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RICS Revision > Conduct rules, ethics and professional practice > Flashcards

Conduct rules, ethics and professional practice Flashcards

1
Q

What is the central purpose of the RICS?

A
  1. To maintain the highest standards of education and training
  2. To protect consumers through strict regulation of professional standards
  3. To be the leading source of information and independent advice on land, property, construction and associated environmental issues
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2
Q

How does the RICS ensure members abide by the Rules of Conduct for Members, 2007 (as amended 2013)?

A

The RICS completes yearly audits

The (Head of regulation) RICS will investigate claims of misconduct

They have the power to:
1. Serve a Fixed Penalty notice
2. Make a Regulatory Compliance Order
3. CPD sanctions
4. Refer to a Disciplinary Panel

Member have right to appeal decisions made at a Disciplinary Panel by going to an Appeal Panel

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3
Q

How does the RICS ensure firms abide by the Rules of Conduct for Firms, 2007 (as amended 2017)?

A

RICS ensures firms comply by conducting audits

Firms have to provide information when registering with the RICS and in an annual return

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4
Q

Why must a Chartered Surveyor do CPD?

A

It is one of the Rules of Conduct for Members, 2007 (as amended 2013)
Ensures you remain up to date with relevant legislation and any changes in the industry

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5
Q

Why must a Chartered Surveyor main solvent?

A

It is one of the Rules of Conduct for Members, 2007 (as amended 2013)
May impair your decision making and mean that you’re more likely to take bribes and not act in the best interest of the client
If you’re unable to manage your own finances, it does not reflect well on you being able to manage your client’s finances

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6
Q

Give me an example of when you have acted with integrity in your work.

A

During the tender for 20RM I identified that a contractor had gained BIM information that would have given them a competitive advantage.

I ensured this information was issued to all tendering contractors via the proper channels.

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7
Q

Give me an example of when you have provided a high standard of service.

A

When I complete RFPs for consultant services I collated 3x costs to ensure I gave my client the best price.

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8
Q

Give me an example of when you have acted in a way that promotes trust in the profession.

A

I undertook a conflict of interest check to ensure that I was not conflicted when undertaking reviewing an RFP for 20RM.

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9
Q

Give me an example of when you have treated others with respect.

A

When completing an RFP for furniture selection at 20RM I ensured the supply chain was compliant with modern slavery legislation.

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10
Q

Give me an example of when you have taken responsibility.

A

When completing monthly invoicing, I ensure I book time for the activity ahead of time so I am never rushed.

I peer review the tracker with a partner before issuing.

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11
Q

What would you do if you were asked to do something unethical?

A

I would speak to someone more senior, such as a supervisor or line manager
I would whistleblow if required e.g. I would report suspected Money Laundering to the MLRO

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12
Q

What has the RICS produced to help surveyors make ethical decisions?

A

The RICS has created the Ethics Decision Tree, which members can refer to if they are asked to do something they are unsure about

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13
Q

When you taken on a new client, what checks do you make?

A

Will need to undertake Customer Due Diligence (CDD) to identify the client and verify their identity
If the client is a politically exposed person (PEP), a PEP family member/business associate or from a high-risk third country then you should undertake Enhanced Due Diligence (EDD)

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14
Q

How do you undertake a conflict of interest check?

A

I use my firm’s internal system, which is a Microsoft Dynamics database to check the client name and the address of the property again all known jobs.

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15
Q

How would you approach a conflict of interest?

A

Follow the guidance set out in the RICS Global Professional Statement on Conflicts of Interest, 2017:

  1. Conflict avoidance - decide whether the conflict is manageable and whether proceeding is in the best interest of all parties
  2. Written advice to both parties - disclose the nature of the conflict, explain how you will manage it and request written confirmation of informed consent
  3. Conflict management - set up an information in accordance with provisions agreed with the clients
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16
Q

What is money laundering?

A

Money laundering is legitimising the proceeds of crime.

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17
Q

Why does you firm have Terms of Engagement? What should be included in Terms of Engagement?

A

Creates a contract with the client
Sets out the proposed fee basis, payment of expenses and that a copy of of the firm’s complaints handling procedure is available upon request

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18
Q

How would you close down a practice?

