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Mandatory > Ethics > Flashcards

Ethics Flashcards

1
Q

What are the 5 rules of conduct?

A

Rule 1: Members and firms must be honest, act with integrity and comply with their personal obligations, including obligations to the RICS

Rule 2: Members and firms must maintain their professional competency and ensure that services are provided by competent individuals who have the necessary expertise

Rule 3: Members and firms must provide a good-quality and diligent service

Rule 4: Members and firms must treat others with respect and encourage diversity and inclusion

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 their profession

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2
Q

What is set out in the RICS Rules of Condut October 2021

A

The 5 rules of conduct

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3
Q

What is the RICS Ethics Decision Tree?

Check

A

A framework of questions which members should ask themselves when facing a situation where they have to make an ethical decision

-do you have all info
- is it legal
- would you be happy for results to be published
- do i have all the information

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4
Q

What is the RICS’s CPD policy for qualified members?

A
  1. Members shall undertake minimum of 20 hours per year
  2. Of which 10 hours must be formal
  3. Members must maintain a relevant and current understanding of RICS Rules Of Conduct during a rolling 3 year period
  4. CPD must be logged on RICS CPD data management system by 31st Jan each year
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5
Q

What level of PII must firms have?

A

If turnover £100,000 or less min PII is £250,000

If turnover £100,001 to £200,000 min PII is £500,000

If turnover £200,001 or more min PII is £1,000,000

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6
Q

When was the RICS founded?

A

Founded 1868

Royal charter granted by privy council 1881

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7
Q

3 main roles of RICS

A
  1. Maintain the highest standards of education and training
  2. To protect consumers through strict regulation or professional standards
  3. To be the leading source of information and independent advice on land, property construction and associated environmental issues (RICS 2015)
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8
Q

5 benefits of being a member

A
  1. Status - your professional credentials provide unrivalled client confidence
  2. Recognition- promotion of your professional excellence to governments and markets
  3. Market advantage - RICS status and standards give you a competitive edge
  4. Knowledge - international practice standards, professional guidance, CPD & knowledge sharing
  5. Network - access to 125,000 professionals worldwide
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9
Q

What are the three levels of disciplery action?

A
  1. Action by Head of Regulation
  2. Disciplinary panel ( drawn from the independant regulatory tribunal)
  3. Appeal panel
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10
Q

What 4 actions can be completed by Head of Regulation upon completion of intitial investigation?

A
  1. Serve a fixed penatly notice
  2. Make a regulatory complience order
  3. Refer the matter to a single member of the Regulatory Tribunal for consideration
  4. Refer the matter directly to a Disciplinary Panel
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11
Q

How long is the cooling off period for ToE and what is the legislation?

A

14 days from date of agreement

Consumer Rights Act 2015

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12
Q

What must Terms of Engagment include? (4)

A
  1. Must state in writing the clients agreement to proceed
  2. The fee basis
  3. Payment of expenses (and how they are calculated)
  4. The firms complaints handeling procedure available upon request
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13
Q

What are 3 steps before accepting an instuction?

A
  1. Check professionally competent
  2. no conflicts of interest or personal interests
  3. Confirm ToE in writing and get written approval BEFORE you start work on the instruction
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14
Q

You must comply with what 2 legislations before accepting an instruction for agency work?

A
  1. Section 18 of the Estates Agent Act 1979 (tell the client when the fee is due and when it is triggered)
  2. Money Laundering Regulations 2017 (as ammended)
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15
Q

Why may it be appropriote to decline an inctuction? (8)

A
  1. You are not competent to undertake the work - it is outside your limitations
  2. You do not have sufficient facts on the issue
  3. The proposed client will not sign your terms of engagement and/or complete AML checks
  4. A PII cap cannot be aggreed
  5. There is a conflict of interest of a personal interst
  6. The advice is for a friend or on a pro bonno basis and your PII cover will not cover work carried out on a personal basis
  7. the potential client is included in the UK Government sanctions list
  8. Would you be content for your actions to be made public - news papers/internet?
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16
Q

Information required by RICS for registration (7)

A
  1. Type of business and staffing details
  2. Name of the Responsible Principal
  3. Statutory regulated activities - such as financial services
  4. Nature of clients
  5. Complaints handling procedure details and records
  6. Professional indemnity insurance details
  7. Whether the firm holds clients money
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17
Q

What are fixed penalties?

