Conduct rules, ethics and professional practice Flashcards
What is the central purpose of the RICS?
- To maintain the highest standards of education and training
- To protect consumers through strict regulation of professional standards
- To be the leading source of information and independent advice on land, property, construction and associated environmental issues
How does the RICS ensure members abide by the Rules of Conduct for Members, 2007 (as amended 2013)?
Head of Regulation at the RICS investigates 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 has right to appeal decision made at a Disciplinary Panel by going to an Appeal Panel
How does the RICS ensure firms abide by the Rules of Conduct for Firms, 2007 (as amended 2017)?
RICS ensures firms comply by conducting audits
Firms have to provide information when registering with the RICS and in an annual return
Why must a Chartered Surveyor do CPD?
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
Why must a Chartered Surveyor main solvent?
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
Give me an example of when you have acted with integrity in your work.
In my case study I was honest and straight forward from the outset, including my initial marketing recommendations and regular updates.
Give me an example of when you have provided a high standard of service.
In my case study, to ensure I was providing the best possible advice, I obtained my clients objectives.
I defined my scope of service within written terms of engagement and my marketing recommendations.
I communicated regularly throughout with both parties via phone, emails and written correspondence.
Give me an example of when you have acted in a way that promotes trust in the profession.
I acted in a professional manner throughout, ensuring I met my clients objectives.
Give me an example of when you have treated others with respect.
I was always very polite and respectful throughout, but especially when dealing with the negotiations. I needed to maintain a good report with the prospective tenant to ensure suitable terms could be agreed.
Give me an example of when you have taken responsibility.
I acted very diligently, prior to commencement I undertook extensive research to identify the planning history, energy performance rating, business rates, land registry title documents and flood zone.
What would you do if you were asked to do something unethical?
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
What has the RICS produced to help surveyors make ethical decisions?
The RICS has created the Ethics Decision Tree, which members can refer to if they are asked to do something they are unsure about
When you taken on a new client, what checks do you make?
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)
How do you undertake a conflict of interest check?
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.
How would you approach a conflict of interest?
Follow the guidance set out in the RICS Global Professional Statement on Conflicts of Interest, 2017:
- Conflict avoidance - decide whether the conflict is manageable and whether proceeding is in the best interest of all parties
- Written advice to both parties - disclose the nature of the conflict, explain how you will manage it and request written confirmation of informed consent
- Conflict management - set up an information in accordance with provisions agreed with the clients
What is money laundering?
Money laundering is legitimising the proceeds of crime.
Why does you firm have Terms of Engagement? What should be included in Terms of Engagement?
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
How would you close down a practice?
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
What is the structure of the RICS?
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
What changes have been made to the Royal Charter and Bye-Laws?
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
Why would you like to be a Chartered Surveyor?
- Status - professional credentials provide client confidence
- Recognition - promotion of your professional excellence
- Market advantage - RICS status gives you a competitive advantage
- Knowledge - International practice standards and professional guidance
- Network - access to over 130,000 members worldwide
What are the THREE benefits of regulation for firms?
CPS:
- Confidence - for client as regulated firms are monitored by RICS regulation
- Professionalism - firms have to provide clear, impartial and expert advice
- Security - firms have to have recognised CHP, access to ADR and PII cover
How many hours of CPD do you have to undertake? What are the rules?
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
What are the Rules of Conduct for Members, 2007 (as amended 2013)?
ECS CPD SIC:
Ethical behaviour Competence Service Continuing Professional Development (CPD) Solvency Information to the RICS Co-operation
What are the Part II - Conduct of Business Rules of Conduct for Firms, 2007 (as amended 2017)?
PCS CPD CCI:
Professional behaviour Competence Service Continuing Professional Development (CPD) Complaints handling Clients' money Indemnity insurance
What information is required by the RICS for registration and in the annual return?
- Type of business and staffing details
- Statutory regulated activities - such as for financial services
- Nature of clients
- Complaints handling procedure and records
- Professional indemnity insurance certificate
- Whether the firm hold clients’ money
Can you rely on due diligence checks undertaken by a solicitor?
