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Mandatory Competencies > Conduct Rules, Ethics & Professional Practice > Flashcards

Conduct Rules, Ethics & Professional Practice Flashcards

1
Q

What are the obligations placed on RICS member in their professional and personal lives?

A

Rules of Conduct for Members

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2
Q

Who is the President of the RICS currently, and who will be the next President?

A

Chris Brookes in the current RICS President. Tim Neal is the President-Elect. Kath Fontana is the the Senior Vice President.

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3
Q

Who is the President of the RICS currently, and who will be the next President?

A

Chris Brookes in the current RICS President. Tim Neal is the President-Elect. Kath Fontana is the the Senior Vice President.

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4
Q

What is the RICS motto (Latin & English)?

A

Est modus in rebus

There is measure in all things

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5
Q

What is the RICS missionary statement?

A

To advance and enforce standards in land, property and the built environment, and promote the usefulness of the profession for the public good

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6
Q

What is the governance structure of the RICS?

A
  • Privy Council awarded the Royal Charter
  • Governing Council runs the RICS and provides management and strategic direction
  • The Regulatory Board, the Audit Committee and the Management Board report directly into the Governing Council
  • 17 specialist professional groups, each of which has an elected board
  • CEO is Dr Sean Tompkins
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7
Q

When was the RICS founded?

A

1868

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8
Q

When did the RICS receive its Royal Charter?

A

1881

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9
Q

What does having a Royal Charter mean?

A

The Royal Charter requires the RICS to promote the usefulness of the profession for the public good. It also means that while the RICS is self regulating, any major constitutional changes requires ratification by the Privy Council

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10
Q

What types of membership of the RICS are available?

A
  • FRICS - Fellow (need 4 fellowship characteristics and 5 years MRICS)
  • MRICS - Member
  • AssocRICS - Associate
  • Trainee
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11
Q

How many pathways are available?

A

22 pathways

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12
Q

How many members worldwide?

A

There are approx. 125,000 qualified surveyors

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13
Q

What are the RICS 3 mains roles?

A
  • Protect the public through regulation and professional standards
  • To protect consumers through strict regulation and maintain high professional standards and education
  • Leading source of information and advice of land, property and construction
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14
Q

What are the benefits of being MRICS?

A
  • Status; it validates professional standards and ethics
  • Professional recognition and standards; RICS trusted mark of excellence
  • Market advantage; from status and competitive advantage
  • Network; over 120,00 members worldwide
  • Knowledge; standards and CPD
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15
Q

What are the five principles of better regulation?

A

PACTT

  • Proportionality; penalties to be proportionate to breach
  • Accountability; to all member and the public
  • Consistency; treat all members the same
  • Targeting; of serious breaches
  • Transparency; to members, client and the public
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16
Q

What are the five core values of the RICS?

A
  • Act with integrity
  • Always provide a high standard of service
  • Act in a way that promotes trust in the profession
  • Treat others with respect
  • Take responsibility
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17
Q

What are the RICS Bye-Laws?

A

RICS have 10 Bye-Laws, which govern all aspects of the organisations, including membership, funding, conduct, government etc. These Bye-Laws are controlled at the level of the Royal Charter, and any changes to them require approval by the Privy Council

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18
Q

What core materials are provided by the RICS?

A
  • International Standards
  • Professional Standards
  • Help Sheets
  • Practice Statements
  • Guidance Notes
  • Codes of Practice
  • Information Papers
  • RICS Starting Points
  • Consumer Guides
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19
Q

What are the 10 International Ethical Standards (2016) as provided by RICS?

A

The International Ethical Standards are not provided specifically by the RICS. They are provided by the International Ethics Standards Coalition, which represents 120 professional bodies within the sector, of which the RICS was a founding member. The Standards are:

  • Accountability
  • Confidentiality
  • Conflicts of Interest
  • Financial Responsibility
  • Integrity
  • Lawfulness
  • Reflection
  • Standard of Service
  • Transparency
  • Trust
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20
Q

What is included in the Rules of Conduct for Members?

A

Part 1 (General)

  • Interpretation
  • Communication

Part 2 (Personal & Professional Standards)

  • Ethical Behaviour
  • Competence
  • Service
  • CPD
  • Solvency
  • Information
  • Co-operations
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21
Q

What is included in the Rules of Conduct for Firms?

A

Part 1 (General)

  • Interpretation
  • Communication

Part 2 (Conduct of Business)

  • Professional Bahaviour
  • Competence
  • Service
  • Training & CPD
  • CHP
  • Client’s Money
  • PII

Part 3 ( Admin)

  • Advertising
  • Solvency
  • Incapacity/Death of a sole practitioner
  • Use of Designations
  • Information
  • Communication
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22
Q

What are the benefits for firms of being regulated?

