Ethics Flashcards
When was the RICS founded?
1868
How many members of the RICS are there?
130,000
What are the levels of membership?
FRICS
MRICS
AssocRICS
Trainee
What characteristics should you display to become a Fellow?
4 of the following: 5 or more years at MRICS A leadership role Professional/technical achievement Academic achievement Raising the profile of the RICS
How is the UK structure of the RICS formed?
4 National Associations
10 Regional Boards
Local Associations
What major challenges does the RICS currently face?
Levitt Enquiry lead by Allison Levitt QC
What are the main roles of the RICS?
To maintain highest standards of education and training
To protect consumers
To be the leading source of information and independent advice
What are the benefits of membership?
Status Recognition Market Advantage Knowledge Network (MRSKN)
What are the principles of RICS Regulation?
PACTT
Proportionality Accountability Consistency Targeting Transparency
What are the core values of the of RICS Global Professional Standards 2015?
- 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
What are the personal and professional standards of the Rules of Conduct for Members 2007 (as amended 2020)?
ECS CPD SIC
Ethical Behaviour Competence Service CPD Solvency Information to the RICS Co-operation
What are the benefits of regulation for firms?
Confidence
Professionalism
Security
Who is appointed in a firm to ensure that RICS requirements are upheld?
a ‘Responsible Principal’
What information is required in a firm’s annual return?
There are six areas:
- Type of business and staffing details
- Statutory regulated activities
- Nature of clients
- CPH and records
- PII details
- Whether the firm holds clients’ money
What is the conduct of business under the Rules of Conduct for Firms 2007 (as amended 2020)?
PCS CPD CCI
Professional Behaviour Competence Service CPD Complaints handling Clients' money Indemnity
What are the firm administration rules under the Rules of Conduct for Firms 2007 (as amended 2020)?
Advertising Solvency Arrangements to cover the incapacity or death of a sole practitioner Use of designations Information to RICS Co-operation
Are there any anticipated professional statements on ethics?
Yes, the new RICS Draft Professional Statement - Statement of Ethical Principles and Rules of Conduct, 1st Edition
This will bring the existing documents together as a whole.
What are the proposed rules of the new RICS Draft Professional Statement - Statement of Ethical Principles and Rules of Conduct, 1st Edition?
FIVE rules:
- Be honest, act with integrity and comply with professional obligations
- Maintain professional competency
- Provide good quality and diligent service
- Treat others with respect
- Act in the public interest, take responsibility for actions, prevent harm and maintain public confidence in the profession
What document can be used for ethical guidance?
The Professional and Ethical Standards Decision Tree
What does the decision tree take into consideration?
Sufficient facts Legality Ethical standards Consultation of appropriate people Clear reasoning Impact if actions were made public (newspaper test)
What 3 levels of disciplinary action are there?
- Action by Head of Regulation
- Regulatory Tribunal
- Appeal Panel
Are international standards mandatory?
Yes
Please can you provide an example of an international standard?
RICS Valuation - Global Standards, 2019
International Property Measurement Standards (IPMS)
Are professional statements mandatory?
Yes
Please can you provide some examples of professional statements?
Countering Bribery, Corruption, Money Laundering & Terrorist Financing, 2019
Conflicts of Interest, Global, 2017
Conflicts of Interest - UK Commercial Property Market Investment Agency, 2017
Property Measurement, 2018
Are practice statements mandatory?
Yes
Please can you provide an example of a practice statement?
Surveyors Acting as Expert Witnesses, 2014
Are guidance notes mandatory?
No, they are voluntary
Please can you provide an example of a guidance note?
Comparable Evidence in Real Estate Valuation, 2019
Valuation of Development Property, 2019
Are codes of practice mandatory?
They are both mandatory and recommended good practice
Please can you give an example of codes of practice?
Code of Measuring Practice 2015
What should be avoided in fee negotiations?
price fixing
aggressive fee cutting
collusion with competitors
NB Fees should be market based and agreed on an ad-hoc basis with clients
Can you change your initial fee quote?
Yes, you can enter into further fee negotiations as long as you act in a professional manner and can still provide a high standard of service.
You may wish to vary your proposed level of service when renegotiating your initial fee.
Is there an example of price-fixing and collusion in the UK?
Four Somerset estate agents colluded to set minimum commission rates (March 2017).
They were ultimately prosecuted and fined by the Competition and Markets Authority.
What are Terms of Engagement?
Terms of Engagement document in writing the client’s agreement to the instruction.
They must include:
- Proposed fee basis
- Payment of expenses and how calculated
- a copy of the Firm’s complaints handling procedure is available on request
What are the three steps to follow with Terms of Engagement?
CIT
- Check professional competency (C)
- No conflicts of interest or personal interests (I)
- Confirm terms of engagement in writing and get written approval from the client before you start work on the instruction (T)
When would you decline an instruction?
- You’re not competent to perform the work
- You don’t have sufficient facts on the issue
- The proposed client will not sign your ToE and/or complete AML checks
- A PII liability cap cannot be agreed
- The advice is for a friend or on a pro bono basis (i.e. free of charge for a charity) and your PII won’t cover work carried out on a personal basis
- There is a conflict of interest
- The potential client is included on the UK Government’s sanction list
- Newspaper test
What is a conflict of interest?