A

Inform the RICS
Inform clients and arrange for them to be handed over to a new firm
Return any clients’ money
Set-up professional indemnity run-off cover for a minimum of 6 years
Retain a copy of client files and record for a minimum of 6 years

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19
Q

What is the structure of the RICS?

A

Governing Council (33 members) runs the RICS

Regulatory Board, Management Board and various committees report to the Governing Council

17 specialist professional groups covering property, land and construction

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20
Q

What changes have been made to the Royal Charter and Bye-Laws?

A

Reduced size of Governing Council to a minimum of 25 seats, with 15 geographical seats
A new Chair of the Governing Council will act for up to 6 years
President will focus on ambassadorial duties and continue to be elected on an annual basis

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21
Q

Why would you like to be a Chartered Surveyor?

A
  1. Status - professional credentials provide client confidence
  2. Recognition - promotion of your professional excellence
  3. Market advantage - RICS status gives you a competitive advantage
  4. Knowledge - International practice standards and professional guidance
  5. Network - access to over 130,000 members worldwide
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22
Q

What are the THREE benefits of regulation for firms?

A

CPS:

  1. Confidence - for client as regulated firms are monitored by RICS regulation
  2. Professionalism - firms have to provide clear, impartial and expert advice
  3. Security - firms have to have recognised CHP, access to ADR and PII cover
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23
Q

How many hours of CPD do you have to undertake? What are the rules?

A

Minimum of 20 hours of CPD per year, of which at least 10 hours must be formal
Member must maintain an understanding of RICS Professional and Ethical standards every 3 years
Members must record their CPD using the RICS CPD Management System on the RICS website by the 31st December

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24
Q

What are the Rules of Conduct for Members, 2022 ?

A

HC-Q-D&I-Pub

1) Honesty, Integrity, compliance with professional obligations
2) CPD - maintain professional competence
3) Good quality and diligent service
4) Respect, diversity and inclusion
5) Act in public interest, take responsibility, maintain public confidence.

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25
Q

What information is required by the RICS for registration and in the annual return?

A
  1. Type of business and staffing details
  2. Statutory regulated activities - such as for financial services
  3. Nature of clients
  4. Complaints handling procedure and records
  5. Professional indemnity insurance certificate
  6. Whether the firm hold clients’ money
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26
Q

Can you rely on due diligence checks undertaken by a solicitor?

A

Can only rely on information provided by a third party where there is an appropriate level of confidence in the quality of the information provided by that party
Guidance contained within RICS Countering bribery, corruption, money laundering and terrorist financing, 2019

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27
Q

If you are conflicted, can you still undertake an instruction if you’ve got informed consent?

A

Depends whether you would be able to act impartially, whether you believe that you undertaking the instruction would be in the best interest of all those who are or may be affected and whether its prohibited by law

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28
Q

What forms of conflict of interest are there?

A

Party Conflict - acting on both sides of a transaction
Own Interest Conflict - relating to a personal interest
Confidential Information Conflict - relating to work between two parties which is confidential

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29
Q

What would you do if you had a personal conflict of interest and how would you manage this?

A

Ensure that all parties were aware and provided informed consent

Iould refer the instruction internally and ensure that the appropriate information barriers were setup

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30
Q

What information barriers does your firm have in place?

A

Restricted access to files
Clear desk policy
Private meeting rooms
Physical barriers e.g. restricted floor access

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31
Q

What would you have to do if you were required to hold clients’ money?

A

RICS has issued a Professional Statement on Client Money Handling, 2019:
• Client account must be kept separate and clearly identifiable
• Word client is on the bank account and cheque book
• A client must be able to have their monies on demand
• Payment of interest is agreed with a client and accounts must be kept in credit
• Regular bank reconciliation
• Accurate records are kept with a running balance available
• Annual audit and reporting obligations by certified accountant employed by RICS
• If cash receipts are used to settle transactions, make sure records show all cash transactions
• Signatories must be agreed with authorised staff and two signatories should be required
• A discrete account is for a single named client account only
• RICS Regulatory Review Visits can be undertaken by RICS usually on a routine 3 yearly basis
• Firms handling client money need to display their procedure on their website

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32
Q

How many Principals in a firm have to be RICS members for a firm to be regulated?