A
  • Confidence; for clients that regulations firms are monitored by RICS
  • Professionalism; have to provide clear, impartial, expert advice
  • Security; CHP, PII etc.
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23
Q

What information is required to maintain registration, and how often does it need to be issued?

A

Annual returns are required. The information includes:

  • Type of business and staffing details
  • Statutory related activities - financial services
  • Nature of clients
  • CHP and records
  • PII details
  • Clients’ money
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24
Q

What is required to set up a firm as far as the RICS is concerned?

A
  • Inform RICS (office, type of work, staff, data protection)
  • Appoint a CONTACT OFFICER for RICS communication
  • Register with RICS for regulation by the Regulatory Board
  • Arrange PROFESSIONAL INDEMNITY INSURANCE
  • Set up account for handling CLIENTS’ MONEY
  • COMPLAINTS HANDLING PROCEDURE and record
  • Appoint a COMPLAINTS HANDLING OFFICER
  • Staff training and CPD
  • Materials to adhere to designations
  • REQUIRED - if 50+% of partners are RICS/offer surveying services
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25
Q

Out with the RICS requirements for setting up a firm, what statute is in place relating to setting up a firm?

A
  • Data Protection
  • Money Laundering
  • Equality
  • Health & Safety at Work (among others)
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26
Q

What is required by the RICS if you are closing down a practise?

A
  • Inform RICS
  • Inform clients, and provide hand over arrangements
  • Return clients’ money
  • Inform insurance - 15 year run off cover (£250k min)
  • Retain client files - 6 years
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27
Q

What should surveyor’s fee be based on?

A

Market rate, and agreed ad hoc with clients. Agressive fee cutting and collusion with competition is unacceptable. Healthy competition and negotiation with client encouraged

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28
Q

What controls and requirements are in place for referral fees?

A

RICS have a Guidance Note of Referral Fees from 2013. Requirement to be transparent, and to consider all referral fees in the context of Bribery Act and International Ethical Standards

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29
Q

What must be included within terms of engagement?

A 
Vital elements: 
- agreement to pay fee basis 
- payment of expenses (and how calculated) 
- CHP 
Likely to contain: 
- Parties
- Scope of service 
- Survey limitations
30
Q

Before issuing terms of engagement for an instruction, what should be considered?

A
  • Check professional competence
  • Check conflict of interest
  • Fee basis discussions with client/credit checking of client
31
Q

In what situation would you decline an instruction?

A
  • Not competent - do not act outside your limitation s
  • Lacking in information - can’t act without all the facts
  • Client won’t sign or under go credit check
  • Conflicts of interest
  • PII cap can’t be agreed
  • PII will not cover works
  • Client is on sanctions list (C&W are a US company therefore USA Sanctions also)
32
Q

What triggers disciplinary action from the RICS?

A

Complaints trigger disciplinary action. Not all short comings in the rules of conduct lead directly to disciplinary action, but failure to follow RICS guidance can cause examination of conduct, and therefore disciplinary action

33
Q

What three disciplinary procedures are available in the RICS?

A
  • Action by the Head of Regulation
  • Disciplinary Panel
  • Appeal Panel
34
Q

What powers does the RICS Head of Regulation have?

A

Following formal investigation if they deem action to be required they have three options:

  • Serve a fixed penalty notice
  • Make a consent order
  • Refer the matter to the disciplinary panel for consideration
35
Q

What situations would likely cause the Head of Regulation to issue a fixed penalty?

A

Fixed penalties are used for breaches of the rules relating only to the supply of information to the RICS

36
Q

What is involved in a Consent Order issued by the Head of Regulation?

A

A consent order is a written agreement between the RICS and a member or firm which concern a disciplinary issue arising from an identified breach of an RICS rule. It’s used for minor breaches, like member accounts regulation.
Generally states the terms including timescales that a member/firm with do or not do a specific thing. £2,000 possible also

37
Q

What’s involved in action taken by the disciplinary panel?

A

The disciplinary panel is used for more serious breaches. The panel sits in public, and 50% of the members are lay members. The penalties available to them are:

  • Issue a consent order
  • Impose a future condition of RICS registration
  • Publish the results (ie. MODUS)
  • Temporary suspension
  • Permanent expelling
  • Unlimited fines and costs
38
Q

What is a conflict of interest?

A

A conflict of interest is anything that impedes the impartiality of a firm or individual and could prevent them from acting in the best interest of the client

39
Q

What could constitute a conflict of interest?

A
  • Financial interest
  • Personal interest
  • Commercial relationship
  • Acting on both sides of a transaction
40
Q

What is the difference between conflict avoidance and conflict management?

