q
What did Alison Levitt commision?
A
A full review of the RICS and the GC commissioned Lord Bichard to do this
16
Q
What was Bichard commissioned to do?
A
- Clarify purpose of RICS (incl acting in public’s best interest)
- Make recommendations on governing structure
- Provide proposals for incoming leadership
17
Q
How many recommendations were there?
A
36, with 7 key areas
18
Q
What were the 7 key areas?
A
- Increased focus on public interest remit of RICS
- Maintaining self-regulation, through greater independence for regulatory functions
- Increased focus on diversity and inclusion
- Empowering and enabling members - greater support for regional boards, member engagement and focus on younger members
- 5-yearly independent review into effectiveness and governance
- New simplified governance structure
- Greater leadership on pertinent issues - climate change and sustainability
19
Q
What are the 5 Future Foundations of the RICS following the Bichard review?
A
November 2023
- Vision
- Mission
- Strategic goals
- Values
- A world class organisation
20
Q
What are the 5 benefits to being an RICS member?
A
- Status - Professional credentials provide client confidence
- Recognition - Promotion of professional excellence
- Market advantage - RICS status gives competitive advantage
- Knowledge - International practice standards, professional guidance, CPD and knowledge sharing
- Network - Access to professionals
21
Q
What are the RICS ‘Rules for the Regulation of Firms’ 2022?
A
If 50% are members then firm has to be regulated
If 25% are members then it can apply to be regulated
Each firm must nominate a Responsible Principal
Disputes concerning a firm will be heard by the RICS Standards & Regulation Board
Only RICS members and registered firms can use the logo
22
Q
What does a firm’s responsible principal do?
A
They are obligated to ensure systems are in place to ensure compliance with regulatory and RICS requirements
23
Q
What information is required by the RICS for Registration?
A
- Type of business and staffing details
- Name of responsible principal
- Statutory regulated activities
- Nature of clients
- Complaints handling procedure details and records
- Professional indemnity insurance details
- Client money
24
Q
What is Rule One?
A
Members and firms must be honest, act with integrity and comply with their personal obligations, including obligations to RICS
25
What is Rule Two?
Members and firms must maintain their professional competences and ensure that services are provided by competent individuals who have the necessary expertise
26
What is Rule Three?
Members and firms must provide good-quality and diligent service
27
What is Rule Four?
Members and firms must treat others with respect and encourage diversity and inclusion
28
What is Rule Five?
Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence
29
What is an example behaviour of Rule One?
Members and firms do not allow themselves to be influenced improperly by others (e.g. receiving gifts) or by their own self-interest.
30
What is an example behaviour of Rule Two?
Members and firms only undertake work that they have the knowledge, skills and resources to carry out.
31
What is an example behaviour of Rule Three?
Members and firms communicate with clients and others clearly and in a way they can understand.
32
What is an example behaviour of Rule Four?
Members and firms must respect the rights of others and treat others with courtesy.
33
What is an example behaviour of Rule Five?
Members and firms respond to complaints made against them promptly, openly and professionally.
34
Appendix A of the Rules of Conduct. What are the professional obligations of members?
1. Comply with CPD requirements
2. Cooperate with RICS
3. Provide all info requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf
35
Appendix A of the Rules of Conduct. What are the professional obligations of firms?
1. Publish complaints handling procedure - to include ADR provided by RICS and maintain a complaints log
2. Ensure all work is covered by adequate PI cover that meets RICS standard
3. If having a sole principal, make appropriate arrangements for their professional work to continue if they die or something similar
4. Cooperate with RICS
5. Provide all info requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf
6. Must show designations which denote their regulation by RICS
7. Report any matter they are required to report under Rules for the Registration of Firms
36
What is the Decision Tree?
Provides a framework of questions which members should ask themselves when facing a decision and asked to act in a potentially unethical manner
37
What handles disciplinary procedures?
The Standards and Regulation Board
38
What can trigger a disciplinary procedure?
A complaint to the RICS
An allegation by a client / third party
Or because of information received or established by the RICS
39
What are the three levels of disciplinary action?
1. Action by Head of Regulation
2. Disciplinary Panel (drawn from the independent Regulatory Tribunal)
3. Appeal Panel
40
What actions can the Head of Regulation initiate?