A

If a practice provides surveying services and 50% of principals are RICS members, then it has to be regulated. If firms want to apply to be registered then they must now have more than 25% of Principals as RICS members (previously they only required one Principal to be an RICS member)

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33
Q

Why are the RICS requiring 25% of Principal to be members in order for firms to apply to be regulated?

A

Concerned that as the RICS profession and brand grows, having a single RICS qualified Principal does not provide sufficient assurance that RICS professional standards have adequate influence within the senior management of firms

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34
Q

Would you ever receive a gift from a client?

A

Would be inappropriate if you were doing a job for that client
Would consult the Ethics Decision Tree and my firms anti-bribery procedure
Would consider RICS Professional Statement Countering bribery, corruption, money laundering and terrorist financing, 2019

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35
Q

If you thought it was appropriate to accept a gift from a client, how would you proceed?

A

Record it on my firm’s Gifts and Hospitality Register

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36
Q

What is the law associated with gift giving and receiving?

A

Bribery Act 2010 and Proceeds of Crime Act 2002

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37
Q

What are the SIX principles of the Bribery Act 2010?

A
  1. Proportionality
  2. Top level commitment
  3. Risk assessments SMT
  4. Due diligence (Insure not happening)
  5. Communication (inclu training)
  6. Monitoring and review
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38
Q

What are the FOUR offences under the Bribery Act 2010?

A
  1. Bribing
  2. Receiving a bribe
  3. Bribing a foreign public official
  4. Failing to prevent bribery
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39
Q

How would you define a bribe?

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

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40
Q

What identification do you require on a client to do Customer Due Diligence?

A

Private: identify client and their identity based on a reliable independent source (e.g. passport or driving licence). Proof of address (e.g. bank statement, council tax statement) not more than 3 months old

Company: certificate of incorporation, full name, company number and address of registered office (names of directors and beneficial owners as anyone who has a shareholding of 25% or more)

PLC: London Stock Exchange listing

Publicly accountable body: proof of government ownership/control

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41
Q

What would you do if you were suspicious of a client?

A

Wouldn’t make them aware as that could be ‘tipping off’ which is an offence
Would report and escalate internally to a compliance manager

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42
Q

What does the Ethics Decision Tree include?

A

Framework of questions members should ask themselves
Encouraged members to consider the legality of their action and the consistency with the RICS Global and Professional Ethical Standards
Ultimate question is whether members would be content to have their decisions or actions made public
RICS Regulation Confidential Hotline offers further assistance to members with any ethical issue

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43
Q

What is the background to the RICS?

A

Founded in 1868
RICS has a Royal Charter, granted by Privy Council in 1881
RICS Regulations and Bye-laws set out the governance of the institution

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44
Q

What are the FOUR levels of membership for the RICS?

A
  1. FRICS
  2. MRICS
  3. AssocRICS
  4. Trainee/Student
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45
Q

What must you do to achieve FRICS status?

A

Provide evidence of achievement to the Fellowship assessor of FOUR Fellowship characteristics. They are grouped into the following categories:

  1. Champion
  2. Expert
  3. Influencer
  4. Role model

A personal statement on current role, practices and ambitions.

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46
Q

What is the UK Structure of the RICS?

A

4 National Associations
10 Regional Boards
Local Associations

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47
Q

Who is the current CEO of the RICS?

A

Justin Young Oct-23

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48
Q

Who is the current President for the RICS

A

Tina Paillet

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49
Q

What are the FIVE Principles of RICS Regulation for Members and Firms?

A

PACTT:

  1. Proportionality: making the penalty proportional to the breach
  2. Accountability: to all members and the public
  3. Consistency: treating all members the same
  4. Targeting: serious breaches
  5. Transparency: to all members, clients and the public
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50
Q

In what circumstance will the RICS disciplinary procedure be triggered?

A

Someone complaining to the RICS
Allegation by a client or third party
Information received or established by the RICS

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51
Q

What are the THREE levels of disciplinary action?

A
  1. Action by Head of Regulation
  2. Disciplinary panel
  3. Appeal panel
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52
Q

What are the THREE most common breaches of the Rule of Conduct for Firms, 2007 (as amended 2017)?

A
  1. Professional behaviour
  2. CPD
  3. Protecting client’s money
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53
Q

What FOUR actions can the Head of Regulation of the RICS impose?

