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2021 APC > Ethics > Flashcards

Ethics Flashcards

1
Q

What are the RICS Global Professional and Ethical Standards (2015)?

A

1) Act with integrity
2) Always provide a high standard of service
3) Act in a way that promotes trust in your profession
4) Treat others with respect
5) Take responsibility

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2
Q

Provide an example where you have conformed to the RICS ethical standards?

A

Valuation

1) Integrity - provided an honest independent opinion of value
2) Provided a high standard of service - met all deadlines set out by the client
3) Promoted trust - conformed to the Red Book
4) Treated other with respect - contacted the property manager prior to inspection
5) Take responsibility - communicated with the client throughout the process

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3
Q

What are the rules of conduct for Members 2007 (amended 2020)

A

1) Ethical Behavior
2) Competence
3) Service
4) CPD
5) Solvency
6) Information to RICS
7) Co-operation

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4
Q

What is the Bribery Act (2010)?

A

Aims to reduce bribery in business in the UK and abroad. Bribe is promising or receiving and advantage for a payment / gift. Corporate entertainment is not prohibited.

SIX Principles:

  1. Proportionality
  2. Top level commitment
  3. Risk assessment
  4. Due diligence
  5. Communication
  6. Monitoring and review

PTR DCM

FOUR offences

  1. Bribing
  2. Receiving a bribe
  3. Bribing a foreign public official
  4. Failing to prevent bribery
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5
Q

What are the penalties for breaking the Bribery Act 2010

A

Policed by the Serious Fraud Office.

Maximum length of 10 years in prison and/or and unlimited fine for individuals.

Unlimited fine for companies.

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6
Q

What are the Money Laundering, Terrorist Financing and Transfer f Funds (Information on the payer) Regulations, 2017?

A

Regulations that cover estate agency work and relevant financial business work inside and outside the UK by a firm.

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7
Q

What are the key provision of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the payer) Regulations, 2017?

A

1) Requirement to have a written money laundering and terrorist financing risk assessment
2) Systems, policies and controls and procedures to address money laundering and terrorist financing
3) Adopt appropriate internal controls
4) Provide staff training
5) Comply with enhance, simplified consumer due diligence requirements
6) Comply with the requirements for politically exposed persons (PEPs)
7) Ensure appropriate record keeping, policies and procedures
8) AML checks are undertaken to identify the purchaser, and check their source of funds, confirm the identity of the vendor’s agent before contracts are exchanged
9) Include additional high risk factors when assessing the need for enhanced due diligence and seek additional information and monitoring in certain cases (e.g. high risk third countries)

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8
Q

What are the Estate Agents Legal Obligations?

A

1) Customer due diligence checks on purchasers, landlords and tenants on any new sale / letting and enhanced customer due diligence when red flags occur.

2) The firm must have policies to identify and scrutinize transactions which are:
- complex
- unusually large
- unusual patterns of transactions or
- without apparent economic or legal purpose

3) Firms must have group-wide procedures to share relevant information, and to train anyone capable of identifying or preventing money laundering or terrorist finance.

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9
Q

What would be involved in customer due diligence checks?

A

1) Identify the client / verify their identity based on a reliable independent source
2) Make reasonable endeavors to identify the beneficial owners of the client
3) Company name, number and address
4) Names of directors are required unless listed on a regulated market
5) Information in purpose and intended nature of the indented business relationship and proposed funding arrangements as appropriate

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10
Q

What would be involved in enhanced due diligence?

A

Additional procedures for transactions or business relationship involving a person established in a high risk third country or a politically exposed person / family person / business person. generally requires a more detailed examination of their background and monitoring of the relationship / transaction.

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11
Q

What is the limit for acceptance of cash under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the payer) Regulations, 2017?

A

EU 10,000

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12
Q

What more general requirements are there of firms under the Money Laundering, Terrorist Financing and Transfer f Funds (Information on the payer) Regulations, 2017?

