Conduct, Rules, Ethics & Professional Practice - Level 1

Question 1

Can you explain the general overview of the New Rules of Conduct (February 2022)

Answer 1

The Rules of Conduct support positive change in the built and natural environments, through promoting and enforcing the highest ethical standards in valuation, the development and management of land, real estate, construction and infrastructure. The Rules of Conduct are based on ethical principles of honesty, integrity, competence, service, respect and responsibility.

Question 2

There are 5 New Rules of Conduct, what is rule 1?

Answer 2

Rule 1 - Members and firms must be honest, act with integrity, and comply with their professional obligations, including their obligations to RICS.

Question 3

There are 5 New Rules of Conduct, what is rule 2?

Answer 3

Rule 2 - Members and firms must maintain their professional competence and ensure that services are provided by competent individuals, with the necessary expertise.

Question 4

There are 5 New Rules of Conduct, what is rule 3?

Answer 4

Rule 3 - Members and firms must provide good-quality and diligent service.

Question 5

There are 5 New Rules of Conduct, what is rule 4?

Answer 5

Rule 4 - Members and firms must treat others with respect and encourage diversity and inclusion

Question 6

There are 5 New Rules of Conduct, what is rule 5?

Answer 6

Rule 5 - Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession

Question 7

Give an example of one Rule that you comply with every day?

Answer 7

Rule 4 – members and firms must treat others with respect and encourage diversity and inclusion.

Question 8

What is included in Appendix A (Professional Obligations) in the New Rules of Conduct

Answer 8

1. Firms must publish a complaints handling procedure, which includes an alternative dispute resolution provider approved by RICS, and maintain a complaints log
2. Firms must ensure that all previous and current professional work is covered by adequate and appropriate professional indemnity cover that meets the standards approved by RICS.
3. Firms with a sole principal must make appropriate arrangements for their professional work to continue in the event of their incapacity, death, absence from or inability to work.
4. Firms must cooperate with RICS.
5. Firms must promptly provide all information reasonably requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf.
6. Firms must display on their business literature, in accordance with RICS’ published policy on designations, a designation to denote that they are regulated by RICS.
7. Firms must report to RICS any matter that they are required to report under the Rules for the Registration of Firms.

Question 9

What are the CPD requirements for a chartered surveyor? What about ethics?

Answer 9

To undertake 20 hours of CPD per calendar year, 10 of which must be formal.

Where this is highlighted under Rule 2, where members and firms must maintain their professional competence and ensure that tasks are provided by competent individuals with the necessary expertise.

Question 10

Why would you require Professional Indemnity Insurance (PII) if you were to set up in private practice?

Answer 10

You would require professional Indemnity Insurance if you were to set up in a private practice to provide financial cover for yourself, the client and the company from financial loss in the event of a breach of professional duty e.g. neglect, errors or omissions.

Question 11

How would you assess the level of PII you would need when setting up in private practice?

Answer 11

• Firms who turnover £100,000 or less = minimum level of cover of £250k
• Firms who turnover £100,000-£200,000 = minimum level of cover of £500k
• Firms who turnover in excess of £200,000 = minimum level of cover of £1m

Question 12

Would the PII indemnity levels increase as your business expanded?

Answer 12

Yes, as per the values recorded above.

Question 13

When would you arrange PII run off cover and why and how long is it held for?

Answer 13

Fully retroactive run-off cover is required to ensure that firms, members and their clients are not exposed to financial detriment in the period following a firm ceasing to trade.

Question 14

How would you protect your client’s interests if you decided to give up practice?

Answer 14

Through a Locum agreement, where firms with a sole principal must make appropriate arrangements for their professional work to continue in the event of their incapacity, death, absence from or inability to work.

Question 15

How would you determine the time period that run off cover would need to be provided?

Answer 15

RICS would expect run-off on this basis to be a maintained for a minimum period of six-years from the cessation of the practice. But this can depend on the last contract that was worked on, where a contract is executed as a deed will require 12 years on run off cover and contracts executed as a deed require 6 years of run off cover.

Question 16

With regards to client’s money, how should you name the bank account you are required to set up for this purpose?

Answer 16

This bank account should be opened in a separate name to the firm and clearly denoted in the clients name.

Question 17

How would you advise your client to give assurance as to how you were going to hold their money, so that it would be securely kept and accounted for?

Answer 17

RICS-regulated firms must provide the following information to clients in writing:
* confirmation that client money will be held in a client money account including bank
* account details, that the RICS-regulated firm has exclusive control over the client money
* and whether the account is in the name of the regulated firm, a wholly owned subsidiary
* or an appropriately contracted third-party transaction service provider
* advice to clients who pay fees in advance for surveying services (but not property agent
* services in England) that this money is not covered by the Client Money Protection
* scheme
* disclosure of all commissions earned by the firm while managing their property
* how unidentified funds are dealt with
* a copy of the firm’s written procedures for handling client money

Question 18

Why do we ring-fence Clients’ Money placed in our trust?

Answer 18

This will ensure that the bank and / or liquidators do not use this money to settle the firm’s liabilities as a result of their insolvency.

Question 19

What would be your approach of the client wished to pay you in advance for your services?

Answer 19

I would put the money in a separate bank account which is in the client’s name. I would also create a drawdown schedule to demonstrate when the percentage of works that have been complete so that a percentage of the money can then be transferred from the account in the client’s name into my business account. Where this schedule is shared with the client as part of the monthly valuation.

Question 20

What would happen if your employer’s rules conflicted with the RICS rules? Which takes precedence?