A
  1. Fixed Penalty notice
  2. Compliance Order
  3. CPD Sanctions
  4. Refer to disciplinary panel
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54
Q

When would the Head of Regulation issue a Fixed Penalty notice?

A

Only used for breaches relating to the supply of information to the RICS by firms and members

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55
Q

What is a Compliance Order?

A

Written document which states the actions which the member or firm must take or desist from taking for a specified period of time
Used for minor breaches which can be easily corrected

56
Q

When would the Head of Regulation refer the matter to a Disciplinary Panel?

A

Used for more serious breaches of conduct

57
Q

Who forms the Disciplinary and Appeal Panels?

A

50% are lay members (non RICS members)

58
Q

What are the FIVE penalties available to the Disciplinary Panel?

A
  1. Compliance Order
  2. Unlimited fine per breach
  3. Conditions upon future continued RICS registration
  4. Expulsion from membership or remove a firm
  5. Publication of results (Modus, RICS website, local newspaper)
59
Q

What does the Appeal Panel do in disciplinary proceeding?

A

Consider a member’s or firm’s appeal to the outcome of a disciplinary procedure
Will review the evidence previously presented and any new representations
Can allow the appeal and vary the penalty previously imposed

60
Q

What is an RICS International standard?

A

High-level, principle-based mandatory standard developed in collaboration with other relevant organisations e.g. RICS Valuation - Global Standards, 2019

61
Q

What is an RICS Practice Statement?

A

Document that provides members with mandatory requirements e.g. Surveyors Acting as Expert Witnesses, 2014

62
Q

What is an RICS Guidance Note?

A

Document provided by RICS to promote good practice. RICS strongly recommend that you have regard to the contents of any relevant guidance note e.g. Comparable Evidence in Real Estate Valuation, 2019

63
Q

What is an RICS Code of Practice?

A

Document produced with other professional bodies and stakeholders to provide up-to-date research and advice to practitioners e.g. Rating Consultancy Code of Practice, 2017
Have the same status as a professional statement or a guidance note (mandatory or recommended good practice)

64
Q

What should you consider during fee negotiations?

A

Firms should avoid price fixing, aggressive fee cutting or collusion with competitors
Fees should be market-based and agreed on an ad-hoc basis with clients
Must consider the RICS Global Professional and Ethical Standards, 2015 and Rules of Conduct, 2007 as amended

65
Q

What should you do if accepting or offering referral fees?

A
  • Must be completely transparent with your clients and consumers, so they understand you are receiving or offering a referral fee
  • State in you terms of engagement if applicable
  • Consider your actions in context of the Bribery Act 2010 and the RICS Global Professional and Ethical Standards, 2015
66
Q

What steps should you follow when you receive instructions from a client?

A

CCT:

  1. Competence
  2. Conflicts of interest check
  3. Terms of Engagement
67
Q

What must your Terms of Engagement comply with if you’re undertaking agency work?

A

Section 18, Estate Agents Act 1979

Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017

68
Q

What is the cooling off period following the establishment of Terms of Engagement?

A

Consumer Rights Act 2015 allows a cooling off period of 14 days from the date of the agreement

69
Q

Why may it be appropriate to decline an instruction?

A
  1. You are not competent to undertake the work
  2. You do not have sufficient facts on the issue
  3. Proposed client will not sign the terms of engagement or complete the AML checks
  4. There is a conflict of interest
  5. Proposed client is on the UK Government’s sanctions lists
70
Q

What would you do if a family member or friend asked you for some advice on a pro bono basis?

A

I would be unable to give them advice as my firm’s professional indemnity insurance would not cover work carried out on a personal basis
I would refer them to another surveyor who would be able to advise them appropriately

71
Q

What is a conflict of interest?

A

Arises when a member or firm’s independence and impartiality is threatened due to the existence of a conflict between two parties

72
Q

What does RICS Conflicts of Interest, 2017 require all firms to have?

A

Must have effective systems and controls in place appropriate to the size and complexity of their business, to ensure full compliance
Firms must keep records to show their compliance with the statement

73
Q

How should your firm operate information barriers when Conflicts of Interest are being managed?