A

Procedure used for breaches of the rules relating only to the supply of information to the RICS by firms and members

This could be a fine or caution

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18
Q

What are Regulatory Compliance Orders

A
  • For low level breaches of the Rules (such as minor breaches which could easily be corrected)
  • It is a written document which states the terms upon which the member or firm must take or desist from taking certain actions in a specific time period and an agreement to pay a fine
  • covers issues such as non-compliance with RICS Rules including CPD requirements
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19
Q

What could the possible sanctions for not complying with CPD regulations be?

A

Fixed penalties and disciplinary panel action leading to expulsion

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20
Q

What is Action by a Disciplinary Panel?

A
  • Procedure used for more serious breaches of conduct
  • The Head of Regulation can consider that a hearing is required under the disciplinary rules
  • Membership of Disciplinary Panel includes lay members
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21
Q

What are the penalties available to a Regulatory Tribunal Disciplinary Panel (7)

A
  1. Issue a regulatory compliance order
  2. Reprimand
  3. Fine
  4. Impose and unlimited fine per breach (but must be proportionate)
  5. Impose conditions upon future continued RICS registration
  6. Expulsion from membership or remove a firm
  7. Require publication of the hearing in RICS Modus, on the RICS website and in a local newspaper to the member or firm
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22
Q

What is an appeal panel?

A
  • Appeal panel considers a member of firms appeal to decisions of disciplinary procedure
  • They review the decision with regard to evidence previously presented and any new representation
  • They can allow the appeal and vary the penalty imposed
  • Membership includes lay members
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23
Q

What are RICS Professional Standards?

A
  1. Mandatory to follow
  2. They are set requirements or expectations for members and firms about how to provided services or outcomes of their actions
  3. Mandatory requirements must be followed and best practice advice should be followed
  4. RICS is currently reviewing and recategorising Professional Statements to Professional Standards
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24
Q

What is RICS Practice Information?

A
  1. Information to support practice, knowledge and performance of members and firms
  2. Advice is not mandatory and does not make explicit recommendations
  3. RICS reviewing and recategorising all guidance notes to Practice Information
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25
Q

What is a Conflict of Interest?

A

A situation where there may be an actual, perceived or potential risk that the professional judgement of an RICS regulated firm or member will be compromised when undertaking an assignment

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26
Q

What are the 3 types of conflict of interest?

A
  1. Party conflict
  2. Own interest conflict
  3. Confidential information conflict
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27
Q

What is a Party Conflict?

A

A situation in which the duty to act in the interest is a client or other party in a professional assignment conflicts with a duty owed to another client or party in relation to the same or a related professional assignment

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28
Q

What is an Own Interest Conflict?

A

A situation in which the duty to act in the interests of a client in a professional assignment conflicts with the interests of that same RICS member/firm

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29
Q

What is a confidential information conflict?

A

A conflict between the duty of an RICS member to provide material information to one client, and the duty of that RICS member to another client to keep that same information confidential.

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30
Q

Conflict avoidance vs conflict management

A

Conflict avoidance - not accepting the instructions

Conflict management - instruction accepted, steps are agreed and put into place to manage the conflict (e.g. information/ethical barrier with written agreement of all parties)

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31
Q

What is conflict avoidance?

A

After receiving all facts consider if conflict is irresolvable due to your impartiality being compromised and weather conflict should be avoided or if it can be properly managed while maintaining transparency and openness with the client

Decide if you want to accept or decline the instruction from client A or client B

32
Q

In a conflict, what must written advice to both parties include?

A
  1. Disclose nature of conflict, circumstances surrounding it and any other relevant facts. Set out proposal for how your firm intends to deal with the conflict e.g. information/ethical barriers
  2. Be as clear as you can - ensure both parties can make their own decision (inform them to seek independent advice if needed)
  3. Request written confirmation from both parties of their informed constant that the firm can act in accordance with the provisions proposed
33
Q

What is conflict management?

A

Once you have received written consent to declaration of your conflict and your proposed management of conflict from Client A and Client B, set up an information barrier in accordance with the provisions agreed with both clients

34
Q

How to handle a conflict of interest in 3 steps?

A

Step 1 - Conflict Avoidance

Step 2 - Written advice to both parties

Step 3 - Conflict management

35
Q

How must you operate an information/ethical barrier?