Answer 20

An RICS member or regulated firm must not advise or represent a client where doing so would involve a Conflict of Interest or a significant risk of a Conflict of Interest; other than where all of those who are or may be affected have provided their prior Informed Consent. Informed Consent may be sought only where the RICS member or regulated firm is satisfied that proceeding despite a Conflict of Interest is:
* in the interests of all of those who are or may be affected and
* is not prohibited by law, and that the conflict will not prevent the member or regulated firm from providing competent and diligent advice to those that may be affected.

Question 21

If a conflict of interest arose within your business, what advice would you give to colleagues or clients on how to deal with it?

Answer 21

Members and firms identify actual and potential conflicts of interest throughout a professional assignment and do not provide advice or services where a conflict of interest or a significant risk of one arises, unless they do so in accordance with the current edition of Conflicts of interest, RICS professional statement.

Question 22

If you carried out work for a client and he decided to pay you in cash, what advice would you give to them and would you readily accept it?

Answer 22

I would provide them with a receipt of the transaction and keep a copy of this receipt and record this payment in the cash book to show when the money was received. I would also ensure that this cash is kept safe until it is banked.

Question 23

Ensure that you are familiar with the UK Bribery Act 2010?

Answer 23

The UK Bribery Act 2010 makes it an offence for a UK national or person located in the UK to pay or receive a bribe, either directly or indirectly. The Bribery Act covers transactions that take place in the UK or abroad, and both in the public or private sectors.

Question 24

Can you explain the process for safeguarding clients’ interests in the event of death or prolonged illness of a sole trader Chartered Surveyor?

Answer 24

Through a Locum agreement, where firms with a sole principal must make appropriate arrangements for their professional work to continue in the event of their incapacity, death, absence from or inability to work.

Question 25

When does a firm have to register with the RICS?

Answer 25

You must register for RICS regulation if you are a firm that offers surveying services to third parties and where 50% or more of the principals are RICS members. Firms that offer surveying services to third parties and have less than 50% (but at least one) of their principals as RICS members can opt to be regulated.

Question 26

What is a Locum employed for?

Answer 26

A locum is effectively another professional who is appointed to ‘stand in’ for the surveyor if they are unable to work, e.g. in the event of an accident/illness, unforeseen circumstances, prolonged absence (e.g. holiday or a sabbatical) or death.

Question 27

Who can take on the role of a Locum?

Answer 27

Typically, a locum will be another Chartered Surveyor, although they could also be a solicitor or accountant by trade, i.e. a trusted professional.

Question 28

If you received a complaint about the service, you had provided how would you deal with it and what are the timescales for responding?

Answer 28

I would respond within five working days of receiving the complaint to acknowledge receipt. I will then fully respond to the complaint within 28 working days of this acknowledgement. The complaint could be resolved by a phone call, or a detailed review could be needed. In all cases, I will write to them with the outcome of the review.

Question 29

Discuss a relevant third-party redress mechanism and their role?

Answer 29

A third party is someone who is not party to the original contract who will provide advice on a disagreement.

Question 30

If a friend asked you for an opinion on a project, they were considering carrying out what advice would you give them?

Answer 30

If it is something general or just an opinion on a particular matter, then there is unlikely to be anything to worry about. However, if the request goes beyond a general chit-chat, my advice would be to refer my friend to another company and avoid the difficulties that could arise both professionally and personally.

If I feel that I should help out and provide the services, it is important to ensure that my friend is treated as a client and the same processes and procedures are used irrespective of the existing relationship.

Question 31

If you and a colleague were invited to a consultants Christmas Party, what advice would you give to your colleague, what are the guidelines for dealing with an offer of a gift or hospitality and when may acceptance be appropriate?

Answer 31

I would refer to the gifts and hospitality policy that is put in place by ISG where it advises on how to assess what is acceptable and proportionate by:

• Assessing value and nature of the gift/hospitality
• Considering the intended receipt or offeror
• Ensure that records are made of this gift or hospitality.
• Consider the timing of the offer.
• Consider the transparency of the offer.
• Consider whose idea it was to purchase the gift or hospitality.
• Consider what the stated business justification/commercial rational is behind the gift or hospitality.

Question 32

What would you advise if a client approached you and asked if you would work for them directly instead of your employer to reduce their cost?

Answer 32

Politely refuse as this is a conflict of interest.

Question 33

How would you describe ‘conduct befitting’ a Chartered Surveyor?

Answer 33

Every member shall conduct himself in a manner befitting membership of the RICS by abiding by the New Rules of Conduct 2020

Question 34

What Laws and regulations govern the formation and workings of RICS?

Answer 34

The regulations add further detail to the bye-laws and sets out the different classes of membership and contains further details of when fees are payable etc. there are 10 regulations in total.

The Bye-laws are set out in the Royal Charter and determine how the RICS is regulated. There are 10 Bye-Laws in total, for example Bye-Law 4 Contributions to Funds’ grants that the Governing Council are able to set Annual Subscription fees.

Question 35

Ensure that you are familiar with the Money Laundering Regulations 2017?

Answer 35

The MLR 2017 sets out the additional obligations of private sector firms working in areas of higher money laundering risk. They aim to stop criminals using professional services to launder money by requiring professionals to take a risk-based approach.

Question 36

What is a Money Laundering Red flag? Example?

Answer 36

It is potentially loss making. Repetitive instructions involving common features/parties or back to back transactions with property rapidly changing value. The transaction is unusual for the client’s profile. Unexplained urgency, requests for short cuts or changes to the transaction particularly at last minute.

Question 37

How does ethics and conduct affect the environment we live and work in?

Answer 37

Environmental ethics is essential for protecting the environment, species, and resources. It promotes sustainable practices and encourages people to become more aware of the impact their actions have on the environment. It emphasizes the interconnectedness of all living things and the need to respect them.