A
  • “Reasonable steps” must be taken to operate an effective barrier to prevent information passing between the two parties
  • Surveyors acting on the two sides must be different and be physically separated
  • Information regarding the instruction should be securely stored
  • Keep an audit trail of all actions taken. Firms Compliance Officer must oversee all actions
74
Q

What guidance does the RICS provide on Conflicts of Interest for commercial investment agents?

A

RICS Conflicts of Interest – UK commercial property market investment agency, 2017

75
Q

What guidance is contained within RICS Conflicts of Interest – UK commercial property market investment agency, 2017?

A

Dual agency – contractual relationships with the buyer and the seller must not be undertaken in any circumstances

Multiple introductions – where agent has competing contractual relationships simultaneously with several buyers, must make it clear whether they are acting on an exclusive or non-exclusive basis. If on a non-exclusive basis, the agent must obtain informed consent from all the parties they are advising

Incremental advice – where agent is approached to provide incremental advice on a transaction, they can only do so if they obtain informed consent and an ethical barrier is put in place e.g. if they are disposing of an asset and asked to provide valuation advice

76
Q

What is a personal interest / own interest conflict?

A

Arises when acting for a family member, a close business associate or someone with whom you have a financial / personal interest / benefit (known as a ‘connected person’)

77
Q

What should you do if a personal interest / own interest conflict arises?

A

Must not let it interfere with or influence your professional judgement. Full transparency is required
Facts must be declared in writing before the instruction is accepted

78
Q

What legislation governs a personal interest / own interest conflict when undertaking agency work?

A

Section 21, Estate Agents Act 1979
Any personal interest with a “connected person” (i.e. someone who could benefit financially from the transaction) should be declared in writing

79
Q

Have you seen an example of a conflict of interest in your firm?

A
  • My firm was instructed to value an office building in the City for loan security purposes
  • My firm had sold the property within the past 2 years
  • In accordance with VPGA 2 of the “Red Book” my firm had to decline the instruction due to having had ‘previous involvement’ within the past 2 years
  • This was an example of conflict avoidance
80
Q

What is the aim of the Bribery Act 2010?

A

Reduce bribery in business in the UK and abroad

81
Q

Who is responsible for an employees’ corrupt actions under the Bribery Act 2010?

A

Companies are responsible for an employees’ corrupt acts unless they can show that they had adequate policies and procedures in place to combat bribery

82
Q

Is hospitality permitted under the Bribery Act 2010?

A

Offering clients reasonable and proportionate hospitality does not constitute an offence, as long as they are recorded in a gift/hospitality register

83
Q

What steps must companies put in place to prevent bribery under the Bribery Act 2010?

A

Identification of potential risks, staff training, provision of clear policies and regular reviews

84
Q

Who is the Bribery Act 2010 policed by?

A

Serious Fraud Office

85
Q

What is the penalty for breaching the Bribery Act 2010?

A

Individuals: maximum of 10 years imprisonment and/or an unlimited fine
Companies: an unlimited fine

86
Q

What are the details of your firms anti bribery procedure?

A

Gifts, hospitality and entertainment must be recorded on the Gifts Register

Receiving - gifts with a value of more than £50 should be declined, require approval for meals where the value is more than £125 per head or entertainment/hospitality with a value of more than £250 per head

Giving - require approval spend more £50 per gift per person (£100 in a 12 month period), more than £125 per head on meals (£250 in a 12 month period) or £250 per head on entertainment/hospitality (£500 in a 12 month period)

87
Q

Who do the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017 cover?

A

Estate agency work and relevant financial business work inside and outside the UK by a firm

88
Q

What are the key provisions of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017?

A
  1. Written money laundering and terrorist financing risk assessment for the firm
  2. Implement systems, policies and controls and procedures
  3. Provide staff training
  4. Comply with new customer due diligence (CDD), enhanced due diligence (EDD) and simplified due diligence requirements (SDD)
  5. Comply with the requirements relating to politically exposed persons (PEPs)
  6. Ensure appropriate record keeping, policies and procedures
  7. Vendor’s agent must undertake AML checks to confirm the identity of the proposed purchaser and verify their source of funds before contracts are exchanged
  8. Money Laundering Reporting Officer (MLRO) must be appointed to report any suspicions to the National Crime Agency using a Suspicious Activity Report (SAR)
89
Q

What did the changes in 2020 to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations require letting agents to do?

