Conduct, rules and ethics Flashcards
What are the roles of the RICS?
1) Maintain high standards of training and education
2) Protect consumers through strict regulation of professional statements
3) Be the leading source of information and impartial advice in relation to real estate, construction and land
What are the benefits to members of joining the RICS?
1) Status -> client confidence in your work
2) Recognition -> promotes professional excellence to clients
3) Market advantage
4) Education -> CPD, prof. standards, internal guidance notes
5) Network -> 125,000 other members
Benefits to firms?
1) Confidence -> your regulated/monitored = top quality work
2) Professionalism -> provide clear, impartial, expert advice
3) Security -> Complaints procedure, access to independent redress and PII cover all provided
Key foundations of RICS regulation?
PACTT
Proportionality -> punishment and crime
Accountability -> to all other members and the public
Consistency -> all members treated the same
Targeted -> on serious breaches
Transparency -> to clients, public and members
Where are the core values found and what are they?
RICS Global Professional and Ethical Standards 2015
1) Always 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
Where are the rules of conduct for firms found and what are they?
RICS Rules of Conduct for firms 2007 (amended 2017)
Conduct of business: PCS CPD CCI
Firm administration: AS RIP DIC
Where are the rules of conduct for members found and what are they? When were they last updated?
RICS Rules of Conduct for members 2007 version 7 (amended March 2020)
ECS CPD SIC
Can any firm register with RICS?
Only if you provide surveying services and:
Pre-April 2020: 50% of firm MRICS
Post-April 2020: 50%+ partners provide surveying advice -> must be regulated.
If 25%+ partners -> opt to be regulated
Partner = can work autonomously/unsupervised
What is included within an annual return?
1) Type of business and staffing deatils
2) Statutory regulated activities
3) Nature of clients
4) Complaints handling procedures and records
5) PII details
6) Whether you hold client’s money
What happens if you break the rules of conduct?
1) Action by head of regulation
2) Disciplinary panel
3) Appeal panel
What can the Head of Regulation do?
1) Serve a fixed penalty notice (relates only to supply of info to RICS)
2) Issue a Regulatory Compliance Order
3) CPD sanctions
4) Refer you to Disciplinary panel
Who are the disciplinary panel and what can they do? Who appoints the panel? Why are they split like that?
Group of 50% laymen 50% MRICS -> appointed by Head of Regulation
1) Issue compliance order
2) Unlimited fine per breach (proportional to crime)
3) Conditions for continued membership
4) Expulsion
5) Require outcome be published (e.g. Modus)
Need to make sure we don’t regulate ourselves
Who are the appeal panel and what can they do?
50% MRICS 50% laymen
Hear new evidence and adjust penalty including overturning
What are legitimate reasons to decline work?
- not competent
- don’t have all the facts
- Client won’t do AML checks
- Client wont sign ToE
- Conflicts of interest
- Client is on Gov. Sanctions lists
- Can’t agree a PII liability cap
What are the key steps to follow for a ToE and what must you include?
CIT
1) clients agreement to fee basis, payment of expenses and how it is calculated
2) a copy of the complaints procedure is available on request
What is a conflict of interest?
When a member or firm’s impartiality and independence is threatened due to a conflict between two clients
What is the governing RICS legislation for CoI?
RICS Global Professional Statement Conflicts of Interest 2017
What are the types of conflict?
1) Party conflict
2) Own party conflict
3) Confidential Information conflict
What is informed consent and when can it be used?
Explained in writing
1) In best interest of relevant parties
2) Transparent on material matters
3) Relevant parties understand the implications of proceeding
4) Not prohibited by law
What CoI check measures do you need?
Depends on the size of the firm and complexity of the work you do. Must be suitable to the situation.
What do you do if there is a conflict/potential conflict?
1) Conflict avoidance -> get the facts, can you proceed?