A conflict arises when a member/firm’s independence and impartiality is threatened due to the existence of a conflict between two parties
Please can you provide an examples of a conflict of interest?
Financial interest
Personal interest
Commercial relationships
Acting on both sides of the transaction
What is the difference between conflict management and conflict avoidance?
Conflict avoidance is when you decline the instruction as the conflict cannot be mitigated.
Conflict management is where steps are agreed to manage the conflict. One must secure informed consent.
Are there any RICS publications on conflicts of interest?
Yes - RICS Global Professional Statement on Conflicts of Interest, 2017
This is mandatory
What are the three types of conflict that are defined in the RICS Global Professional Statement on Conflicts of Interest, 2017?
- ‘Party Conflict’ - acting on both sides of the transaction
- ‘Own Interest Conflict’ - relating to a personal interest
- ‘Confidential Information Conflict’ - relating to work between two parties which is confidential
Tell me about informed consent in relation to conflicts of interest
Informed consent is used in conflict management.
Informed consent can only be given in writing by the party if the person explaining the position to them is entirely transparent about any material factors and sure that the party affected understands what they are doing.
Surveyors should only seek informed consent if they are satisfied that all relevant parties are best served in doing so.
Is Dual Agency a conflict of interest?
Yes, JLL cannot act as both the vendor and purchasing parties agents.
This is prescribed in the RICS Professional Statement: Conflicts of Interest - UK commercial property market investment agency, 2017.
What is incremental advice?
This is where an agent is approached by another party to provide advice, to include valuation, building surveying or planning, related to a purchase or disposal that is incremental to an existing instruction.
RICS members must only provide incremental advice if consent is given and an information barrier is put in place before providing any incremental advice to the prospective buyer.
What is an information/ethical barrier?
An information barrier prevents parties from communicating with each other.
Barriers must operate as follows:
- Must be robust
- Must take ‘reasonable steps’ to operate an effective barrier
- Surveyors must be physically separated (different floors/buildings)
- All information regarding the instruction should be securely stored
- Must keep a clear audit trail of communication
- The firm’s compliance office must oversee all actions
What is negligence?
Negligence is where a duty of care is breach and there is a loss, a claim for damages (negligence claim) arises
Do you owe a duty of care for pro-bono work?
Yes.
Burgess v Lejonvarn (2020)
Parties providing professional services pro-bono and without a contract owe a duty of care to act with reasonable care and skill in respect of the services they provide.
The court of appeal determined that they are not under a duty to advise or give warnings, and nor are they liable for the work they do not do.
Are there any limitations on negligence claims?
Yes, under the Limitations Act 1980.
Contract law:
- 6 years from the date of the negligent act, breach of contract or omission
- or, 3 years from the date of knowledge of the damage subject to a 15 years long stop from the negligent act or omission
Tort Law:
- 6 years from the date the claimant suffered the loss
How can negligence be avoided?
- Clearly understanding the client’s objectives
- Confirm precise instructions in writing in the ToE
- Ensure you are competent to perform the work
- Undertake work in accordance with RICS standards and guidance
- Make detail file notes / lots of photos
- Keep up to date with market knowledge and legislation
- Cap the professional liability excess
What is the RICS guidance on complaints handling?
RICS Guidance Note: Complaints Handling 2016
Who should you notify if there is a complaint?
PII provider & my firm’s complaints handling officer
As part of the Rules of Conduct for Firms, what must a firms Complaints Handling Procedure entail/include?
- A firm’s written complaint handling procedures must be approved by RICS
- Always notify the PII provider of a complaint at the soonest possible opportunity (if there is a complaint it could lead to a negligence claim)
- Details of the complaints handling procedures should be issued to a client at the same time as Terms of Business
- A complaints log must be maintained to show the details, progress and outcome of any complaints
- Firms must have an RICS approved Alternative Dispute Resolution (ADR) mechanism in their complaints handling procedure
What are the minimum CPD requirements?
- 20 hours
- 50% + formal
- Record CPD electronically on the RICS website
- Members must maintain their maintain a relevant and current understanding of RICS Professional and Ethical Standards during a rolling 3-year period
What is the purpose of Professional Indemnity Insurance (PII)?
To protect clients, surveyors and third parties against negligence claims where the is a duty of care breached and a claim for damages arises
What are the requirements for run-off cover?
- For consumer claims, this requires obtaining a minimum of £1,000,000 of aggregate cover over a minimum of 6 years
- For commercial claims, firms must consider what is adequate and appropriate for a minimum of 6 years
What happens if a firm is unable to obtain run-off cover?
They can apply for coverage to the RICS run off pool
Is PII required for pro-bono work?
Yes, because there is duty of care owed, under Burgess v Lejonvarn (2020)
What can client’s money include?
Holding deposits
Rent
Service Charge
Retentions
Who might have to be familiar with the RICS Professional Statement ‘Client Money Handling’ 1st Edition?
Property managers
Can you keep interest accrued on a client’s money?
No as it belongs to the client. It is advisory that Payment of interest is agreed with a client.
If a firm was unable to repay a client’s money, can the client recover it from the RICS?
The RICS runs a Clients’ Money Protection Scheme - this is a last resort protection for the client
Can you accept a payment of £9,000 in cash?
Yes, 10,000 EUR is the acceptable limit.
However, at my firm, we do not accept cash payments.
