Conduct rules, ethics and professional practice Flashcards
What standards are required for sole practitioners to be compliant with the RICS regulations ?
Rules of conduct for firms.
What are the RICS rules of conduct for members?
-ICE SSI CCC Interpretation Communication Ethical Behavior Services Solvency Information to RICS CPD Competence Co-operation
What are the RICS rules of conduct for firms?
-IC
Interpretation
Communication
-CCC PAPA SICCUS
Competence
Cooperation
CPD
PI insurance
Advertising
Professional Behaviour
Arrangements to cover death of sole practitioner
Service Information to RICS Complaints handling procedure Client's money handling procedure Use of designations Solvency
What are the different status types of RICS documents?
- Mandatory (Information standards, professional statements)
- Recommended best practice (RICS guidance note, Code of practice)
- Information only (RICS information paper, RICS insight, RICS economic report, research)
What is meant by ‘treat others with respect’?
Be courteous, polite and consider cultural sensitivities and business practices
Never discriminate, encourage the fair and respectful treatment of clients
Why are the ethical standards important?
Create a clear and streamlined guide to members to ensure that clients and anyone else who deals with the RICS has confidence in the profession
What factors does the RICS Decision Tree consider?
Sufficient facts Legality Ethical standards Consultation of appropriate people Clear reasoning Impact if actions made public
Give some examples of how you reflect the RICS ethical standards in your work.
- Integrity - turning down an invitation from the client whilst bidding for consultancy services
- High standard of service - referring clients to specialists when scope is outside competence EG. VAT is not my speciality.
- Trust - Letting the contractor know that they have undervalued their work
- Respect - Despite being in a dispute over a variation, I spoke in a respectful manner
- Responsibility - reporting dangerous practices on site, such as spanner falling between scaffold board.
What is the RICS Decision Tree?
Flowchart to help members decide how to act in difficult situations where their professional ethics may be at stake
What is a ‘Chinese Wall’? (now informed consent/ information barrier)
An information barrier within an organisation used in order to prevent exchanges or communication that could lead to a conflict of interest
What is meant by ‘act with integrity’?
Being honest and trustworthy in all that I do
Transparent, respecting confidential information, not taking advantage of anyone, not allowing bias or pressures affect my judgement or obligations, not accepting gifts or hospitality that might suggest an improper obligation, acting in the interest of the public
What is meant by ‘take responsibility’?
Be accountable for my actions and don’t blame others if things go wrong
Always act with skill, care and diligence, respond to complaints in the appropriate professional manner, prepare to question things that don’t seem right
What is a bribe?
The exchange of something of value in return for someone doing or agreeing to do something improper in a business context
Bribery also covers the offer or request for a bribe, even if it is not completed
What is meant by ‘provide a high level of service’?
Ensuring the best possible advice, support or performance is given to my clients
Be clear about the service being provided, act within my scope of competence, transparent about fees and any other costs or payments, communicate with clients in a way that allows them to make informed decisions
What are the penalties under the current bribery legislation?
A maximum 10 years’ imprisonment and/or an unlimited fine
Give some examples of where conflicts of interest may arise.
- Acting for two different parties with competing interests at the same time
- Financial interests (e.g. gaining over and above your normal fee)
- Personal relationship
- Commercial relationship
- Interests of your firm conflict with that of your client
What is a conflict of interest?
A situation which effects the impartiality of one party. Anything that impedes or might be perceived to impede an individual’s or firm’s ability to act impartially and in the best interest of a client.
What should a surveyor do if a conflict of interest arises?
Should be dealt with by implementing openness and transparency
Declare any conflicts of interest clearly to all parties ASAP and offer to stand down from acting for any party
All parties can then decide how they wish to proceed and if there are any objections you must stand down
Your neighbour asks you for help in designing a loft conversion - what would you do?
No terms and conditions
No PII
Potential conflict of interest
Follow the RICS Decision Tree
Say no and offer to set up a formal meeting with a director of my firm
Alternatively, refer them to the RICS ‘Find a Surveyor’ service
Who does the current bribery legislation affect?
Near-universal jurisdiction, allowing for prosecution of UK individuals or companies doing business overseas, as well as overseas individuals or companies doing business in the UK
What is meant by ‘promote trust within the profession’?
Act in a manner, both in professional and private life, that promotes me and my firm in a positive way
Promote the highest standards globally, amending behaviour to suit others, fulfil obligations
What legislation exists in relation to bribery in the UK?
Bribery Act 2010
How would you define ethical behaviour for a chartered surveyor?