1. Serve a Fixed Penalty Notice
2. Make a Regulatory Compliance Order
3. Refer the matter to a single member of the Regulatory Tribunal for consideration
4. Refer the matter directly to a Disciplinary Panel
41
What is a Fixed Penalty Notice?
Procedure used for breaches of the Rules and consists of a fine and/or caution
42
What are Regulatory Compliance Orders?
These are for low level breaches of the Rules (that can be easily corrected)
Written document that between RICS and member/firm acknowledging the breach of the Rules. It outlines the disciplinary action and the actions needed to rectify the matter (incl fine)
43
What is Action by a Disciplinary Panel?
Used for serious breaches of conduct. Disciplinary Panel can include non RICS members. Penalties include:
Issuing a regulatory compliance order
Reprimand
Caution
Fine
Impose condition upon future RICS membership
Expulsion from membership
Require publication of the results of the hearing
44
What is an Appeal Panel?
APs can consider a member's appeal against review of a decision
They will review the decision made
They can vary the penalty previously imposed
45
Use of Social Media: Guidance for RICS Members, 2024 - what is this?
Provides guidance on social media. RICS might investigate concerns around discrimination, dishonesty, bullying
46
What are RICS Professional Standards?
"Set requirements or expectations for RICS members and regulated firms about how they provide services or the outcomes of their actions"
Can include mandatory requirements (must) or guidance / best practice (should)
47
What is RICS Practice Information?
Information to support practice, knowledge and performance of RICS members and regulated firms. E.g. good practice, information, insights and processes
Do not contain advice
48
What are RICS Practice Alerts?
"key tools for warning or alerting the profession to emerging areas of risk over which the RICS has concerns"
49
What should firms avoid in relation to fee negotiations? And what should they do?
Avoid price fixing, aggressive fee cutting or collusion with competitors.
Fees should be market-based and agreed on an ad-hoc basis with clients
You should not be see to be undercutting another firm
50
What should you consider when deciding a fee?
Amount of time and resources required, and that you have the appropriate expertise
51
What should you consider in relation to referral fees?
The granting and acceptance of referral fees should also be considered in the context of the Bribery Act 2010 and the Rules of Conduct, 2021
52
What are Terms of Engagement?
These must state in writing the client's agreement to the proposed fee basis, payment of expenses and that a copy of the firm's complaint's handling procedure is available on request.
53
What three steps should be followed in relation to TOE?
1. Check professionally competent
2. No conflicts of interest or personal interest
3. Confirm TOE in writing and get written approval from the client before you start work on the instruction
54
What is required in TOE for estate agency work?
Compliance with Section 18 of the Estate Agents Act 1979 and money laundering checks (Money Laundering Regulations, 2017)
55
Why might you decline an instruction?
1. You are not competent to undertake the work
2. You do not have sufficient facts on the issue
3. The proposed client will not sign your TOE or complete AML checks
4. There is a conflict of interest or personal interest
5. A PI insurance liability cap cannot be agreed
6. The advice is for a friend or on a pro bono basis and you PI insurance will not cover work carried out on a personal basis
7. The potential client is included in the UK Government's sanctions list
8. Would you be content for your actions to be made public?
56
What is a conflict of interest?
Arises when a member or firm's independence and impartiality is threatened due to the existence of a conflict between two clients. e.g.
Financial interest
Personal interest
Commercial relationships
Acting on both sides of a transaction
57
What is the difference between conflict avoidance and conflict management?
Conflict avoidance is when you do not accept the instruction
Conflict management is when the instruction is accepted, and steps are agreed and put in place to manage the conflict, such as an information/ethical barrier, with the written agreement of all parties.
58
What is the RICS Global Professional Standard: Conflicts of Interest, 2017. And what does it say?
Mandatory standard that come info effect on 1st January 2018
States "a Member must not advise or represent a client where doing so would involve a conflict of interest or a significant risk of a conflict of interest, other than where all those who are, or may be affected have provided their informed consent."
59
What THREE types of conflicts of interest are defined?
1. A party conflict - relating to work on the same or related instruction for two different parties
2. An own interest conflict - relating to a personal interest
3. A confidential information conflict - relating to work between two parties that is confidential
60
What is informed consent?
