Ethics Flashcards
What are the rules of Conduct?
- New rules effective February 2022
- Apply to both members and firms
5 Rules of Conduct
1) Act with Integrity – be honest and comply to personal and RICS obligations
2) Maintain Professional Competency – ensure individuals are competent and experienced
3) Provide good quality and diligent service
4) Treat others with respect – encourage diversity and inclusion
5) Take responsibility – be accountable for your actions and be prepared to act if necessary. Prevent harm and maintain public confidence
Where are the Mandatory Professional Obligations found
- Appendix A Rules of Conduct – sets out professional obligations
Mandatory Professional Obligations for RICS members
- Comply with CPD requirements (min. 20 hours per year, 10 hours must be formal)
- Cooperate with RICS
- Promptly provide all necessary information reasonably requested by the Standards and Regulation Board
Mandatory Professional Obligations
RICS Regulated firms must:
1) Publish complaints handling procedure, inc. alternative dispute resolution and maintain a complaints log
2) Have adequate professional indemnity insurance (PII)
3) If a sole principal, make appropriate arrangements for their professional works to continue to the event their incapacity, death or absence
4) Cooperate with RICS
5) Promptly provide all necessary information reasonably requested by the Standards and Regulation Board
6) Designation on business literature that they are RICS regulated
7) Report to RICS any matter under Rules for the Registration of Firms
Rationale for developing new Rules of Conduct
- A simpler structure – easier to understand
- Clear examples – shows real life applications
- Focuses on respect, diversity, and inclusion
- Understanding evolving technology
- Tackling global challenges – sustainability development
Ethics Decision Tree
- Provides a framework of questions which members should relate to when they are unsure if their actions are potentially unethical
- Encourages considering the legality of one’s actions and their consistency with the Rules of Conduct – have clear reasoning before making a decision
- Questions include:
- Sufficient facts?
- Legal?
- In line with RICS global professional and ethical standards?
- Clear reasoning in reaching a decision?
- Content if actions were made public?
Disciplinary Procedures
A disciplinary procedure can be triggered by someone:
o Complaining to the RICS
o An allegation by a client or third party
o Information received or established by the RICS
What are the 3 Levels of Disciplinary Action
- Action by Head of Regulation
- Regulatory Tribunal
- Appeal Panel
Disciplinary Procedures
If disciplinary action is required, one of the four actions will be considered:
1) Serve a Fixed Penalty Notice
o Procedure used for breaches of the rules relating only to the supply of information to the RICS by firms and members
2) Make a Regulatory Compliance Order
o Used for low level breaches of the Rules which could easily be corrected
o The compliance order is a written document which states terms which must be taken or desist from taking for a specified time period
3) CPD Sanctions
o Follow CPD requirements
4) Action by Regulatory Tribunal
o Used for more serious breaches of conduct
o Head of Regulation considers if the hearing is required under the discipline rules
o 50% of the panel are not RICS members
Penalties available to the Disciplinary Panel
1) Issue a Compliance Order
2) Unlimited fine per breach proportionate to the offence
3) Conditions on continued RICs registration
4) Expulsion
5) Publication of the results – RICS Modus Magazine, RICS website, local newspaper
Appeal Panel
- Considers members or firms appeal against review of decision relating to the disciplinary procedure
- Have regard to evidence previously presented and any new representations
- 50% of the panel are not RICS members
Social Media: Guidance for RICS members, 2021
The RICS is likely to investigate concerns about social media posts where they involve:
- Discrimination
- Dishonesty
- Abusive or threatening behaviour
- Bullying, harassment, or victimisation
- Ignoring previous advice or warnings about concerns
If the most may damage public confidence or trust in the profession, may take disciplinary action
Fee Negotiations
- Avoid price fixing, aggressive fee cutting or collusion
- Fees should be market based and agreed on an ad-hoc basis with clients
- Further fee negotiations can take place after submitting initial fee proposal as long as you have acted professionally
- Vary proposed level of service when renegotiating your initial fee proposal as long as you provide a high level of service
- Be transparent with your client if you are offering or receiving a referral fee
What must TOE state
- Proposed fee basis
- Payment of expenses (and how calculated)
- Firms complaints handling procedure available on request
what is the 3 step process for TOE prior to commencing instruction
3 steps to follow:
1) Check professionally competent
2) No conflicts of interest or personal interests
3) Confirm Terms of Engagement in writing prior to the commencement of works
Why would you decline an instruction?
