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APC 2023 > Ethics > Flashcards

Ethics Flashcards

1
Q

Who is the president of the RICS?

A

Tina Paillett

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2
Q

What is the Royal Charter?

A

Granted in 1881

The Charter requires the RICS to act in the public interest

Under the Royal Charter, the governing council is required to over the effective delivery of the RICS’ strategy and standards and regulation

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3
Q

What is the Standards and Regulation Board?

A
  • Has exclusive responsibility for the RICS’ regulatory functions

Inc:

  • strategy, governance and policy
  • public interest remit
  • regulatory operations and dispute resolution
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4
Q

What is the role of the RICS?

A

To promote and enforce the highest professional standards in the development and management of real estate

3 main roles:
- Maintain highest standards of education and training
- To protect customers through regulation of professional standards
- To be the leading source of information and advice

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5
Q

What does the RICS ‘Rules for regulation of firms’ state?

A
  • If 50% of the principals are members then it has to be regulated
  • If 25% then can be regulated
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6
Q

What are the Rules of Conduct 2021?

A

5 rules of conduct:
1. Must be honest, act with integrity and comply with obligations
2. Maintain professional competency and ensure services provided by competent individuals
3. Provide good quality and diligent service
4. Treat others with respect and encourage diversity and inclusion
5. Act in the public interest, take responsibility for actions, act to prevent harm and maintain public confidence in the profession

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7
Q

Give an example of when you have demonstrated Rule 1

A

I was offered tickets for a football match by a building surveyor, who were being considered to pick up the project management of a refurbishment project.

I declined based on the value and timing of the offer.

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8
Q

Give an example of when you have demonstrated Rule 2

A

I was asked to provide a report on indicative values for a potential PD scheme. I advised I did not have the knowledge or experience to accept this work so I referred them to a member within my team who had experience within this sector.

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9
Q

Give an example of when you have demonstrated Rule 3

A

An internal client needed a market report on a very short turn around. I stayed after hours to ensure the report was completed to a high standard and within their time limits.

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10
Q

Give an example of when you have demonstrated Rule 4

A

I was heavily involved with the Brokerage - social mobility charity helping with access into real estate / finance

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11
Q

Give an example of when you have demonstrated Rule 5

A

Responded promptly and professionally regarding a complaint about the credit controller at one of my sites - where an error had been made on our side regarding their account

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12
Q

What was the rationale for the new Rules of Conduct?

A
  • A simpler structure (easier to understand)
  • Clear examples with case studies
  • Focus on respect, diversity and inclusion
  • Understanding evolving technology
  • Tackling global challenges
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13
Q

What is the governance structure of the RICS?

A
  • Governing council has 21 members and is the RICS’ governing body
  • Regulatory board, management boards and other boards/committees report to Governing Council
  • 17 specialist groups covering property, land and construction

UK Structure:
- 4 National associations
- 10 regional boards
- Local associations

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14
Q

What was the Levitt review?

A

Independent review carried out Alison Levitt in 2021, on internal governance failures.

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15
Q

What was the Bichard review?

A

RICS commissioned Lord Bichard to undertake a further review.

The report made seven recommendations:
- Focus on public interest remit
- Maintain self regulation
- Increased focus on diversity and inclusion
- Greater support for regional boards
- Review of RICS’ effectiveness every 5 years
- A simplified governance structure
- Showing greater leadership on topical issues (ESG, climate change)

Recommended a quick and phased approach to adoption of clear responsibilities

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16
Q

What are the benefits of a firm being regulated?

A
  1. Confidence – for clients as firms are monitored by RICS
  2. Professionalism – firms have to provide clear, impartial advice
  3. Security – firms require CHP and PI
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17
Q

What is required in an RICS annual return?

A
  1. Types of business and staffing details
  2. Statutory regulated activities
  3. Nature of clients
  4. Complaints Handling Procedure
  5. PII details
  6. Confirm whether holding client’s money
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18
Q

What are the 3 levels of disciplinary action?