Can only be given in writing by the party if the person explaining the position to them is entirely transparent about any material factors and sure that the party affected understands what they are doing
61
What should you do if a conflict arises? (3 step process)
Step 1 - Conflict Avoidance
- consider whether the conflict is irresolvable because your impartiality is compromised and should be avoided, or whether it can be properly managed maintaining transparency and openness
Step 2 - Written advice to both clients
- Assuming you wish to accept the instruction, let clients know the following
1. Disclose nature of conflict and any relevant factors (and set out proposals for dealing with the conflict)
2. Be clear and ensure the parties can make their own decision
3. Request written confirmation from both clients of their consent to proceed
Step 3 - Conflict Management
- Once written consent agreed set up information barrier
62
In relation to a conflict, how would you set up an information/ethical barrier?
- barrier must be robust enough to offer no chance of info passing between two parties
- must take reasonable steps to operate an effective barrier
- surveyors acting on two sides must be different and must be separated
- there is a virtual IT barrier
- info regarding instruction securely stored
- clear audit train of the conflict check and all communication
63
RICS Professional Standard: Conflicts of interest - UK commercial property market investment agency, 2017 - what is this?
Specifically related only to UK commercial investment agency work where a specific risk has been identified.
64
What is not allowed in relation to the RICS Professional Standard: Conflicts of interest - UK commercial property market investment agency, 2017?
Dual agency - where an agent has a contractual agency relationship with both the seller and the buyer at the same time. THIS MUST NOT BE UNDERTAKEN (1st Jan 2018).
65
In relation to conflicts of interest in investment agency, what is meant by 'multiple introductions'?
Where an agent has competing contractual relationships simultaneously with several buyers for commercial real estate investment opportunities.
You can make multiple introduction. Once appointed and TOE are being signed, an agent must be clear as to whether they are acting on an exclusive or non-exclusive basis.
If non-exclusive, the agent must obtain informed consent from from the clients subject to the necessary information barriers.
66
What is incremental advice? Re COI in commercial agency.
Where an agent is approached by another party to provide advice, to include valuation, building surveying or planning, related to a purchase or disposal that is incremental to an existing instruction.
RICS members must only provide incremental advice if consent is given and an information barrier is put in place.
67
What is a Personal Interest/Own Interest Conflict? Re COI in commercial agency.
Arising when acting for a family member, close business associate or someone with whom you have a financial or personal interest - a 'connected person'
You must not let a personal interest interfere with your professional judgement.
Declare facts before you start the instruction.
REMEMBER Section 21 of Estate Agents Act 1979 declaration required for agency work.
68
What do the RICS Bye Laws state in relation to confidentiality?
That client confidentiality must be maintained for all client affairs, including historic information.
Third party must get approval unless they override it (e.g. HMRC or police)
69
How long should client files be held for?
A minimum of 6 years before disposal and destroyed securely
70
What happens if you find out confidential information by accident?
This cannot be used for your own purposes. The client should be advised of the error and the matter recorded in a note to the firm's compliance officer.
Any confidential info received by accident should be disposed of.
71
What is your firms complaint's handling procedure?
Acknowledged within 7 days and investigated in 28 days.
Details of CHP should be included in TOB.
Firms must include an ADR as part of their CHP.
Must notify PII insurers when you receive a complaint.
72
What should you do when you receive a complaint?
Stage 1
- details of CHP issued when the firm receives a complaint from a valid complainant to whom it owes a duty of care
- details of nominated person who investigates the complaint must be stated (The Complaints Handling Officer)
- The complaint must be in writing
- procedures and timescales for the complaint should be recorded
Stage 2
- if the complainant not happy, the second stage involves using an independent redress scheme
e.g. the Centre for Effective Dispute Resolution (CEDR), The Property Redress Scheme and the RICS Dispute Resolution Service
73
What are the 4 requirements of CPD?
1. Minimum of 20 hours CPD a year
2. At least 50% must be formal CPD
3. All members must maintain a relevant understanding of RICS Rules of Conduct
4. All members must record CPC activity using the RICS CPD Management System online by 31st Jan each year
74
What is formal CPD?
Where there is structured learning with clear objective and outcomes e.g. professional courses / seminars
75
What is informal CPD?
includes any self-managed learning that is relevant or relation to your professional role, e.g. private study, informal seminars
76
What is negligence and name one case as an example.
I have a duty of care to clients and third parties. When breached and there is a loss, a claim for damages arises.