- Not competent to do the work
- Insufficient facts on the issue
- Unsigned Terms of Engagement or uncomplete AML checks
- Conflict of interest or personal interest
- PII cap cannot be agreed
- Advice is for a friend or free of charge for a charity and PII will not cover works carried out on a personal basis
- Potential client is included in the UK Government sanctions list
- Would you be content if your actions were made public?
Use the RICS Ethics Decision Tree to consider whether to act for a client
What is conflict of interest?
Conflict of interest arises when a firm’s independence and impartiality is threated due to the existence of a conflict between two clients.
Examples include:
- Any financial interest
- A personal interest
- Commercial relationships
- Acting on both sides of a transaction
What is conflict avoidance
When you do not accept the instruction
What is conflict management?
When the instruction is accepted, and steps are agreed. Such as an information / ethical barrier.
What RICS guidance is there for conflict of interest?
RICS Global Professional Statement on Conflicts of Interest, 2017
- Mandatory statement, effective January 2018
- A member must not advice or represent a client where doing so would involve a conflict of interest or a significant risk of a conflict of interest, other than where all those who are, or may be affected have provided their informed consent
- Sets out high level principals for the appropriate identification and management of conflicts
what are the three types of COI
1) Party Conflict – relating to work on the same or related instruction for two different parties. Do not let personal interest interfere with your professional judgement.
2) Own Interest Conflict – relating to a personal interest (e.g. family member)
3) Confidential Information Conflict – relating to work between two parties that is confidential
All firms must keep a record of compliance
Can you move forward if there is a COI
Yes.
As long as Informed Consent is gotten.
This can only be given if the person explaining the position is entirely transparent about any material factors and is sure that the party affected understands what they are doing.
Surveyors should only seek informed consent if satisfied that all the relevant clients / parties will be best served by doing so.
How do you handle a COI
- Consider transparency and openness
Three Step Process:
1) Conflict Avoidance
- Consider the full facts, whether the conflict is irresolvable because your impartiality is compromised and should be avoided or whether it can be properly managed maintaining transparency and openness
2) Written Advice to Both Parties
- Assuming the instruction is accepted, set the following in writing:
Nature of the conflict and circumstances
Be very clear so parties can make their own decisions
Request written confirmation (informed consent)
3) Conflict Management
- Receive written confirmation
- Set up an information barrier in accordance with the agreed provisions
Use of Information / Ethical Barriers
If both parties agree in writing your firm can act for both parties where a conflict of interest exists, then the information barrier must be operated as follows:
- Barrier must be robust enough to ensure no information passes in between
- Take ‘reasonable steps’ to operate an effective barrier
- Surveyors acting on both sides must be physically separated, preferably different buildings, or different floors and separate support teams
- Information on the instruction must be stored securely
- Clear audit trail
Can you explain the RICS Professional Statement: Conflicts of Interest – UK Commercial Property Market Investment Agency, 2017
Professional Statement: Conflicts of Interest – UK Commercial Property Market Investment Agency, 2017
- Mandatory professional statement
- Relates only to UK commercial investment agency work where a specific risk has been identified
- Came into effect January 2018
This statement deals with the following:
1) Dual Agency
- Where an agent has a contractual agency relationship with both the seller and the buyer at the same time
- This practice must not be undertaken in any circumstances from January 2018 by any RICS member
Is duel agency allowed
Where an agent has a contractual agency relationship with both the seller and the buyer at the same time
- This practice must not be undertaken in any circumstances from January 2018 by any RICS member
Multiple Introductions?
- An agent has competing contractual relationships simultaneously with several buyers for commercial real estate investment opportunities
- When a client appoints an agent to act on their behalf in acquiring a commercial real estate investment, terms of engagement must be agreed in writing and the agent must make it clear whether they are acting on an exclusive or non-exclusive basis
- Exclusive basis – other prospective buyers with whom the agent was in contact with must be informed that the agent is no longer able to advise them
- Non-exclusive – the agent must obtain informed consent from the client(s) subject to necessary information barriers being in place
- On appointment the seller or seller’s agent must be advised accordingly