2) Written advice covering
- Nature/circumstances/proposals for mitigation
- Parties to make own decision, with 3rd party advice if needed
- Request written confirmation confirming consent
3) Conflict management -> put the measures in place
What is an information barrier?
No chance of information passing between parties:
- Different surveyors, physically separated with different support teams
- Different files with no access, all securely kept
- Clear audit trail and overseen by firm’s compliance officer
What does the Bribery Act 2010 cover?
6 key principles:
1) Proportionality
2) Top level commitment
3) Risk assessment
4) Due diligence
5) Communication
6) Monitoring and review
What is a bribe
The giving, receiving, offering, promising an advantage such as a payment, gift or service for an action which is illegal or a breach of trust
Who is responsible for bribery?
Firm for employees
-> need to show they took all reasonable measures to prevent it (training, identification of risks, clear policies, regular reviews)
Is hospitality allowed under the Bribery Act?
Must be reasonable and proportionate.
Must be listed in the firm’s gift register
What are the penalties under the bribery act? Who polices it?
Serious Fraud Office
- Individuals: Max 10 years in prison and/or unlimited fine
- Companies: unlimited fine
What is the key money laundering statutory legislation?
Money Laundering, Terrorist Financing and Transfers of Funds (info on payer) 2017, amended 2020
What is money laundering?
Converting the proceeds of criminal activity into legitimate assets
What are the penalties under the ML, TF and ToF 2017? Who polices it?
Overseen by HMRC
Assisting in ML: Max 14 years and/or unlimited fine
Tipping off/not reporting: Max 5 years / unlimited fine
What is customer due diligence?
1) Identification and verification
2) Owner and beneficiaries of client
3) If a firm: name, number, registered address. Names of directors (unless listed)
4) Purpose and appropriate funding arrangements
What is enhanced due diligence?
If a PEP/family member of high risk third country
- More info on background, purpose and increased monitoring
What is the RICS guidance for money laundering?
RICS Professional Statement Countering bribery, corruption, money laundering and terrorist financing 2019
RICS Countering B, C, ML and TF 2019 is broken down how?
1) Mandatory Requirements
2) Guidance
3) Supplementary Guidance
What are the mandatory elements in relation to bribery and corruption of the RICS Countering B, C, ML and TF 2019?
1) Don’t do it
2) Have systems in place to stop it
3) Report suspicion
4) Do due diligence to identify potential risks
5) Keep records
What are the mandatory elements in relation to ML and TF of the RICS Countering B, C, ML and TF 2019?
1) Don’t do it
2) Have systems in place to stop it
3) Report suspicion
4) Do due diligence to identify potential risks
5) Keep records
1) Only use 3rd party checks if your sure (i.e. lawyers - otherwise double check info)
2) Understand the purpose of the instruction
3) Verify clients by checking IDs
What guidance is given under RICS Countering B, C, ML and TF 2019?
1) Have a written policy
2) Have a gifts register
3) Train staff
4) Have senior management control procedures
5) Keep up to date with legislation
What supplementary guidance is given under RICS Countering B, C, ML and TF 2019?
- Establish a risks based approach
-> Who
-> What
-> Why
Also guides on - dealing with PEPs
- How to find ultimate beneficiaries of a firm
What covers complaints handling?
RICS Guidance Note on Complaints Handling 2016
What must you do under the RICS Complaints Handling 2016 Guidance Note?
1) Have RICS approve your CHP
2) Notify PII as soon as possible after a complaint
3) Provide CHP to client with Terms of Business
4) Maintain a complaints log
5) Include an ADR mechanism in your CHP
What is the minimum CHP requirements by RICS?
1) In house
- Issue to whomever you owe a duty of care
- Give details of complaints handling officer (external if sole practicioner)
- Do all in writing
- Acknowledge within 7 days, investigated within 28 days
2) ADR
- Make use of redress schemes (CEDR/ RICS DRS)
- RICS will step in if member fails to respond or prevents the party gaining access to ADR service
What is your firms CHP?