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
If your agency team sold a property, could you still value it?
Cannot value the property if you have had “previous involvement” which is usually defined as being within the past two years
If you are conflicted, can you still undertake an instruction if you’ve got informed consent?
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
What forms of conflict of interest are there?
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
What would you do if you had a personal conflict of interest and how would you manage this?
Ensure that all parties were aware and provided informed consent
Would refer the instruction instruction internally and ensure that the appropriate information barriers were setup
What information barriers does your firm have in place?
Restricted access to files
Clear desk policy
Private meeting rooms
Physical barriers e.g. restricted floor access
What would you have to do if you were required to hold clients’ money?
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
How many Principals in a firm have to be RICS members for a firm to be regulated?
Until April 2020: a regulated firm is a practice that has 50% or more principals who are RICS members
From April 2020: 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)
Why are the RICS requiring 25% of Principal to be members in order for firms to apply to be regulated?
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
Would you ever receive a gift from a client?
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
If you thought it was appropriate to accept a gift from a client, how would you proceed?
Record it on my firm’s Gifts and Hospitality Register
What is the law associated with gift giving and receiving?
Bribery Act 2010 and Proceeds of Crime Act 2002
What are the SIX principles of the Bribery Act 2010?
- Proportionality
- Top level commitment
- Risk assessment
- Due diligence
- Communication
- Monitoring and review
What are the FOUR offences under the Bribery Act 2010?
- Bribing
- Receiving a bribe
- Bribing a foreign public official
- Failing to prevent bribery
How would you define a bribe?
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
What identification do you require on a client to do Customer Due Diligence?
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
What would you do if you were suspicious of a client?
Wouldn’t make them aware as that could be ‘tipping off’ which is an offence
Would report and escalate internally to a compliance manager
What does the Ethics Decision Tree include?
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
What is considered an appropriate margin of error?
When valuing it depends on the availability of comparable evidence and the complexity of the valuation, as to what would be an acceptable margin of error
±10% is usually considered to be a reasonable margin of error but more likely ±5% for residential property
Case of Dunfermline Building Society and CBRE (2017) assumed an acceptable margin of error of ±15%
What is the background to the RICS?
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
What are the FOUR levels of membership for the RICS?
- FRICS
- MRICS
- AssocRICS
- Trainee/Student
What must you do to achieve FRICS status?
Provide evidence of achievement to the Fellowship assessor of FOUR Fellowship characteristics. They are grouped into the following categories:
- Champion
- Expert
- Influencer
- Role model
A personal statement on current role, practices and ambitions.
What is the UK Structure of the RICS?
4 National Associations
10 Regional Boards
Local Associations
Who is the current CEO of the RICS?
Dr Sean Thompkins
What are the FIVE Principles of RICS Regulation for Members and Firms?
PACTT:
- Proportionality: making the penalty proportional to the breach
- Accountability: to all members and the public
- Consistency: treating all members the same
- Targeting: serious breaches
- Transparency: to all members, clients and the public
What are the International Ethics Standards, 2016?
Ethical framework for the global property market
Published by the International Ethics Standards Coalition
What relevance do the International Ethics Standards, 2016 have for the RICS?
- Did not originate from the RICS but are promoted by the RICS
- RICS are currently reviewing the Global Professional and Ethical Standards, 2015 and may extend them to reflect the International Ethics Standards more closely
What are the Rules of Conduct, 2007 and how are they changing?
- Two short documents setting out the standards of professional conduct and practice expected of members and firms
- RICS announced in November 2019 that there would be a full review of the Rules of Conduct in 2020
In what circumstance will the RICS disciplinary procedure be triggered?
Someone complaining to the RICS
Allegation by a client or third party
Information received or established by the RICS
What are the THREE levels of disciplinary action?
- Action by Head of Regulation
- Disciplinary panel
- Appeal panel