Acting in accordance with the 5 RICS professional and ethical standards
What procedures should RICS corporate members follow in relation to preventing bribery?
RICS corporate members should follow the 6 principles in preventing bribery practices:
Proportionate procedures - procedures should be proportionate to the bribery risks the company faces
Top level commitment - zero tolerance to bribery
Risk assessment - the company should periodically assess the internal and external risks of bribery
Due diligence - systematically investigate employees and business partners (the level of which should be informed by the risk assessment)
Communication (including training) - communicate policies, operate confidential whistle-blowing service, provide training
Monitor and review - periodically review procedures and make improvements where necessary
What are facilitation payments and what is their legal status?
Also known as ‘grease’ or ‘speed’ payments
Unofficial payments made to public officials in order to secure or expedite the performance of a routine government action
Illegal under the Bribery Act 2010
If a contractor wants to buy you lunch on the day of an interim valuation, how would you respond?
Reject the offer, as it may improperly influence your decisions/judgement or give the appearance of doing so
A contractor invites you to their Christmas dinner dance - would you go?
Maybe, however only offer or accept gifts and hospitality that you would be happy for others to know about
Question whether the gift is proportionate and reasonable in terms of value and frequency
Reject if it may improperly influence your decisions/judgement or give the appearance of doing so
A contractor gives you a bottle of champagne at Christmas. Would you accept it?
Maybe, however only offer or accept gifts and hospitality that you would be happy for others to know about
Question whether the gift is proportionate and reasonable in terms of value and frequency
Reject if it may improperly influence your decisions/judgement or give the appearance of doing so
What considerations should RICS members have in relation to offering or accepting gifts and hospitality?
Only offer or accept gifts and hospitality that are customary, proportionate and reasonable in terms of value and frequency
Never offer or accept any gift or hospitality if it may improperly influence your decisions/judgement or give the appearance of doing so (e.g. consider the timing of the gift)
Only offer or accept gifts and hospitality that you would be happy for others to know about
Follow the policies and procedures of your employer in relation to gifts, hospitality and promotional expenditure - e.g. record in company’s gifts and hospitality register
Report any concerns about bribery to your employer or to RICS Regulation
What is the purpose of the current UK legislation on bribery?
Criminalises bribery in the UK, making it a criminal offence to directly or indirectly:
Offer, promise or give a bribe
Request, agree to receive or accept a bribe
What would you do if a contractor offers you a gift such as a scale rule with the contractor’s name on it?
Accept it, as it is a bona fide promotion intended to improve the image of an organisation
Would the offer or acceptance of gifts or hospitality amount to a bribe?
Could amount to a bribe if they are intended to induce someone to behave in a manner that breaches an expectation that they will act in good faith and impartially
However, bona fide hospitality and promotion intended to improve the image of an organisation, better present products and services or establish cordial relations is seen as an established and important part of doing business and is not criminalised under the Act
Describe a conflict of interest you have experienced and how it was resolved.
As my firm is multi-disciplinary, there are certain clients who employ different disciplines. To prevent any wrongdoing, my firm ensures they are separate fee amounts, there is an information barrier and there is informed consent.
What standard are judgements under the current bribery legislation based upon?
Judgments are decided based on the ‘reasonable person’ test
Would you go against the recommendations of a chartered surveyor?
Yes providing there is reason for it (e.g. not acting within the RICS rules of conduct or ethical standards)
You have put in a fee bid to a client. They contact you and say that another practice has quoted a lower fee, but they would like you to do the work. They ask you to reduce your fee to match the other practice. What should you do?
The other practice may not exist and could be a negotiating tactic. The scope of the works may be different.
Avoid price fixing, aggressive fee cutting or collusion with competitors.
Original fee quote should have been a reasonable reflection of the works required.
Reducing costs may mean corners are cut and quality is reduced in order to make a profit.
Client may be expecting the same next time as well and this will not be sustainable.
Can chartered surveying practices work for a client, but not charge a fee?
Commercial decision based on the opportunity and risk (i.e. may be charitable work).
Need to question quality of work and incentive if no fee is in place.
Legal advice required regarding the formation of a contract (i.e. no consideration).
Can one part of a chartered surveying practice work for a client, whilst another part of the practice is working for a different client who has conflicting interests to the first?
Yes, providing a Chinese wall is effectively implemented (now information barrier).
Teams should be physically separated in different parts of the building (or in different buildings)
Requires a compliance officer to monitor the ‘wall’ - education and training must be made available to those managing the wall
If you saw one of your team send out an interim valuation that over values the works, what do you do?