A
  • Letting agents have to register with HMRC within 12 months of May 2020 if they let individual properties for more than the equivalent of €10,000 per month
  • Where they undertake lettings of properties for more than €10,000 per month, they will have to undertake CDD check on landlords and tenants on any new letting or subletting
  • EDD will have to be undertake when any red flags occur
90
Q

When should you undertake Enhanced Due Diligence?

A

If the client is a politically exposed person (PEP), a PEP family member/business associate or from a high-risk third country

91
Q

Is your firm able to accept cash payments?

A

My firm has a policy not accept cash payments, although the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017 allows for a maximum of €10,000 to be accepted in cash.

92
Q

How long must a firm maintain records for under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017?

A

5 years

93
Q

Who is responsible for policing the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017?

A

HMRC are responsible for policing the regulations for estate agents

94
Q

What are the penalties for failing to comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017?

A

Assisting with money laundering: maximum 14 years prison sentence and/or unlimited fine

Tipping off a person or for failing to report suspicion: maximum 5 years prison sentence and/or unlimited fine

95
Q

What is the Proceeds of Crime Act 2002?

A

Provides powers for enforcement authorities in the UK to recover in criminal and civil proceedings money and other assets which are deemed to be the proceeds of crime
Creates a set of criminal offences intended to combat money laundering

96
Q

What are the THREE main areas of offence under the Proceeds of Crime Act 2002?

A
  1. Concealing criminal property: if a person conceals, disguises, converts or transfers criminal property
  2. Arrangements: if a person enters into or becomes concerned in an arrangement which they know or suspects facilities the acquisition, retention, use or control of criminal property by or on behalf of another person
  3. Acquisition use and possession: if a person acquires, uses or has possession of criminal property
97
Q

What is the RICS guidance on bribery and corruption called?

A

RICS Countering bribery, corruption, money laundering and terrorist financing, 2019

98
Q

What are the THREE parts of RICS Countering bribery, corruption, money laundering and terrorist financing, 2019?

A
  1. Mandatory requirements for anti-bribery and corruption and for anti-money laundering and terrorist financing
  2. Guidance setting out supporting good practice for the above
  3. Supplementary guidance on some of the concepts set out in Parts 1 and 2
99
Q

What does RICS Countering bribery, corruption, money laundering and terrorist financing, 2019 say RICS regulated firms must do in relation to bribery and corruption (B&C)?

A
  • Not offer or accept anything that could constitute a bribe
  • Have procedures in place to comply with the law
  • Report suspicion to the relevant authority
  • Act with due diligence to perform periodic written evaluations of the risk the firm faces
  • Retain records to show the firm has met the requirements of the Professional Statement
100
Q

What does RICS Countering bribery, corruption, money laundering and terrorist financing, 2019 say RICS regulated firms must do in relation to money laundering and terrorist financing (ML & TF)?

A
  • Not facilitate or be complicit in ML and TF
  • Have systems in place to comply with the laws
  • Report suspicion
  • Evaluation and review the risks presented to the firm
  • Use third party reliance for checks only where there is a level of confidence for the quality of information provided by the third party
  • Take appropriate measures to understand the client and the purpose of the instruction
  • Verify the client by undertaking basic ID checks
  • Retain records to show how the firm has met the requirements of this Professional Statement
101
Q

What practical guidance (Part 2) is contained within RICS Countering bribery, corruption, money laundering and terrorist financing, 2019?

A
  • Have a written policy in place
  • Publish a code of behaviour for staff
  • Encourage transparency
  • Set up a gifts register
  • Provide staff training
  • Senior management to take control of procedures
  • Keep up to date with legislation
102
Q

What supplementary guidance (Part 3) is contained within RICS Countering bribery, corruption, money laundering and terrorist financing, 2019?

A
  • ‘Risk-based approach’ – considering who you act for, what you are doing and why you are being asked to do something – when assessing risks to your business
  • Dealing with politically-exposed persons (PEPs) – they are higher risk as they hold positions of influence and enhanced due diligence is required
  • The need to identify the beneficial ownership of a company partnership or trust – such as by requesting a recent Certificate of Incorporation or Annual Return for a company
103
Q

What is Formal CPD?

A

Includes structured learning that has clear learning objectives and outcomes e.g. seminars

104
Q

What is Informal CPD?