A

Conflict avoidance is when you do not accept an instruction because of a conflict of interest.
Conflict management is where the instruction is accepted and steps are agreed and put in place to manage a conflict of interest

41
Q

What actions would you take if you identified a conflict of interest?

A
  • Consider the conflict; does it need to be avoided or can it be managed?
  • Notify; notify client and all involved parties at the earliest opportunity
  • Offer; offer to step down from the instruction
42
Q

What if following your notification and offer to step down due to a conflict of interest your client requests that you continue with the instruction?

A

Provide the client with written advice:
- Nature of the conflict, the circumstances and any relevant facts
- Detail proposed conflict management techniques
- Advise them to seek external advice
- Request written confirmation to proceed
If written confirmation is received, set up your management procedures and stick to them

43
Q

What management procedures are available for conflicts of interest?

A

Information barriers:

  • Barriers must be robust (ideally different locations, locked files etc.)
  • Reasonable step to keep barriers in place
  • Keep clear audit trail of conflict check process with all written and oral communication
  • Ensure compliance officer is overseeing
44
Q

What types of gifts and hospitality are acceptable?

A

Hospitality and promotional activity/expenditure of low value which seeks to genuinely promote and improve the firm is acceptable and part of normal business. It is important to always be aware of Bribery Act 2010 and the Proceeds of Crime Act 2000 when accepting gifts

45
Q

What do you know about the Bribery Act?

A

The Bribery Act 2010 came in to force in July 2010 and it makes it a corporate criminal offence to fail to prevent bribery and aims to reduce bribery in business. It is policed by the Serious Fraud Office. The penalties include 10 years imprisonment and an unlimited fine

46
Q

What does the bribery act prohibit?

A
  • Offering, promising or giving a bribe to gain a business advantage
  • Requesting, agreeing to receive or accepting a bribe from another person for a business advantage
  • Bribing a public official for business advantage
  • Not reporting a bribe or not having systems in place to mitigate a bribe
47
Q

What is the gift policy at your organisation?

A

For all situations where a government official is not involved, gifts and hospitality that is reasonable, proportional and justifiable. No cash or cash equivalent is acceptable, and within a year nothing with a value of over £500 USD can be accepted.

48
Q

What is money laundering?

A

Money laundering means exchanging money or assets that were obtained criminally for other money/assets that are “clean”. Also generally the definition includes money to fund terrorism

49
Q

What are considered to be offences under the Money Laundering Regulations 2007?

A
  • Tipping off someone who is under suspicion (5 years and unlimited fine)
  • Failing to report knowledge of suspicion (5 years and unlimited fine)
  • Assisting a criminal to obtain, hide or invest funds (14 years and unlimited fine)
50
Q

What are the requirement on regulated firms (such as RICS firms) under the Money Laundering Regulations?

A
  • Undertake customer due diligence
  • Keep records (five years)
  • Maintain internal procedure to identify and prevent laundering
  • Report suspicious activity
    • internally to nominated money laundering reporting officer
    • externally, strange transactions need to be reported to the National Crime Agency/police.
    • train employees on internal procedures and legislative obligations
    • no cash payments of over £10,000 (£15,000 Euros)
51
Q

What is client sanctioning?

A

A process of credit and sanction checking of clients:

  • Used to ensure clients are financially sound, legitimate and all details are accurately recorded
  • If appropriate checks are failed, then matter is referred to Monday Laundering Reporting Officer
52
Q

What are the processes involved in client sanctioning at the beginning of a client relationship?

A
  • Company details; checking all correct and valid (Companies House)
  • Credit Checks; to assess the risk (Dun & Bradstreet)
  • Sanction Checks; to check legitimacy of client (Worldcheck)
53
Q

How is client sanctioning undertaken in your organisation?

A

C&W have a practise management team who carry out all the necessary checks. Out BAIT system is where any new jobs are opened, and if the client it new, before the job can become live all necessary checks need to be carried out by practise management team before a job can go live

54
Q

What are the RICS requirements regarding complaints handling procedures?

A

All RICS regulated firms are required to have a Complaint Handling Procedure (CHP) in place for each and every instruction. It must be free to use, and a log of complaints should be kept

55
Q

What are the timescales involved in an RICS approved CHP?

A

Once a formal written complaint is received, it must be acknowledged within 7 days. Investigation must take place within 28 days from complaint

56
Q

What would you do if a client called you up and made a complaint about your work?