A
  • Firms must register with HMRC on an annual basis
  • Firms must have a nominated person (Money Laundering Officer) appointed to report any suspicious activities with a Suspicious Activity Report (SAR) to the National Crime Agency
  • Firm to maintain records for minimum of 5 years and to report to Companies House any discrepancies between the information their firm holds on their customer compared with the information held in the Companies House Register
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13
Q

What are the penalties for failure to comply with the Money Laundering, Terrorist Financing and Transfer f Funds (Information on the payer) Regulations, 2017?

A
  • Maximum of 14 years in prison and/or unlimited fine for assisting with money laundering
  • Maximum 5 years prison sentence and/or unlimited fine for tipping off a person by informing them that they are under suspicion of money laundering or for failing to report suspicion
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14
Q

What is the purpose of the Proceeds of Crime Act 2002?

A

Provides powers for enforcement authorities in the UK to recover in criminal and civil proceedings money and other assets which are deemed to be proceeds of crime.

Also created a set of criminal offences intended to combat money laundering (AML offences)

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15
Q

What are the criminal offences under the Proceeds of Crime act 2002?

A
  1. Concealing Criminal property
  2. Arrangements: if a person is concerned they are facilitating acquisition, retention, use or control of criminal property by or on behalf of another person
  3. Acquisition use and possession
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16
Q

What is the RICS Professional Statement - Countering Bribery, Corruption, Money Laundering and Terrorist Financing 2019?

A

Sets out mandatory, globally applicable requirements for RICS members and regulated firms in relation to bribery corruption, money laundering and terrorist financing.

It falls in to 3 parts:
1. Mandatory requirements for anti-bribery, corruption, anti-money laundering and terrorist financing
2. Guidance setting out supporting good practice for the above
3. Supplementary guidance on some of the concepts set out in Parts 1&2
Useful glossary

17
Q

If you did not have colleagues to recommend, how would you handled this instruction?

A
  • I would refer to the “find a surveyor” page in the RICS website and search for another surveyor to refer to the client
  • If there were no surveyors available (which is unlikely), I would terminate the instruction
18
Q

Please provide an overview of the Estate Agents Act (1979) and how it applies to your work?

A
  • Estate Agents act 1979 regulates estate agency work, ensures that estate agents act in the best interest of their client and that both buyers and sellers are treated fairly, honestly and promptly
  • Section 21 – Any interest with a “connected person” must be declared in writing
  • Section 18 – must provide a client with clear terms before entering a contract of sale
19
Q

Please can you outline the key sections of RICS Real Estate Agency and Brokerage Guidance 3rd Edition (2016) and its purpose?

A
  • Purpose - To outline the principles that shape the culture of fairness and transparency of Estate Agency
  • Section 7.1 – “You should maintain the confidentiality of matters with which you become acquainted during your instruction.”
  • Overview – 8 sections, covering Ethics, securing an instruction, sale and acquisition of both freehold and leasehold, ending an instruction, safety and security and agency management
20
Q

Please outline the various pieces of regulation published by RICS in hierarchical order?

A
  • International Standards (Mandatory) – E.G. IVS (2017) / IPMS (2018)
  • Professional Statements (Mandatory) – E.G. UK Residential Estate Agency (2017)
  • Practice Statements (Mandatory) – E.G. Very Few of these (Home Buyer Report (2016) for example)
  • Guidance Notes (Voluntary) – Surveying Safely (2018)
  • Codes of Practice (Mandatory or Recommended Practice)
21
Q

What’s is the difference between a freehold interest and leasehold?

A
  • Freehold – you own the property outright for an unlimited term
  • Leasehold – you own the property for a defined term, after which the property reverts back to the freeholder
22
Q

How did you confirm that there were no conflicts with the client?

A

• Using my company’s internal software I search for any instructions relating to the property Address, the name of Client, the Tenant, and the name of the Borrower

23
Q

What is a conflict of interest and provide an example of a conflict of interest?