A
  1. Action by Head of Regulation
  2. Regulatory Tribunal
  3. Appeal panel
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19
Q

What steps can the head of regulation take?

A
  1. Serve a Fixed Penalty Notice
  2. Make a Regulatory Compliance Order
  3. CPD Sanctions
  4. Refer the matter to the Disciplinary panel
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20
Q

What actions can the regulatory tribunal take?

(CUCEP)

A
  • Procedure is used for more serious breaches
  • Panel involves non-RICS members

Penalties:

  1. Issue a compliance order
  2. Impose an unlimited but proportionate fine
  3. Impose conditions on future RICS registration
  4. Expulsion from membership
  5. Publication of the hearing
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21
Q

What is the RICS stance on social media?

A

As per guidance note ‘Use of social media, guidance for RICS members 2021’

  • Remind members of high standards of professional behaviour and relates to rules of conduct
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22
Q

What are the 3 types of conflict?

A
  1. Party conflict – relating to work on the same instruction
  2. Own Interest conflict – relating to a personal interest
  3. Confidential information conflict – relating to work between two parties that is confidential
23
Q

What RICS guidance relates to conflicts of interests?

A

RICS Global Professional Statement on Conflicts of Interest 2017
- Mandatory statement came into effect on 1st January 2018
- States: must not advise a client where a CoI is involved unless those impacted provide informed consent.

24
Q

Benefits of being an RICS member

A
  1. Status – Credentials
  2. Recognition
  3. Market advantage – Competitive advantage
  4. Knowledge – Guidance, standards and CPD
  5. Network – Access to 125,000 professionals
25
Q

Would you ever decline an instruction?

A

It may be appropriate to decline an instruction when:
- You are not competent to take on the work / outside limitations
- Do not have sufficient facts
- Proposed client will not sign ToEs / complete AML checks
- There is a conflict of interest
- PI cap cannot be agreed
- Advice is for a friend or a pro-bono basis (PI does not cover)
- Potential client is on the govt. sanctions list
- Would you want actions to be made aware to the public?

26
Q

Why do you need PI insurance?

A
  • Under the RICS mandatory requirements - RICS ‘Professional Indemnity Insurance Requirements Version 9.
  • To protect clients against negligence when there is a duty of care breached
  • All members must ensure that an appropriate level of PI insurance is in place
27
Q

What are the PI levels?

A

Turnover in previous year Minimum level required
£100,000 or less - £250,000
£100,001 to £200,000 - £500,000
£200,001 and above - £1,000,000

28
Q

What are the maximum levels of uninsured risk?

A

Up to and including £500,000 The greater of 2.5% of the sum insured, or
£10,000
Over £500,000 2.5% of the sum insured

29
Q

You’re starting a new practice, what RICS guidance do you need to comply with?

A
  • Inform RICS (Firm details form)
  • Appoint principal
  • Register with RICS for regulation
  • Arrange PI
  • Client Money Handling
  • Register for RICS Valuer Registration Scheme
  • CHP – set up complaints log and CHO
  • Use RICS logo kit
  • Plan for succession (Locum)
  • Ensured CPD logged
  • RICS annual return at YE
30
Q

You’re starting a firm, what statutory regulations do you need to comply with?

A
  • Disclose business name
  • Disability discrimination (Equality Act)
  • Financial services
  • Bribery Act compliance
  • Appoint an AML officer
  • H&S compliance
  • Asbestos register
  • Fire Safety
  • Register for Data protection
  • Estate agency compliance
  • Inform HMRC for VAT and tax registration
  • Employment law
  • Employer and public liability
31
Q

If you’re closing a practice - what actions are required?

