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Ethics, Rules of Conduct and Professionalism > Ethics > Flashcards

Ethics Flashcards

1
Q

When was the RICS founded?

A

1868

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2
Q

How many members of the RICS are there?

A

130,000

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3
Q

What are the levels of membership?

A

FRICS
MRICS
AssocRICS
Trainee

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4
Q

What characteristics should you display to become a Fellow?

A 
4 of the following:
5 or more years at MRICS
A leadership role
Professional/technical achievement 
Academic achievement 
Raising the profile of the RICS
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5
Q

How is the UK structure of the RICS formed?

A

4 National Associations
10 Regional Boards
Local Associations

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6
Q

What major challenges does the RICS currently face?

A

Levitt Enquiry lead by Allison Levitt QC

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7
Q

What are the main roles of the RICS?

A

To maintain highest standards of education and training
To protect consumers
To be the leading source of information and independent advice

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8
Q

What are the benefits of membership?

A 
Status 
Recognition
Market Advantage 
Knowledge 
Network 
(MRSKN)
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9
Q

What are the principles of RICS Regulation?

A

PACTT

Proportionality
Accountability 
Consistency 
Targeting
Transparency
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10
Q

What are the core values of the of RICS Global Professional Standards 2015?

A
  1. Act with integrity
  2. Always provide a high standard of service
  3. Act in a way that promotes trust in the profession
  4. Treat others with respect
  5. Take responsibility
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11
Q

What are the personal and professional standards of the Rules of Conduct for Members 2007 (as amended 2020)?

A

ECS CPD SIC

Ethical Behaviour 
Competence 
Service
CPD
Solvency 
Information to the RICS
Co-operation
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12
Q

What are the benefits of regulation for firms?

A

Confidence
Professionalism
Security

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13
Q

Who is appointed in a firm to ensure that RICS requirements are upheld?

A

a ‘Responsible Principal’

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14
Q

What information is required in a firm’s annual return?

A

There are six areas:

  1. Type of business and staffing details
  2. Statutory regulated activities
  3. Nature of clients
  4. CPH and records
  5. PII details
  6. Whether the firm holds clients’ money
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15
Q

What is the conduct of business under the Rules of Conduct for Firms 2007 (as amended 2020)?

A

PCS CPD CCI

Professional Behaviour 
Competence
Service 
CPD
Complaints handling
Clients' money
Indemnity
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16
Q

What are the firm administration rules under the Rules of Conduct for Firms 2007 (as amended 2020)?

A 
Advertising
Solvency
Arrangements to cover the incapacity or death of a sole practitioner
Use of designations
Information to RICS
Co-operation
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17
Q

Are there any anticipated professional statements on ethics?

A

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.

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18
Q

What are the proposed rules of the new RICS Draft Professional Statement - Statement of Ethical Principles and Rules of Conduct, 1st Edition?

A

FIVE rules:

  1. Be honest, act with integrity and comply with professional obligations
  2. Maintain professional competency
  3. Provide good quality and diligent service
  4. Treat others with respect
  5. Act in the public interest, take responsibility for actions, prevent harm and maintain public confidence in the profession
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19
Q

What document can be used for ethical guidance?

A

The Professional and Ethical Standards Decision Tree

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20
Q

What does the decision tree take into consideration?

A 
Sufficient facts
Legality
Ethical standards 
Consultation of appropriate people
Clear reasoning
Impact if actions were made public (newspaper test)
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21
Q

What 3 levels of disciplinary action are there?

A
  1. Action by Head of Regulation
  2. Regulatory Tribunal
  3. Appeal Panel
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22
Q

Are international standards mandatory?

A

Yes

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23
Q

Please can you provide an example of an international standard?

A

RICS Valuation - Global Standards, 2019

International Property Measurement Standards (IPMS)

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24
Q

Are professional statements mandatory?

A

Yes

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25
Q

Please can you provide some examples of professional statements?

A

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

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26
Q

Are practice statements mandatory?

A

Yes

27
Q

Please can you provide an example of a practice statement?

A

Surveyors Acting as Expert Witnesses, 2014

28
Q

Are guidance notes mandatory?

A

No, they are voluntary

29
Q

Please can you provide an example of a guidance note?

A

Comparable Evidence in Real Estate Valuation, 2019

Valuation of Development Property, 2019

30
Q

Are codes of practice mandatory?