A 
•	Conflict of interest is when one’s impartiality and independence is threatened due to the existence of a conflict between 2 clients
•	Examples are:
1.	Financial conflict
2.	Personal interest
3.	Commercial relationships
4.	Acting on both sides of a transaction
24
Q

What is the purpose of RICS Global Professional Statement on Conflict of Interest 2017 and what are the types of COI defined?

A
  • Mandatory statement that came into effect on 1st JWhat anuary 2018
  • Outlines that members cannot be involved in in business with COI unless having informed consent
  • Types of conflict: Party Conflict, Own Interest Conflict, Confidential Information Conflict
25
Q

If there had been a conflict, how would you have dealt with it?

A
  • Conflict avoidance - I’d consider whether the conflict could be resolved
  • Written advice to both parties - I would outline the conflict clearly in writing to the client and request informed consent
  • Conflict management - Consider the what procedures I could implement in accordance of provisions agreed by both parties, such as an information barrier
26
Q

Please outline standard aspects included in your companies TOE?

A
  1. Background
  2. Scope of works
  3. Timings
  4. Key individuals
  5. Fees
  6. Terms of business
27
Q

Please outline sections of your companies TOB?

A
  1. Our responsibilities
  2. Fees
  3. Suspending or Terminating Instructions
  4. Limitation of Liability
  5. Indemnity
  6. Money Laundering
  7. Material Interests and conflict of interests
  8. Data protection
  9. Equality act 2010
  10. Anti-corruption
  11. Health and Safety
28
Q

What RICS legislation would you refer to for guidance for TOE

A
  • Agency – S.18 of Estate Agents Act 1979 and S.2.1.3 of RICS Real Estate Agency and Brokerage Guidance note 2016 3rd Edition (2016)
  • Valuation – VPS1 in Red Book Global 2019 (mandatory standard) which applies IVS 101 Scope of Work, helps ensure that a clear understanding of the valuation and process is included in TOE
29
Q

Please explain the purpose of the Consumer Protection Regulations (2008) and how it applies to your work?

A
  • Consumer protection from unfair trading regulations (2008) came into effect in 26th May 2008 published by Govt.
  • Prohibition on all sectors from producing misleading omissions and aggressive sales tactics
  • Outlines that there is a duty for consumers to trade fairly and honestly with consumers
30
Q

Please explain the purpose of the Misrepresentation Act (1967) and how it applies to your work?

A
  • A buyer will have a claim against a seller in tort if he can show that the seller has made either a deliberate (fraudulent) misstatement or a negligent misstatement on which he has relied to his detriment.
  • If the misstatement is “honest”, that is a genuine mistake; it is not so clear cut
31
Q

Please outline The Global Professional and Ethical 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. Takes responsibility
32
Q

Which ethical standard did you uphold in your case study?

A

• I provided a good Service to the client, promoting trust in the profession by maintaining frequent communication with the client in order to meet the pre-determined deadlines we had set out

33
Q

Please outline conducts of business in the Rules of Conduct for Firms (2007, amended 2020)

A 
•	Professional Behavior
•	Competence
•	Service
•	Training and continuing professional development
•	Complaints handling 
•	Clients’ Money
•	Indemnity
PCS – CPD – CCI
34
Q

Please outline the rules for firm administration in the Rules of Conduct for Firms (2007, amended 2020)

A 
•	Advertising
•	Solvency
•	Arrangements to cover the incapacity of a sole practitioner
•	Use of designations
•	Information to RICS
•	Co-operation
ASA – UIC
35
Q

Please provide an example of when you have acted with integrity

A

• In my submission I detail how a client asked me to disclose bids received for another property I was marketing nearby, I did not provide my client with the information in accordance with the Estate Agency Act 1979 and RICS Real estate agency and brokerage act 3rd edition (2016)

36
Q

What are the red flags of money laundering

A
  • Inability or unwillingness of parties to provide identity documents
  • Changes to parties involved in transactions
  • Unusual transaction features (unexpected urgency, loss making transaction)
  • Payment of fees, purchase or rental monies in unusual currencies

2021 APC (1 decks)

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