A
  • Inform the RICS
  • Ensure clients are informed and hand over arrangements are made
  • Return any client money held to their accounts
  • Inform insurers and procure PII run-off cover for 6 years
  • Retain a copy of all files and records for at least 6 years
32
Q

Talk me through the Bribery Act 2010

A
  • Aims to reduce bribery in UK and abroad
  • A bribe can be the giving, offering, promising or receiving advantage (such as payment, a gift or a service) for an action which is illegal

Six principles: (PCRDCM)
1. Proportionality
2. Top level commitment
3. Risk assessment
4. Due diligence
5. Communication
6. Monitoring and review

Four offences: (BRBF)
1. Bribing
2. Receiving a bribe
3. Bribing a foreign public official
4. Failing to prevent a bribe

Companies are responsible for their employees acts unless they can show that they had adequate policies in place

Penalties:
- Bribery Act is policed by the Serious Fraud Office
- If breaches, maximum penalty of 10 years imprisonment or an unlimited fine

33
Q

What is the Proceeds of Crime Act 2002?

(CAUP)

A
  • Provides powers for enforcement authorities in the UK to recover criminal and civil proceedings money and assets which are deemed to be proceeds of crime
  • Also creates a set of criminal offences intended to combat money laundering

3 main areas of offence (CAUP)
1. Concealing criminal property – if someone conceals or converts criminal property
2. Arrangements – if someone enters into an arrangement which facilitates the acquisition or use of criminal property
3. Acquisition use and possession – if someone acquires, uses or has possession of a criminal property

34
Q

What must be included within Terms of Engagement?

A

Must state in writing:
- The client’s agreement to the proposed fee basis
- Payment of expenses
- A copy of the firms CHP

Follow CIT steps

35
Q

What does the RICS state with regard to confidentiality?

A
  • RICS Bye Laws state that ‘client confidentiality must be maintained for all client affairs’.
  • The client must be informed before any of their information is shared with a third party.
  • All files should be held for a minimum of 6 years before disposal and destroyed securely.
  • Any confidential material received in error should be disposed securely.
36
Q

How would you handle a conflict of interest?

A

Three step process:
1. Conflict avoidance – upon full receipt of facts, consider whether conflict is resolvable and decide whether to proceed or not
2. Written advice to both parties – set out the following to both parties:
- Disclose nature of conflict
- Be as clear as you can
- Request written confirmation of written consent
3. Conflict management – once written confirmation is received, set up information barrier or plan aligned with agreed.

37
Q

Why do you want to become a member of the RICS?

A

I want to join an organisation which sets the highest professional standards.
Become part of a worldwide network of experts
Having the professional qualifications set by the RICS demonstrates to clients and other professionals that I have the appropriate skills and experience to conduct my work

38
Q

Provide an example of when you have acted with honesty and integrity?

A

I was acting for my client in the disposal of an office building in Bracknell

39
Q

Example of respect, diversity and inclusion?

A

I was very involved within the internship programme with summer gone, which was linked to the Brokerage - a social mobility charity aiming to provide access to careers in finance, real estate etc for those in disadvantaged positions.

40
Q

What is negligence?

A

The breach of the duty of care that exists to the client which results in a loss

41
Q

What are the limitation periods for negligence?

A

Under the Limitation Act 1980:

Contract - 6 years from the date of the negligent act.
- Section 14A provides an alternative limitation period of 3 years from the date of knowledge to the 15 years long stop from the negligent act
Tort - 6 years from the date the claimant suffered the loss

42
Q

How can negligence be avoided?

A
  • Understanding client objectives with precise instructions in ToEs
  • Ensure competence
  • Undertake work in accordance with RICS guidelines
  • Make detailed notes and take photos
  • Keep up to date with market knowledge and CPD
  • Appropriate PII cap
43
Q

What is the Money Laundering, Terrorist Financing and Transfer of Funds 2017?

A
  • Statutory regulations that cover estate agency work inside and outside the UK
44
Q

What are the key provisions of the Money Laundering, Terrorist Financing and Transfer of Funds 2017?