E.g. Hope Capital Ltd v Alexander Reece Thompson LLP (2023). Found that the purpose of a valuation is central to the extent of the valuer's duty of care when considering a negligence claim. It reinforced the fact, that valuers, professional advisors and professional indemnity insurers are not liable for all of the consequences of a transaction, when a party relies on their advice to enter into a transaction.
This also means professional advisors, after providing their advice, are not automatically responsible for any changes as a result of changes in the market that they are not responsible for. Unless previously discussed and agreed with by their professional advisors, lenders should not assume professional advisors take responsibility for all consequences deriving from their advice.
77
What is stated in the Limitation Act 1980?
In England and Wales the limitation period may be:
- 6 years from when the service was provided
- 6 years from when the loss was suffered
- A long-stop position of 15 years if the claimant did not know a loss was suffered or 12 years, depending on the type of claim/instruction
78
Avoidance of negligence. How can negligence claims be avoided or reduced?
1. Clearly understand client's objectives and confirm instructions in TOE
2. Ensure competence
3. Undertake work in accordance with RICS advice (incl. professional standards and practice information)
4. Make detailed file notes and take photos
5. Keep up to date with market knowledge and CPD
6. Cap the professional liability excess on your PII policy in the TOEs
79
What is Professional Indemnity Insurance?
Protects businesses against claims arising from negligent advice or services provided to clients, covering legal costs and potential compensation
- Mandatory for surveyors working in practice - members must insure it is in place for each instruction
- Details set out in the RICS Professional Indemnity Insurance Requirements July 2024
- All policies must be underwritten by an RICS approved insurer (see RICS website)
80
What are the minimum requirements based on the turnover of the firm for PII?
Turnover vs minimum level indemnity require for each claim
- £100,000 or less = minimum £250,000 cover
- £100,001 to £200,000 = minimum £500,000 cover
- £200,001 or more = minimum £1,000,000 cover
81
What are the minimum requirements for a new firm that does not have a turnover yet?
Estimate the turnover and adjust accordingly
82
What is the maximum level of uninsured excess required by the RICS?
Turnover of up to £10 million = the greater of 2.5% of the sum insured or £10,000
Turnover of over £10 million = No set limit
83
What is meant by a PII policy being full retroactive?
PII policies work on a 'claims made' basis. i.e. policies cover claims that are made during the period of insurance regardless of when the negligent act occurred.
84
Following cessation of trading, 'adequate and appropriate' run-off cover is required. What should be considered?
- a minimum of £1,000,000 of aggregate cover over a period of 6 years
- if you're not able to get this through your current insurer you can apply for coverage to the RICS Run-off Pool
- PII cover is needed for pro-bono work
RICS runs a Member's Support Service (MSS) for members facing claims for work carried out by an employers who has gone into administration
85
What are the six main areas of good practice as set out in the RICS Professional Standard: Client Money Handling (2019)
CHARPP
C - Compliance
H - Holding client money
A - Accounting records and controls
R - Receipts
P - Providing info
P - Payments from client accounts
86
What procedures do chartered surveyors need to be aware of when handling client money?
- client accounts must be kept separately and clearly identifiable
- The work 'client' is on the bank account and check book
- A client must be able to have their moneys on demand
- Accurate records are kept with a running balance available
- Annual audit and reporting obligations by a certified accountant employed by the RICS
- All firms handling client money need to display their procedures document on their website
The RICS also runs a Clients' Money Protection Scheme.
87
What RICS compliance procedures do you have to abide by when starting a new practice?
- Inform the RICS by completing a Firm Details Form
- Appoint a Responsible Principal for all RICS communication
- Register with RICS for the regulation of the firm
- Arrange PII and send details to RICS
- Set up procedures for client money handling
- If undertaking valuation work, register for the RICS Valuer Registration Scheme (VRS)
- Obtain RICS approval for the complaints handling procedure
- Set up a complaints log
- Appoint complaints handling officer
- Plan for succession if a sole practitioner
- Ensure CPD logged
- Ensure completed of an online RICS Annual Return
88
What statutory compliance procedures do you have to abide by when starting a new practice?
- Disclose business name
- Disability discrimination compliance
- Financial services compliance
- Appoint a Money Laundering Reporting Officer
- Health and Safety compliance
- Fire Safety compliance
- Inform HMRC for VAT and Tax registration
- Ensure compliance with current employment law
89
What RICS compliance procedures do you have to abide by when closing a practice?