Talk to them initially and point out the error
Suggest the error is corrected before issuing
Escalate to a director if the error was purposeful
Consider reporting through firm’s whistleblowing procedure if necessary
If you were self-employed, would you consider adjusting your PII to carry out a piece of work or decline to do the work?
Commercial decision based on the opportunity and risk
Never proceed without the sufficient level of PII
What does having the PII policy written on a full civil liability basis mean?
A full civil liability basis means if a claim isn’t specifically excluded, it’s included (as opposed to a ‘negligence only’ policy, where if a claim is not specifically included, it’s excluded)
Explain the term ‘claims made basis’.
The policy at the time the claim is made will respond, not the policy in place at the time of the negligence.
Insurer will only pay out if the policy was within the period of the insurance, not after, unless there is run off cover.
Does the RICS publish any guidance on the Disciplinary Measures?
Yes, there is a large section on the RICS website.
Who is the president of the RICS?
Who is the vice president of the RICS?
Who is the senior vice president of the RICS?
Who is the CEO of the RICS?
Tim Neal.
Kath Fontana
Clement Lau
Sean Tomkins
What is the Royal Charter?
Awarded in 1881 by Queen Victoria, to maintain and promote the usefulness of the profession for the public advantage.
Can you name some of the professional groups?
• Quantity Surveying and Construction. • Project Management. • Building Surveying. • Planning and Development • Commercial Property Residential • Dispute Resolution.
What are fixed penalties and when are they issued?
A fixed penalty is an administrative fine and/or caution issued by RICS when a Regulated Member fails to provide us with information that we have requested. This information can include: a firm or valuer submitting their annual return record, updating CPD records or payment of regulatory fees.
What replaced consent orders from 1 October 2019?
A Regulatory Compliance Order is an agreement between RICS and a Regulated Member that they are liable for disciplinary action (a Regulated Member is and RICS professional or regulated firm). The Regulated Member:
- admits that they have fallen short of the standards expected
- agrees to an appropriate sanction
- in some cases, take steps to meet the standards expected and/or to prevent it happening again
What does a regulatory compliance order consist of?
1) Caution
2) Reprimand
3) A requirement that the Regulated Member gives one or more undertakings as to future conduct
4) A requirement that the Regulated Member takes or stops taking certain actions within a specified period of time
5) Conditions on the Regulated member’s continued membership of RICS
6) Conditions on a Regulated Members registration for regulation
7) A requirement that the Regulated Member pays a fine of up to £2000 per breach
Can you tell me more about the New Arbitration Service?
- Brought in due to a decline in the use of Arbitration due its slowness.
- Arbitrators are supervised to ensure they use the powers given to them under the Arbitration Act 1996 to robustly manage costs.
- Will be faster and cheaper than courts.
- Will be better than adjudication, as it will be more detailed when looking at an issue, resulting in judgements that are commercially sensible.
Can you describe the RICS governing structure to me?
1. At the top is the Governing Council. Management board Regulatory tribunal Audit committee Presidential nominations committee Standards and regulation board Nominations committee
What are the three market sectors covered by the RICS?
Land, Property, Construction
What is meant by ‘professional behaviour’ as one of the 15 rules for firms?
Shall at all times act with integrity and avoid conflicts of interest and avoid any actions or situations that are inconsistent with its professional obligations.
What is meant by ‘competence’ as one of the 15 rules for firms?
Shall carry out its professional work with due skill, care and diligence and with proper regard for the technical standards expected of it.
What is meant by ‘service’ as one of the 15 rules for firms?
Shall carry out its professional work with expedition and with proper regard for standards of service and customer care expected of it.
What is meant by ‘CPD’ as one of the 15 rules for firms?
Shall have in place the necessary procedures to ensure that all its staff are properly trained and competent to do their work.
What is meant by ‘complaints handling’ as one of the 15 rules for firms?
Shall operate a complaints handling procedure and maintain a complaints log. The complaints handling procedure must include an Alternative Dispute Resolution (ADR) that is approved by the Regulatory Board.
What is meant by ‘client’s money’ as one of the 15 rules for firms?
Shall preserve the security of clients’ money entrusted to its care in the course of its practice or business.
What is meant by ‘professional indemnity insurance’ as one of the 15 rules for firms?
Shall ensure that all previous and current professional work is covered by adequate and appropriate professional indemnity insurance cover which meets standards approved by the Regulatory Board.
What is meant by ‘advertising’ as one of the 15 rules for firms?
Shall promote its professional services only in a truthful and responsible manner.