A
  1. The barrier must be robust enough to offer no chance of the information passing between the two parties
  2. You must take ’reasonable steps’ to operate an effective barrier
  3. Surveyors acting on the two sides must be different and must be physically separated preferably in different buildings or different floors with different support teams
  4. All information regarding the instructions must me securely stored
  5. Keep an audit trail of the conflict check process and all written and oral communication. The firms compliance officer must oversee all actions
36
Q

What are the standard minimum procedures for the handling of a complaint?

A

Stage one (In house)

  • Details for the CPH should be issued whenever the firm receives a complaint from a relevant complainant to whom the firm owes a duty of care
  • Procedure must be quick, clear transparent and impartially implemented
  • Details of the nominated person who will be handling the complaint (Complaint Handling Officer) must be stated as the first person to contact
  • Complaint must be made in writing
  • Procedures and strict timescales for the complaint should be recorded
  • A complaint should be acknowledged within 7 days and investigated within 28 days

Stage two (ADR - Third party resolution)

  • If the complainant is not happy with the review second stage involves independent redress scheme the form has chosen to use
  • Name of appropriate redresses mechanism must be provided to the complainant such as ‘Centre for Dispute Resolution’, the RICS Dispute Resolution Service, The Property Redress Scheme
37
Q

What are the maximum levels of uninsured excess required by RICS

A

Firms turnover in the proceeding year is up to £10 million then the maximum uninsured excess is the greater of 2.5% the sum insured or £10,000

Firms turnover in the proceeding year over £10 million No maximum uninsured excess limit is set

38
Q

What run-off cover is required following cessation of trading?

A
  • For consumer claims a min of £1 mill of aggregate cover over a period of 6 years
  • For commercial claims, firms must consider what is adequate and appropriate for a minimum of 6 years
  • Firms that are unable to obtain run-off cover from their incumbent insurer or the open market will be able to apply for coverage to the RICS Run-off pool

Max 15 years depending on risk assessment

39
Q

How do you avoid or reduce a negligence claim?

A
  1. Understand client objective and confirm in written ToE
  2. Ensure you are competent
  3. Follow Professional Standards and Practice Information
  4. Detailed notes and photographs
  5. Keep current with knowledge, legislation and undertake/record your CPD
  6. Cap professional liability excess on your PII in ToE
40
Q

What are the procedures for handling clients money?

A
  1. Client accounts must be kept separately and be clearly identifiably
  2. The word ‘client’ must be on bank account and cheque book
  3. Client must be able to have monies on demand
  4. Payment of interest agreed with client and accounts must be kept on credit
  5. Regular reconciliation checks that payments and transfers have been made/received and expenditure checked monthly
41
Q

Starting a new practice - RICS compliance?

A
  1. Inform RICS by completing a Firm Details Form
  2. Appoint a Responsible Principal
  3. Register with RICS for regulation of the firm
  4. Arrange PII and send RICS details
  5. Set up a complaint log and appoint Complaints Handling Officer
  6. Ensure completion of RICS annual return at end of each year
42
Q

Starting a new practice - statutory compliance

A
  1. Disclose business name
  2. Bribery act 2010 compliance
  3. Register for Data Protection (Data protection act 2018)
  4. Inform HMRC for VAT registration (current threshold £85,000 pa)
  5. Ensure insurer compliance for employer and public liability
  6. Appoint a Money Handling Reporting Officer (Money Laundering Regulations 2017)
43
Q

Closing a practice - RICS compliance

A
  1. Inform RICS of closure
  2. Inform clients at earliest opportunity and arrange hand over to a new firm
  3. Return any money held to clients own accounts
  4. Inform insurers and obtain PII run off cover for a min of 6 years
  5. Retain a copy of client files and records for min 6 years
44
Q

What is a bribe?

A

The giving, offering, promising or receiving of an advantage such as a payment, gift or service for an action which is illegal or a breach of trust

45
Q

What are the 6 principals of a bribe?

A
  1. Proportionality
  2. Top level commitment
  3. Risk assessment
  4. Due diligence
  5. Communication
  6. Monitoring and review
46
Q

What are the 4 bribery offences?

A
  1. Bribing
  2. Receiving a bribe
  3. Bribing foreign public officials
  4. Failing to prevent a bribe
47
Q

Penalties for bribery?

A

Max penalty of 10 years imprisonment and/or unlimited fine for individuals and companies face unlimited fine

48
Q

What is money laundering?