1) Initial steps - 2 working days
- Director acknowledges and responds, confirming CHP
2) Investigation - 15 working days
- Director investigates and provides written response
3) Responses
- If not satisfied, can raise in CHO
4) Complaints officer - 15 working days
- CO investigates, advise senior executive
5) Mediation
- CEDR or RICS DRS
6) Referral to arbitration
- Commercial clients: Arbitration Procedure for Surveying Disputes
- Consumer clients: Ombudsman Services
What are the PII requirements? How does it work?
RICS approved provider
Under £100,000 -> £250,000
£100,001 to £200,000 -> £500,000
Over £200,001 -> £1,000,000
Done on a retroactive, claims made basis -> covers all claims within insurance period regardless of when the negligence occurred
What is your firms PI policy?
£5m aggregate
Anything over that needs sign off at increasingly senior levels:
- £5 - £30m = senior director
- £30 - £50m = lead director
- £50m+ = EMEA Valuation Governance Board
- Unlimited = Global Valuation Board
What is run off cover and how much do you need?
If you retire or close your firm.
Consumer claims: £1m for 6 years
Commercial claims: suitable level for 6 years
RICS recommends longer, can be sued for 15 years…
What do you do if you can’t get PII? And run-off cover?
Apply for RICS Assigned Risk Pool (at a cost) or RICS Low Earners Scheme (retired/part time)
RICS Run-off pool
When do you need PII?
All work, including pro-bono. Whenver you have a duty of care or are providing advice
What do RICS require for you start a practice?
1) Inform RICS -> Firm Detail Form
2) Send RICS your PII
3) Send RICS your CHP
4) Set up money handling procedures
5) Appoint Responsible Principal to contact RICS
- Appoint Complaints Handling Officer
- Register for regulation by Regulatory Board
- Log CPD
- Train staff
- Get a logo kit from RICS
- Ensure Annual Return is completed each year
What is the statutory compliance required for starting a practice?
1) Register with HMRC
2) Register with companies house (name, address)
3) Appoint Money Laundering Officer
- Ensure compliance with wage legislation
- Ensure insurance compliance as employer
- Abide by the
Equality Act 2010 / Bribery Act 2010 / Estate Agency Act 1979 / GDPR 2016
What do you do if you close a practice?
Inform RICS Inform clients Return any client money held Inform PI insurer and get run off cover Retain a copy of all files for at least 6 years
Why would you hold client money?
Deposits, rent, service charges
What RICS doc governs client money handling?
RICS Professional Statement Client Money Handling 2019
What are the key areas of RICS CMH legislation?
1) How to hold client money
2) Providing information to clients
3) Receipts of client money
4) Payments from the account
5) Accounting records and controls
6) Compliance
What Client Money Protection services does the RICS offer?
RICS Clients’ money protection scheme
- Last resort if firm is unable to pay
1) For surveying services -> general protection for money held by firms
2) for Residential agents
What are the rules of CPD?
1) 20 hours, at least 10 formal
2) Recorded on the RICS website
3) Rules of conduct for firms -? Train staff
4) Every 3 years, need to do some form of ethical component to CPD
What is your firms gifts policy?
1) Must be reasonable and proportionate
2) Gifts of value under £100 with line manager approval
3) Charitable donations for guest speakers under £100 with line manager approval
4) No political donations to be made under any circumstances
5) No cash or cash equivalents
6) No paid foreign travel or accommodation
How is the RICS set up?
CEO Sean Thompkins
Global Governing Council (25 members including president Tim Neale)
Audit Committee / Management Board / Standards and Regulations Board
Also: 17 Professional Groups
What does acting with integrity mean to you? Can you give an example from your case study and a general example?
Act with integrity = being honest and straightforward
1) Borrower wanted to see report before client - said no
2) In case study asked client for permission to use case study in APC (also detailed all my working/comps/assumptions)
What does treating others with respect mean to you? Can you give an example from your case study and a general example?