A

Firstly, I’d likely apologise for whatever it is that they were complaining about. Often a simple conversation can resolve an issue. Following our conversation, I would issue them with one of C&W’s complaints process booklets, which details the various steps of the CHP, and I would make sure they were aware that formal complaints are required to be in writing, and provide them with the details of who to write to. I would also speak to the partner in charge of my team, who is also generally the partner in charge of the instruction. If a formal complaint was then received, it would be directed to the partner in charge of the instruction, following which is logged on our complaints log where it is tracked throughout it’s life, and issued to a Complaint’s Handling Officer (who is generally another partner, somewhat removed from the instruction but with expertise in the area). There are processes and necessary timescales for acknowledgement (within 7 days) and investigation (within 28 days). After it has been investigated, any necessary recourse will be taken. If the client is still unhappy, they will be directed to one of the external redress organisations, RICS Dispute Resolution / Property Ombudsmen depending on the complaint.

57
Q

What external redress options are available as part of a CHP?

A
  • RICS Dispute Resolution Service
  • Property Ombudsman
  • Financial Ombudsman
58
Q

When should the details of your CHP be issued to a client?

A

They should be issued at the point of instruction, as part of your terms of business. They should also be issued at the point when a complaint is received (that’s also the point you would notify insurance provider that there is a potential claim)

59
Q

In what situation would the RICS get involved as part of a CHP?

A

RICS only get involved if a member fails to respond to a complaint or prevents the complainant from accessing an independent redress mechanism

60
Q

What is negligence?

A

Negligence is when there is a breach of the duty of care required to third parties (using reasonable skill and care). If the duty of care is breached then there may be claim for damages due to any direct loss

61
Q

What are the two pieces of case law that govern negligence for surveying?

A

Case that defines negligence
- Donoghue v Stevenson (1932) - reasonably foreseeable that a failure could cause harm

Case for surveying
- Merrit v Babb (2001) - individual surveyor sued for negligence by former client after firms PII policy was cancelled when it became insolvent (no run-off cover)

62
Q

How would you avoid negligence?

A
  • Ensure you understand the client’s objectives (instructions in writing)
  • Keep accurate records
  • Make sure you are competent for an instruction (and have all necessary information)
  • Carry out instruction following industry guidance
  • Keep up to date on legislation and market knowledge (record CPD)
  • Cap the professional liability excess on your PII policy in the terms of engagement
63
Q

What timescales are involved in possible negligence claims and what statute dictates that?

A

The Limitations (Scotland) Act 1973 dictate the timescales available for redress. Generally 5 years in contract and in delict, however some situations where up to 15 years is possible

64
Q

What is the RICS Rule on PII?

A

Rule 9 - “A firm 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

65
Q

What is the aim of Professional Indemnity Insurance?

A
  • To protect the firm from any financial loss it cannot meet
  • To protect the firm from the consequences of its liability to pay damages to third parties due to beach in its professional duty
  • To protect the firm’s client from suffering financial loss which the firm cannot meet
66
Q

What PII related standards are required by the RICS?

A
  • That the policy is retroactive (claims made basis) and that all past and present employees are covered
  • That insurance cert is supplied to RICS annually
  • That RICS minimum wording is used (or more comprehensive)
  • That RICS minimum amount per claim, based on turnover, is used (or more comprehensive)
  • That RICS requirements for uninsured excess, based on limit of indemnity is used
  • That is underwritten by a RICS listed insurer
  • That adequate run-off cover is in place (min. 6years and £250k)
67
Q

What are the RICS requirements for Continuing Professional Development?

A
  • 48 hours for trainees / 20 hours for members
  • Ethical element every 3 years
  • Half of CPD required to be formal
  • Must be recorded on the RICS online (CPD app)
68
Q

What is meant by the term Client Money?

A

Any money that does not belong to the firm, but rather to a specific client. In some situations it is necessary for a firm to control/manage some Client Money, and if this is happening there are a number of controls required to be in place for this to take place, and the RICS have specific requirements

69
Q

What controls are required to be in place for a firm holding Client Money?

A
  • All client money must be held in a separate bank account that is distinct from the firms money (with general client or discreet accounts, with client names in the titles)
  • Management of the account is by a Principal, who opens all mail and carried out all reconciliation (three ways required)
  • The money should always be available to the client
  • Interest arrangements need to be approved in writing
  • Unclaimed money can be donated to charity after 6 years
  • Procedures in place to ensure that client accounts are not overdrawn
70
Q

What would you do it you accidentally sent some confidential client information to a third party?

A

The client who’s information it is should be informed. The third party should be told that it was sent in error and it should be properly deleted. The compliance officer should be informed and the incident logged

71
Q

What standard does your company adhere to for quality assurance for services provided?

A

ISO 9001 - client focused quality assurance in relation ot services provided. It covers:

  • Management responsibility
  • Resource management
  • Realisation
  • Measurement
  • Documentation
72
Q

What standard does your company adhere to for environmental management?

A

ISO 14001

Mandatory Competencies (10 decks)

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