What is meant by ‘solvency’ as one of the 15 rules for firms?
Shall ensure that its finances are managed appropriately.
What is meant by ‘arrangements to cover the incapacity or death of a sole practitioner:’ as one of the 15 rules for firms?
That has a sole principal (i.e. a sole practitioner or a sole director in a corporate practice) shall have in place appropriate arrangements in the event of that sole principal’s death or incapacity or other extended absences.
What is meant by ‘Use of designations’ as one of the 15 rules for firms?
Registered for regulation must display on its business literature, in accordance with the Regulatory Board’s published policy on designations, a designation to denote that it is regulated by RICS.
What is meant by ‘Information to RICS:’ as one of the 15 rules for firms?
Shall submit in a timely manner such information about its activities, and in such form, as the Regulatory Board may reasonably require.
What is meant by ‘Co-operation:’ as one of the 15 rules for firms?
Shall co-operate fully with RICS staff and any person appointed by the Regulatory Board.
What is meant by ‘Professional behaviour’ as one of the 9 rules for members?
Members shall at all times act with integrity and avoid conflicts of interest and avoid any actions or situations that are inconsistent with their professional obligations.
What is meant by ‘Competence:’ as one of the 9 rules for members?
Members shall carry out their professional work with due skill, care and diligence and with proper regard for the technical standards expected of them.
What is meant by ‘service’ as one of the 9 rules for members?
Members shall carry out their professional work in a timely manner and with proper regard for standards of service and customer care expected of them.
What is meant by ‘CPD’ as one of the 9 rules for members?
Members shall comply with RICS’ requirements in respect of continuing professional development.
What is meant by ‘solvency’ as one of the 9 rules for members?
Members shall ensure that their personal and professional finances are managed appropriately.
What is meant by ‘information to RICS’ as one of the 9 rules for members?
Members shall submit in a timely manner such information, and in such form, as the Regulatory Board may reasonably require.
What is meant by ‘Co-Operation’ as one of the 9 rules for members?
Members shall cooperate fully with RICS staff and any person appointed by the Regulatory Board.
What does the RICS state about PI insurance?
Rule 9 of the RICS Rules of Conduct for Firms requires all regulated firms to be covered adequate and appropriate PII which meets the standards approved by the Regulatory Board
What should a PII policy contain?
1) Must be on a claims made basis
2) Must be on an each and every claim basis
3) Policy wording is written on a full civil liability basis
4) Underwritten by a listed insurer
5) Covers past and present employees
6) Run-off cover
7) Minimum level of indemnity required by the RICS
What is PII and what is its purpose?
Professional Indemnity Insurance (PII):
Protects firms against losses resulting from professional negligence, errors and/or omissions which cause financial loss to a third party
Ensures a firm’s clients do not suffer financial loss which the firm cannot meet
How would you determine what is sufficient in terms of PII runoff cover?
Should be for a minimum of 6 or 12 years, depending on how the contract was executed, however negligence claims can be made up to 15 years after work was undertaken - advice from an insurance broker should be sought as to whether to maintain for the full 15 years
What is generally excluded from PII cover?
1) Material damage
2) Theft
3) Personal injury
4) Damage to third party property
5) Work carried out prior to the inception of the policy
6) Insured v insured claims (i.e. a company suing an employee for professional negligence)
7) Insolvency
What are the minimum levels of PII required?
1) £100,000 or less turnover = min. £250,000 indemnity
2 )£100,001 to £200,000 turnover = min. £500,000 indemnity
3) £200,001 and above turnover = min. £1,000,000 indemnity
What should you do in case of a potential claim on your PII?
Must notify insurer in the event of:
An actual claim
A written or verbal threat of a claim
Any circumstance that the firm has reason to believe may result in a claim
Any complaint notified via the firm’s CHP
How can negligence claims be avoided?
1) Good communication
2) Clearly understand client’s objectives and confirm precise details
3) Check you are competent to perform the instruction
4) Undertake work in accordance with any relevant RICS guidance
5) Keep up-to-date notes
6) Be aware of changes in legislation
7) Try and resolve any complaints as soon as possible
What is the RICS Assigned Risk Pool?
1) Insurance facility for regulated firms that find themselves unable to obtain PII in the normal market
2) Firms can remain in the ARP for a maximum of 3 years, where they will be audited and guided in how to amend their business procedures/practices ready to obtain market PII again
What is the Carsberg Report?
A report undertaken in 2005 as a result of members general dissatisfaction with the RICS’ internal Regulatory procedures.