Treat others with respect = treating everyone the same and how you would want to be treated
1) Working with interns of lesser experience
2) Respecting agents decision not to share sales data with me during comp search
What does providing a high standard of service mean to you?
Case study and general example?
High standard of service = making sure those you work with get the best possible advice/service/support and deliver on all the Terms of Engagement
1) Working late to finish reports to meet deadline
2) Responded to all queries professionally and promptly
What does promoting trust in the profession mean to you?
Case study and general example?
Promoting trust = promoting me/my firm/the RICS in a positive way both in my personal and professional life
1) Giving presentations on graduate surveying life to students
2) Provided clarity in ToE of the CHP, firm’s terms of business and all key areas
What does taking responsibility mean to you?
Case study and general example?
Taking responsibility = Being accountable for your actions.
Acknowledging mistakes and correcting them, not blaming others
1) Spotted mistake in draft report table during peer review - pointed it out and said I would fix
2) Ensuring the CoI, project sheet, file notes etc were correctly set up and stored in our internal files
What do the RICS provide to assist with AML?
Red Flag document
How long do you need to keep records for?
Limitation Act 1980 - can be sued for 6 years with a long stop date of 15 years.
Other regulations e.g. right to rent checks need to be kept for 12 months post-tenancy
What is negligence?
Breach of a duty of care where a loss arises.
You have a duty to care to clients and third parties to use “reasonable care and skill”
How can you avoid negligence?
Make file notes Take photos on site Ensure you are competent at the outset Have comprehensive terms of engagement Undertake work in accordance with RICS guidance
What steps do you take for handling clients money?
RICS Professional Statement Client Money Handling 2019
- Have separate bank account with client name in
- Put money in there promptly
- Do not use money for any other purposes
- Provide access on demand to client
- Ensure records are kept
- Have appropriate access safeguards e.g. 2 director signatories to approve a transfer
What are the main points of the ML TF info on payer regulations 2017?
1) Do written AML checks
2) Have appropriate policies/controls in place
3) Do CDD and EDD
4) PEP / high risk person monitoring
5) Keep written records
Others
- No cash over 10,000 euros
- Have a money laundering officer
- AML before exchange of contracts
How do you do AML?
Individuals
- Verify and certify ID
- Proof of address
- Smart search => check the results
- First payment must come from UK bank account
Companies
- Name
- Registered address
- Beneficial owners (25% or more)
- Credit Safe
Recent Changes to the RICS?
1) Governing council from 50 to 25 members
2) President changes annually
3) CEO changes every 6 years
What is the RICS set up?
Governing council then Audit, regulatory and management boards
17 specialist professional groups
When should you not withdraw money from a client account?
Without their consent / for a pre-agreed purpose
What is negligence
Breach of duty of care where a loss arises
Where are desk top valuation covered in the red book?
VPS 2 Inspections, Investigations and records
What impacts your fee offered?
1) Competitive pressures in the market for that type of work
2) Amount of work involved
3) Risk and liability
4) Other strategic considerations
What impacts the liability you offer?
1) Asset value
2) Market uncertainty / volatility
3) Are other parties added? Can increase liability
Key principles of ML regulations?
1) Do written risk assessments
2) Have internal controls in place
3) Train your staff
4) Comply with CDD and EDD procedures
5) Identify PEPs
6) Keep records
7) Review and be aware of risks
What are the 2020 ML updates?
1) Customer Due Diligence on tenants with lettings over 10,000 Euros
2) Tell HMRC too
What does the bribery act actually legislate?
1) Companies are responsible for their staff
2) Record gifts in a gift register
3) Have clear policies and training in place to make staff aware
4) Do risk assessments/DD to identify risks
5) Review these policies and risks regularly
What would you do differently under enhanced due diligence?
examining the background and purpose of the transaction
increasing your monitoring of the business relationship