- Inform the RICS of your closure and deregister
- Ensure clients are informed and handover arrangements are made
- Return any monies held by clients to their own accounts
- Inform insurers and procure PII run-off cover for a minimum of 6 years
- Retain a copy of client files for a minimum of 6 years
90
What is a bribe?
Can be the giving, offering, promising or receiving of an advantage such as a payment, gift or a service for an action which is illegal or a breach of trust
91
What are the six principles of the Bribery Act 2010?
1. Proportionality
2. Top level commitment
3. Risk assessment
4. Due Diligence
5. Communication
6. Monitoring and review
92
What are the four offences in the Bribery Act 2010?
1. Bribing
2. Receiving a bride
3. Bribing a foreign public official
4. Failing to prevent bribery
93
What two things does a gift have to be to be acceptable?
Reasonable AND Proportional
This is acceptable as long as it is accurately recorded in a gift/hospitality register
94
Who policies the Bribery Act?
The Serious Fraud Office
95
What is the penalty if the Bribery Act is breached?
Maximum of 10 years in prison and/or an unlimited fine
96
What is Money Laundering?
When the proceeds of criminal activities are disguised or converted and then realised in legitimate assets
97
What regulation covers money laundering?
Money Laundering, Terrorist Financing and Transfer of Funds Regulations (2017)
98
What are the key provisions in the Money Laundering, Terrorist Financing and Transfer of Funds Regulations (2017)?
1. A requirement to have a written ML and TF risk assessment
2. Implement systems, policies and controls to address ML
3. Adopt appropriate internal controls
4. Provide staff training
5. Comply with new customer DD requirements
6. Comply with requirements relating to politically exposed persons (PEPs)
7. Ensure appropriate record keeping
8. AML checks on proposed purchasers + check purchasers source of funds
99
What are estate agents' legal obligations in relation to AML?
- Register with HMRC if letting properties for more than €10,000/month
- Individuals / businesses must be registered with HMRC in order to trade
- CDD checks on vendors, purchasers, landlords and tenants undertaken on any new sales/lettings
- Enhanced DD checks if reg flags occur (e.g. high risk countries)
100
In relation to AML, firms must have policies to identify transactions which are?
1. Complex or unusually large
2. Contain unusual patterns of transactions
3. Are without apparent economic or legal purpose
101
There are two levels of CDD. What are they?
1. Customer DD
2. Enhanced DD
102
What checks are involved in CDD?
- Identify client and verify identity through reliable source (e.g. passport)
- Identify beneficial owners (i.e. person responsible for managing). Perhaps Persons of Significant Control register on CH
- Company name, number and address of registered office
- Names of directors unless company is listed
- Info in purpose of business and proposed funding
103
What checks are involved in EDD?
- Additional procedures required for any transaction or business relationship with person established in 'high risk third country' or a 'politically exposed person'
- PEP generally presents a higher risk for potential involvement in bribery and corruption by virtue of their position
- more detailed examination on the background and purpose of the transaction
104
What is the cash limit for transactions relating to AML?
10,000 Euros cash
105
Regarding AML, there must be a nominated person to report suspicious activity via what?
Report suspicious activity with a Suspicious Activity Report (SAR)
106
How long does a firm have to hold records for in relation to AML?
A minimum of 5 years and report to Companies House if there are any discrepancies between firm info and CH info
107
What are the penalties for failing to comply with AML regulation?
Maximum 14 years prison sentence and/or unlimited fine for assisting with ML
Maximum 5 years prison sentence and/or unlimited fine for tipping off a person by informing them they are under suspicion for ML (or failing to report suspicion)
108
For a public limited company, what are the typical requirements for ML checks for CDD?
London stock exchange listing
109
For a publicly accountable body, what are the typical requirements for ML checks for CDD?
Government ownership/control
110
For a private limited company, what are the typical requirements for ML checks for CDD?
1. Certificate of incorporation
2. Full name, registered number, registered office, business address
3. Names of all directors and names of all shareholders with 25% or more holding
4. Identification of a higher risk client
Report discrepancies to CH
111
What are some red flags in relation to ML?
Inability or unwillingness of parties to provide identity documents
Changes to parties involved in transactions
Unusual transaction features (e.g. urgency or loss making)
Payment of fees in unusual currencies
112
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