A
  • Requirement to have a risk assessment
  • Implement systems and policies
  • Adopt appropriate internal controls
  • Provide staff training
  • Comply with DD requirements
  • Comply with requirement re PEPs
  • Ensure appropriate record keeping
  • Undertake AML checks
  • Include high risk factors
45
Q

What are estate agents obligations regarding Money Laundering, Terrorist Financing and Transfer of Funds?

A
  • Requirement for agents to register with HMRC if they let individual properties for more than $10,000/month
  • States CDD needs to be undertaken on sales/lettings
  • EDD if required (red-flags present)

States firms must have policies in place to identify and scrutinise transactions which are:
- complex
- unusually large
- unusual patterns
- without economic purpose

Firms must also have training procedures in place

46
Q

What are the levels of DD?

A
  1. Customer DD (CDD)
    - Identify client and verify ID
    - Identify beneficial owners
    - Company name, number and address of registered office
    - Names of directors
  2. Enhanced DD (EDD)
    - Additional procedures for a transaction involving a person established in a ‘high risk third country’ or a ‘PEP’ (Politically exposed person’)
47
Q

What red flags would you look for with regard to AML, terrorist financing etc?

A
  • Inability / unwillingness to present ID documents
  • Changes to parties involved in transactions
  • Unusual transaction features i.e. urgency
  • Payment of fees in unusual currencies
48
Q

What are the penalties for non compliance with AML?

A

Failure to comply with regs:
- Maximum 14 years in prison or unlimited fine for assisting with ML
- Max. 5 years prison sentence or unlimited fine for tipping off a person or failing to report AML

49
Q

What is the Proceeds of Crime Act 2002?

(CAUP)

A

Provides powers for enforcement authorities in the UK to recover money/assets which are deemed to be proceeds of crime

Three main offences:
1. **Concealing **criminal property
2. ** Arrangements ** - if someone enters into business knowing / suspicious of criminal activity
3. Acquisition - if a person acquires, uses or has possession of criminal property

50
Q

What is the RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing 2019?

A
  • Mandatory global guidance for RICS members and firms
  • Divided into 3 parts:
  1. Mandatory requirements
  2. Guidance setting out best practice
  3. Supplementary guidance on Parts 1&2
51
Q

What are the six main areas of good practice set out in the RICS Professional Statement ‘Client Money Handling, 2019?

HPR PAC

A
  1. Holding client money
  2. Providing information to clients
  3. Receipts of client money
  4. Payments from client accounts
  5. Accounting records and controls
  6. Compliance
52
Q

What is the procedure when handling client money?

A
  • Client accounts must be separate and clearly identifiable
  • word ‘client’ must be displayed
  • client must be able to use money on demand
  • payment of interest agreed with client
  • Accurate records kept and annual audit
53
Q

Talk me through Complaints handling procedures

A

Details set out in RICS Guidance Note 2016

  • A firm’s written CHP must be approved by the RICS
  • Notify PI insurers if complaint received
  • Details of CHP issued with Terms of Business
  • Complaints log must be maintained the show details, and outcome of complaints
  • Firms must include an RICS approved ADR scheme
54
Q

What are the stages of a CHP?

A

Set out within RICS Guidance Note of Complaints Handling 2016

  • CHP must be RICS approved
  • Notify PI insurers
  • Details of CHP to be issued with ToB
  • Complaints log must be maintained
  • Must have an RICS approved ADR in their CHP

Stage one: (In-house)

  • Details of CHP issued whenever firms receive a complaint
  • Procedure must be quick, clear and transparent
  • Details of CHO must be stated
  • Complaint must be made in writing
  • Timelines must be followed - acknowledged within 7 days and investigated within 28 days

Stage two: ADR
- If claimant not happy, independent redress scheme used
- Name of scheme must be provided i.e Centre of Dispute resolution (CEDR), RICS dispute resolution service

APC 2023 (23 decks)

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