A

They are both mandatory and recommended good practice

31
Q

Please can you give an example of codes of practice?

A

Code of Measuring Practice 2015

32
Q

What should be avoided in fee negotiations?

A

price fixing
aggressive fee cutting
collusion with competitors

NB Fees should be market based and agreed on an ad-hoc basis with clients

33
Q

Can you change your initial fee quote?

A

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.

34
Q

Is there an example of price-fixing and collusion in the UK?

A

Four Somerset estate agents colluded to set minimum commission rates (March 2017).

They were ultimately prosecuted and fined by the Competition and Markets Authority.

35
Q

What are Terms of Engagement?

A

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
36
Q

What are the three steps to follow with Terms of Engagement?

A

CIT

  1. Check professional competency (C)
  2. No conflicts of interest or personal interests (I)
  3. Confirm terms of engagement in writing and get written approval from the client before you start work on the instruction (T)
37
Q

When would you decline an instruction?

A
  1. You’re not competent to perform the work
  2. You don’t have sufficient facts on the issue
  3. The proposed client will not sign your ToE and/or complete AML checks
  4. A PII liability cap cannot be agreed
  5. 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
  6. There is a conflict of interest
  7. The potential client is included on the UK Government’s sanction list
  8. Newspaper test
38
Q

What is a conflict of interest?

A

A conflict arises when a member/firm’s independence and impartiality is threatened due to the existence of a conflict between two parties

39
Q

Please can you provide an examples of a conflict of interest?

A

Financial interest
Personal interest
Commercial relationships
Acting on both sides of the transaction

40
Q

What is the difference between conflict management and conflict avoidance?

A

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.

41
Q

Are there any RICS publications on conflicts of interest?

A

Yes - RICS Global Professional Statement on Conflicts of Interest, 2017

This is mandatory

42
Q

What are the three types of conflict that are defined in the RICS Global Professional Statement on Conflicts of Interest, 2017?

A
  1. ‘Party Conflict’ - acting on both sides of the transaction
  2. ‘Own Interest Conflict’ - relating to a personal interest
  3. ‘Confidential Information Conflict’ - relating to work between two parties which is confidential
43
Q

Tell me about informed consent in relation to conflicts of interest

A

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.

44
Q

Is Dual Agency a conflict of interest?

A

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.

45
Q

What is incremental advice?

A

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.

46
Q

What is an information/ethical barrier?

A

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
47
Q

What is negligence?

A

Negligence is where a duty of care is breach and there is a loss, a claim for damages (negligence claim) arises

48
Q

Do you owe a duty of care for pro-bono work?

A

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.

49
Q

Are there any limitations on negligence claims?

A

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

50
Q

How can negligence be avoided?

A
  • 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
51
Q

What is the RICS guidance on complaints handling?

A

RICS Guidance Note: Complaints Handling 2016

52
Q

Who should you notify if there is a complaint?

A

PII provider & my firm’s complaints handling officer

53
Q

As part of the Rules of Conduct for Firms, what must a firms Complaints Handling Procedure entail/include?

A
  • 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
54
Q

What are the minimum CPD requirements?

A
  • 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
55
Q

What is the purpose of Professional Indemnity Insurance (PII)?

A

To protect clients, surveyors and third parties against negligence claims where the is a duty of care breached and a claim for damages arises

56
Q

What are the requirements for run-off cover?

A
  • 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
57
Q

What happens if a firm is unable to obtain run-off cover?

A

They can apply for coverage to the RICS run off pool

58
Q

Is PII required for pro-bono work?

A

Yes, because there is duty of care owed, under Burgess v Lejonvarn (2020)

59
Q

What can client’s money include?

A

Holding deposits
Rent
Service Charge
Retentions

60
Q

Who might have to be familiar with the RICS Professional Statement ‘Client Money Handling’ 1st Edition?

A

Property managers

61
Q

Can you keep interest accrued on a client’s money?

A

No as it belongs to the client. It is advisory that Payment of interest is agreed with a client.

62
Q

If a firm was unable to repay a client’s money, can the client recover it from the RICS?

A

The RICS runs a Clients’ Money Protection Scheme - this is a last resort protection for the client

63
Q

Can you accept a payment of £9,000 in cash?

A

Yes, 10,000 EUR is the acceptable limit.

However, at my firm, we do not accept cash payments.

Ethics, Rules of Conduct and Professionalism (1 decks)

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