A

Includes self-managed learning that is relevant or related to your professional role

105
Q

How long should files be kept for?

A

A minimum of 6 years before disposing and destroying them securely (although can be sued for negligence for up to 15 years)

106
Q

What should you do if a third parties requests access to your files?

A

Must get the client’s approval first unless you are subject to a statutory duty overriding the client’s confidentiality rights e.g. the police or HMRC investigation

107
Q

What should a surveyor do if they find out a confidential piece of information in error about a party who is not their client?

A
  • Cannot use the information for their own purposes
  • Client and sender should be advised of the error
  • Matter should be recorded in a note to the firm’s compliance officer
  • Any confidential information received in error should be disposed of securely
108
Q

What are the criteria for proving a negligence claim?

A
  1. Duty of care owed
  2. Breach of the duty of care
  3. Loss that was caused by that breach
109
Q

What does the Limitation Act 1980 state are the limits on the period for negligence?

A

Contract: 6 years from the date of the negligent act, breach of contract or omission. (If later) up to 3 years from the date of knowledge of the damage. Claims for negligence are barred for any period longer than 15 years after the negligent act, breach of contract or omission

Tort: 6 years from the date the claimant suffered the loss

110
Q

How can you avoid negligence claims?

A
  • Understand client’s objectives and confirm precise instructions in writing in the Terms of Engagement
  • Ensure you are competent to undertake the instruction
  • Undertake the work in accordance with the relevant RICS Standards and Guidance Notes
  • Make detailed file notes and take photographs
  • Keep up to date with market knowledge and legislation and undertake and record your CPD
  • Cap the professional liability excess on your PII policy in the Terms of Engagement
111
Q

Who must Professional Indemnity Insurance policies be underwritten by? Provide some examples.

A

RICS approved insurer e.g. AIG, Allianz and AXA

112
Q

What is the regulatory document issued by the RICS on Professional Indemnity Insurance called?

A

RICS Professional Indemnity Insurance Requirements, 2019

113
Q

What level of Professional Indemnity Insurance cover should a new business obtain?

A

Estimate their turnover and adjust in due course

114
Q

What level of run-off cover is required following the cessation of trading?

A

Consumer claims: minimum of £1,000,000 of aggregate cover over a minimum of six years

Commercial claims: must consider what is an adequate level of cover for a minimum period of six years

RICS recommend more length cover as claims can be made up to 15 years after work is undertaken

115
Q

Who can firms apply to if they are unable to obtain run-off Professional Indemnity Insurance cover?

A

RICS Run-off Pool

116
Q

Who can retired/part-time members apply to for Professional Indemnity Insurance?

A

RICS Low Earners Scheme

117
Q

Who can members apply to if they cannot arrange Professional Indemnity Insurance?

A

RICS Assigned Risk Pool

118
Q

Who can members go to if they are facing personal negligence claims for work carried out by a former employer who they though had Professional Indemnity Insurance cover, but does not ?

A

RICS Member Support Service (MSS)

119
Q

What guidance did the RICS publish on the Professional Indemnity Insurance and valuation?

A

RICS Guidance Note on PII, Risk, Uncertainty and Insurance in Valuation Work, 2018

120
Q

Why would a firm of surveyors handle clients’ money?

A

Holding deposits, rent, service charge and retentions

121
Q

What are the SIX main area of good practice set out in the RICS Professional Statement Client Money Handling, 2019?

A
  1. Holding client money
  2. Providing information to clients
  3. Receipt of client money
  4. Payments from client accounts
  5. Accounting records and controls
  6. Compliance
122
Q

What scheme does the RICS run for instances where an RICS Regulated Firm is unable to repay a client’s money?

A
  • RICS Clients’ Money Protection Scheme
  • Scheme split into two parts covering money held by firms undertaking surveying activities and those undertaking residential agency activity
123
Q

When starting a new practice, what RICS regulations do you have to comply with?