A

Money laundering is when proceeds of criminal activities are disguised or converted and then realised as legitimate assets

49
Q

Key provisions of the Terrorist Financing and Transfer of Funds (information on the Payer) Regulations 2017 (as amended in 2022)

A
  1. To have a written money laundering and terrorist financing risk assessment
  2. Adopt appropriate internal controls
  3. Provide staff training
  4. Comply with new customer, enhanced and simplified due diligence
  5. Comply with requirements relating to politically exposed persons
  6. Ensure appropriate recording keeping policies and procedures
  7. AML checks must be completed before exchange by vendor agent to confirm identity of proposed purchaser and source of funds
50
Q

Estate Agents legal money laundering regulations

A
  1. Check these pg 33
51
Q

What are the 2 levels of due diligence?

A
  1. Customer due diligence (CDD)
  2. Enhanced due diligence (EDD)
52
Q

What is Customer Due Diligence?

A
  1. Identify and verify the identity of the client with independent source (passport/ driving licence/ electronic verification)
  2. Make reasonable endeavours to identify beneficial owners of client and those managing
  3. If a company need the name, number and address of registered office
  4. Name of directors (unless company on listed or regulated maker e.g. London stock exchange)
  5. Get information on purpose and intended nature of business relationships and proposed funding arrangements
53
Q

What is enhanced due diligence?

A
  1. Additional procedures required for any transaction or business relationship involving a person in high risk third country or a politically exposed person (PEP) or a PEP family member or business associate - they require additional evidence and monitoring
  2. PEP someone who has been intruded with public function and presents higher risk of bribery and corruption due to influence and position
54
Q

Penalties for failure to comply with AML regs

A
  1. Max 14 year sentence and/or unlimited fine for assisting with money laundering
  2. Max 5 year sentence and/or unlimited fine for tipping off someone by informing them they are under suspicion for money laundering or failing to report a suspicion
55
Q

Public limited company typical requirement checks for CDD - evidence for constitution

A

London stock exchange listing

Companies house

56
Q

Publicly accountable body typical requirement checks for CDD

A

Government ownership/control

57
Q

Private limited company typical requirement checks for CDD

A
  1. Certificate of incorporation
  2. Full name, registered number, registered office, business address
  3. Name of all directors and shareholders with 25% or more holding
  4. Identification of a higher risk client
  5. Report discrepancies to Companies House
58
Q

Private individual typical requirement checks for CDD

A
  1. Copy of valid driving licence or passport
  2. Copy of bank statement, credit card bill council tax statement or utility bill to show evidence of address within past 3 months
59
Q

Money laundering red flags

A
  1. Inability or unwillingness to provide identity docs
  2. Changes to parties involved in transactions
  3. Unusual transaction features (urgency to complete, potential loss, making, unusual values, unusual transaction for client)
  4. Payment of fees, purchase or rental monies in unusual currencies
60
Q

Proceeds of Crime Act 2002 3 main areas of offence

A
  1. concealing criminal property - disguising conveying concealing or transferring criminal property
  2. arrangements - entering into or becoming concerned in arrangements which you know or suspect facilitate the acquisition , retention, use or control of criminal property by or on behalf of another person
  3. acquisition use and possession - acquiring using or possessing criminal property
61
Q

Part one RICS Professional Statement: Countering bribery, corruption, money laundering and terrorist financing- b&c

A

Bribery and corruption
RICS regulated fines must
1. Not offer or accepting t anything that constitutes a bribe
2. Have procedures in place to comply with the law
3. Report suspicions to relevant authority
4. Act with due diligence and carry out periodic written risk assessments
5. Retain records

62
Q

Part one RICS Professional Statement: Countering bribery, corruption, money laundering and terrorist financing- ML &TF

A

Money laundering and terrorist financing
RICS regulated firms must
1. Not facilitate or be complicit in ML or TF
2. Have systems in place to comply with the law
3. Report suspicion
4. Evaluate and review risks presented
5. Only use third party reliance for checks where there is a level of credibility
6. Take measures to understand client and purpose of instruction
7. Verify the client by undertaking basic ID checks
8. Retain records

63
Q

Part two RICS Professional Statement: Countering bribery, corruption, money laundering and terrorist financing- guidance

