Conduct, Rules, Ethics & Professional Practice - Level 1 Flashcards
Can you explain the general overview of the New Rules of Conduct (February 2022)
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.
There are 5 New Rules of Conduct, what is rule 1?
Rule 1 - Members and firms must be honest, act with integrity, and comply with their professional obligations, including their obligations to RICS.
There are 5 New Rules of Conduct, what is rule 2?
Rule 2 - Members and firms must maintain their professional competence and ensure that services are provided by competent individuals, with the necessary expertise.
There are 5 New Rules of Conduct, what is rule 3?
Rule 3 - Members and firms must provide good-quality and diligent service.
There are 5 New Rules of Conduct, what is rule 4?
Rule 4 - Members and firms must treat others with respect and encourage diversity and inclusion
There are 5 New Rules of Conduct, what is rule 5?
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
Give an example of one Rule that you comply with every day?
Rule 4 – members and firms must treat others with respect and encourage diversity and inclusion.
What is included in Appendix A (Professional Obligations) in the New Rules of Conduct
- Firms must publish a complaints handling procedure, which includes an alternative dispute resolution provider approved by RICS, and maintain a complaints log
- 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.
- 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.
- Firms must cooperate with RICS.
- Firms must promptly provide all information reasonably requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf.
- 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.
- Firms must report to RICS any matter that they are required to report under the Rules for the Registration of Firms.
What are the CPD requirements for a chartered surveyor? What about ethics?
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.
Why would you require Professional Indemnity Insurance (PII) if you were to set up in private practice?
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.
How would you assess the level of PII you would need when setting up in private practice?
- 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
Would the PII indemnity levels increase as your business expanded?
Yes, as per the values recorded above.
When would you arrange PII run off cover and why and how long is it held for?
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.
How would you protect your client’s interests if you decided to give up practice?
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.
How would you determine the time period that run off cover would need to be provided?
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.
With regards to client’s money, how should you name the bank account you are required to set up for this purpose?
This bank account should be opened in a separate name to the firm and clearly denoted in the clients name.
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?
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
Why do we ring-fence Clients’ Money placed in our trust?
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.
What would be your approach of the client wished to pay you in advance for your services?
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.
What would happen if your employer’s rules conflicted with the RICS rules? Which takes precedence?
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.
If a conflict of interest arose within your business, what advice would you give to colleagues or clients on how to deal with it?
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.
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?
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.
Ensure that you are familiar with the UK Bribery Act 2010?
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.
Can you explain the process for safeguarding clients’ interests in the event of death or prolonged illness of a sole trader Chartered Surveyor?
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.