A
  • Inform RICS of your new practice by completing a Firm Detail Form
  • Appoint a Contact Officer for all RICS communication
  • Register with RICS for regulation of the firm by the Regulatory Board
  • Arrange Professional Indemnity Insurance and send details to RICS
  • Set up procedures for Members Accounts Regulations for handling clients’ money, including Client Money Protection Scheme details
  • Register for the RICS Valuer Registration Scheme (VRS) if undertaking Red Book Global valuation work
  • Obtain RICS approval for the Complaints Handling Procedure
  • Set up a complaints log
  • Appoint a Complaints Handling Officer
  • Obtain a logo kit from the RICS to use to produce all practice material to ensure compliance with the designation ‘Regulated by RICS’
  • Plan for succession/future running of the business if a sole practitioner
  • Ensure CPD logged online on the RICS CPD Management System
  • Set up staff training plan
  • Ensure completion of an online RICS Annual Return at the end of each year
124
Q

When starting a new practice, what statutory regulations do you have to comply with?

A
  • Requirement to disclose business name
  • Disability discrimination compliance (Equality Act 2010)
  • Financial services compliance (Financial Services and Markets Act 2000 and Financial Services Act 2012)
  • Bribery Act 2010 compliance
  • Appoint a Money Laundering Reporting Office (Money Laundering Regulations, 2017)
  • Health and Safety compliance (Health & Safety Act 1974, as amended)
  • Asbestos register (Control of Asbestos Regulations, 2012)
  • Fire Safety compliance (Regulatory Reform (Fire Safety) Order 2005)
  • Register for data protection (General Data Protection Regulation, 2016 and Data Protection Act 2018)
  • Set up estate agency compliance (Estate Agents Act 1979, Consumer Protection Regulations 2008, Misrepresentation Act 1967)
  • Inform HMRC for VAT and Tax registration (VAT registration threshold is currently £85,000 per annum turnover)
  • Ensure compliance with current employment law i.e. National Living Wage, working hours, stakeholder pensions, gender pay gap reporting etc.
  • Ensure insurance compliance for employer and public liability
125
Q

What does the RICS require you to do if you are closing a practice?

A
  • Inform RICS of your retirement/closure
  • Ensure that your clients are informed at the earliest opportunity and hand over arrangements made to the new firm
  • Return any monies held by clients to their own accounts
  • Inform your insurers and procure professional indemnity insurance run off cover for a minimum of 6 years in accordance with RICS requirements
  • Retain a copy of the client files and records for a minimum of 6 years
126
Q

What are some of the greatest challenges facing the RICS?

A
  • Lack of diversity in the industry

* Keeping up with an ever-evolving industry

127
Q

What do the new rules state about the use of the RICS logo and designation ?

A
  • Use of the RICS logo has been restricted to members and regulated firms only
  • The ‘regulated by RICS’ designation must be displayed clearly to ensure visibility
  • Prescribed text that must be included in the terms of engagement
  • Companies are only allowed to use ‘chartered surveyor(s)’ designation in trading name and not company name
128
Q

What countries have been identified as high-risk third countries?

A

16 countries have been identified as high-risk third countries by the European Commission. These include: Afghanistan, Iraq, Syria, Iran and North Korea

129
Q

Why must a regulated firm have professional indemnity insurance?

A

Rules of Conduct for Firms, 2007 (as amended 2017) require firms to have PII
Protect clients and your company from negligence claims

130
Q

What are the Part III - Firm Administration Rules of Conduct for Firms, 2007 (as amended 2017)?

A
  1. Advertising
  2. Solvency
  3. Arrangements to cover the incapacity or death or a sole practitioner
  4. Use of designations
  5. Information to the RICS
  6. Co-operation
131
Q

What are the FIVE RICS Global and Professional Ethical Standards, 2015?

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
132
Q

What has the RICS Regulatory Board been renamed as?

A

RICS Standards and Regulatory Board

133
Q

What changes did were introduced in the RICS Rules for the registration of firms, 2019?

A
  • Responsible principal - firm must nominate a responsible principal who is obliged to ensure all steps are taken to ensure compliance with regulatory and RICS requirements, including reporting to the RICS
  • Logo - restriction on the use of the logo to regulated firms and restriction of the designation ‘Chartered Surveyors’ to the trading name only
  • Eligibility changes - firms can only be registered if 25% of their principals are chartered (increased from a single chartered surveyor before)
134
Q

What document has the RICS issued on the handling of client money?

A

Client money handling, 2019

135
Q

When did Client money handling, 2019 become effective

A

1st January 2020

RICS Revision (42 decks)

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