A
  1. Have a written policy in place for the procedures for senior management to take control of
  2. Publish code of behaviour to staff and provide training
  3. Encourage transparency
  4. Set up gifts register
  5. Keep up to date with legislation
64
Q

Part three RICS Professional Statement: Countering bribery, corruption, money laundering and terrorist financing- supplementary guidance

A
  1. Consider 3 w’s - ( who you act for, what your are doing, why you are being asked to do something)
  2. Dealing with PEP
  3. The need to identify the beneficial ownership of a company
65
Q

Give an example of how you demonstrate the rules of conduct

A
  • Rule 1 - Act with honesty and integrity – Identifying actual or potential conflicts, being transparent with clients about fees and services
  • Rule 2 - Ensure necessary competence and expertise – ensuring have the necessary experience or being supervised by someone who does. CPD
  • Rule 3 - Good quality and diligent service – I ensure all my work is to a high standard and provided in a timely manner, understand clients objectives before accepting work. Keeping proper records. Encourage sustainable solutions when advising clients to deliver economic. Environmental and environmental benefits
  • Rule 4 - Respect, diversity and inclusion – not discriminating and treating everyone fairly. KF have boards in place to encourage and support diversity and I ensure I take part in company-wide surveys
  • Rule 5 - Act in public interest, prevent harm, take responsibility – reporting suspicions through proper channels. Respond to complaints properly fairly and transparently, safe person concept
66
Q

What is the structure of the RICS?

A
  • Governed under a royal charter
  • Governing council – over 20 members – provides management and strategic direction
  • Standards and Regulation Board and Management Board report to Governing Council
  • 17 Specialist Professional Groups covering property, land and construction. Each has an elected board and is responsible for outlining standards of competence and practice.
67
Q

What is the RICS moto in Latin?

A

Est Modus in Rebus - there is measurment in all things

68
Q

What procedures must firms put in place to reduce money laundering?

A
  • Have a written money laundering and terrorist financing risk assessment
  • Implement policies, systems and controls and procedures to address ML and TF risks and meet requirements under regulation
  • Adopt appropriate internal controls
  • Comply with CDD and Enhanced CDD requirements
  • Ensure appropriate record-keeping policies and procedures
  • AML checks to confirm identity and source of funds by vendor agents before contracts exchanged
  • Include additional high risk factors when assessing the need for EDD and seek additional information and monitoring in certain cases
  • Firms must be registered with HMRC if letting induvial properties for than E10,000 per month
69
Q

What is the legislation on anti-money laundering?

A
  • Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017
70
Q

What AML checks should you undertake?

A
  • CDD checks on vendors, purchasers, landlords and tenants to be undertaken on new sales and any letting or reletting
  • EDD checks to be undertaken if red flags occur (e.g. high-risk countries, non-face-to-face to face business relationships)
  • Vendor’s agent must confirm the identity of the proposed purchaser of a property and any beneficiaries. Check the purchaser’s source of funds.
71
Q

What legilstation is there for bribary?

A

Bribary Act 2010

72
Q

What is PII?

A
  • Proffesional Indemnity Insurance
  • Mandatory for surveyors working in practice
  • Protects clients, suveyors and third parties against negligence claims where there is a duty of care breached and a claim for damages arrises
73
Q

What is integrity?

A

Being honest and having strong moral principals

74
Q

What are some of the questions on the ethics decision tree?

A
  • Do you have sufficient facts?
  • Is it legal?
  • Is it in line with the Rules of Conduct?
  • Have you consulted with appropriate people to make an informed decision?
  • Do you have clear reasoning in reaching your decision?
  • Would you be happy for your actions to be made public?
75
Q

After consulting the ethics decision tree, if you are still unsure what can you do?

A

Talk to RICS Regulation Confidential Hotine which offers assitance to members with any ethical issues

76
Q

What are members proffesional obligations to RICS?

A

Appendix A Rules of Conduct
* comply with CPD requirments
* cooporate with RICS
* promty provide all info requested by either the Standards and Regualtions board of those delegated by them

77
Q

What are the proffesional obligations for firms?

A

Appendix A - Rules of Conduct
* Publish compaints handeling procedure, including ADR provider aproved by RICS and maintain complaints log
* current and previous work with apporiote PII
* if sole principal have appropriote plans if cannot undertake work
* cooporate with rics
* provide information to Standards and regualtions board or those delageted by them
* display on business literature a designation to denote regulated by RICS

Mandatory (11 decks)

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