Ethics Flashcards
Rule 1
Members and firms must be honest, act with integrity and comply with their
professional obligations, including obligations to RICS.
Rule 2
Members and firms must maintain their professional competence and ensure
that services are provided by competent individuals who have the necessary
expertise
Rule 3
Members and firms must provide 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 the profession
What and when did the rules of conduct change?
New rules took effect in 02nd Feb 2022.
They changed from rules which had previously been in place since 2007, they were updated to provide a single document to give greater clarity to RICS firms & members.
There is now clearer focus on example behaviours , understanding evolving technology and tackling climate change.
Professional obligations of RICS members?
1 - Members must comply with the CPD requirements set by the RICS which required 20 hours of CPD for each calendar year, 10 hours of which must be formal.
2 - Members must co-operate with RICS.
3 - Members must promptly provide all information reasonably requested by the standards and regulations board, or those exercising delegated authority on it’s behalf.
Professional obligations of RICS firms?
1 - Firms must publish a complaints handling procedure, which includes an alternative dispute resolution provider approved by RICS, and maintain a complaints log.
2 - Firms must ensure that all previous and current professional work is covered by adequate and appropriate PII that meets the standards approved by RICS.
3 - Firms with a sole principal must make an appropriate arrangements for their professional work to continue in the event of their incapacity, death, absence from inability to work.
4 - Firms must co-operate with RICS.
5 - Firms must promptly provide all information reasonably requested by the standard and regulation board, or those exercising delegated authority on it’s behalf.
6 - Firms must display on their business literature, in accordance with RICS published policy on designations, a designation to denote that they are regulated by RICS.
7 - Firms must report to RICS any matter that they are required to repot under the Rules for the registration of firms.
What are regulations?
Rules, procedured and processes for members and firms,
The regulations add further detail to the bye-laws and sets out the difference classes of membership and contains further details of when fees are payable etc.
There are 10 regulations in total.
When was RICS founded?
1868
RICS motto
‘Est Modus in Rebus’ which in Latin translates to ‘There is measure in all things’.
RICS leadership team - Governing council
Governing council is the highest governing body and sets RICS global strategy and ensured RICS fulfils its Royal Charter obligations
RICS president
Tina Paillet FRICS
RICS President elect
Justin Sullivan FRICS
RICS Chief executive
Justin Young
RICS mission statement
To qualify and equip their members to offer the highest standards of professional service.
To promote and enforce standards.
To lead solutions to the major challenges facing the built environment through the professional expertise.
How is the RICS governed
Royal charter being granted by the privy council in 1881.
The RICS is self regulated and internally monitored meaning that it is not regulated by the Government or external parties.
The Bye-Laws determining how the RICS is regulated.
The governing council manage and agree the strategy for the RICS.
The regulatory board, audit committee and management board are beneath the governing council and execute the strategy set by them.
Five principles of better regulation
Proportionality
Accountability
Consistency
Targeting
Transparency
Why have rules of conduct?
To provide a framework and set standards that we can all work to and so the client knows what they are getting.
Also a useful professional guide for individual institutions.
Senior Vice President
Nicholas Maclean FRICS
What are the RICS PII max uninsured excess requirements?
Updated and in effect from April 2022.
Introduced changes to the max uninsured excess of PII.
For companies with a turnover in excess of £10M there is no max of uninsured excess.
less than £10M the max uninsured excess is the greater of £10k or 2.5% of the insured sum.
Limitation periods for under hand and deed forms of contract.
Under hand 6 years
12 years as a deed
Minimum levels of indemnity?
Turnover £100k or less = £250k
Turnover £100-200k = £500k
Turnover £200k+ =£1M
Merrit VS BABB
2001 case highlights the importance of run off cover
A surveyor was sued for negligence by a former client.
The surveying firm was no longer in existence therefore the individual surveyor was perused for damages successfully.
Highlighted the need for run off for all previous employees.
Purpose of PII
Provide financial cover in the event a client suffers financial loss as a result of a breach of professional duty.
The professional is protected from financial losses.
The firm does not have to meet the claim out their own assets and resources.
Ensure the firms clients do not suffer financial loss.
On what basis is PII underwritten in the UK?
On a claim made basis.
The insurance policy in place at the time of the breach is discovered responsible for providing the indemnity not the insurance in place when the breach occurred.
Requirements for PII set by RICS?
Be on an ‘each and every claim Basis’
RICS sets out the min levels of indemnity
RICS sets out the max levels of uninsured excess
Runn off cover must be in place for at least 6 years
Policy wording is written on a full civil liability basis
Be fully retroactive
Must cover for past and present employees
Be underwritten by a listed insurer
Setting up a practice
Professional obligations of firms
1 - Firms must publish a CHP which includes dispute resolution provider approved by RICS and maintain a complaints log.
2 - Firms must ensure that all previous and current professional work is covered by adequate and appropriate PII that meets the standard approved by RICS.
3 - Firms with sole principal must make arrangements for their professional work to continue in the instance of their incapacity, death, inability to work.
4 - Firms must co-operate with RICS.
5 - Firms must promptly provide all information reasonably requested by the standards and regulation board or those exercising delegated authority on its behalf.
6 - Firms must display on their business literature, in accordance with RICS published policy on designations, a designation to denote that they are regulated by RICS.
7 - Firms must report to RICS any matter that they are required to repot under the Rules for the registration of firms.
Setting up a practice
complaints handling procedure
The RICS provide a model form
The process must include a redress mechanism
Details of the policy must be issued to the client with the terms of business
It must be clear quick transparent and impartial and free of charge within the first stage.
Names and contact details of the nominated investigating person must be stated
The complaint must be investigated within 28 days
All complaints their progress must be reported
We must note the need to advise PI insurers of a complaint immediately
The process must have 2 stages
Stage 1 - Needs to be consideration of the complaint by a senior member of the firm or the complaints handling officer
stage 2 - If the issue is not resolved, the complain is referred to an independent third party with the authority to award redress. The complaint may be expected to contribute to costs at this stage.
Procedures for setting up a practice
Contact the RICS for guidance and obtain a company start up pack
inform the RICs and register for regulation
Appoint a contact officer for all RICS communication
Prep a CHP
Obtain PII
Abide by the rules of conduct for firms
Use the designation regulated by RICS on all practice material
What information do registered firms need to send to RICS annually?
Annual return and carried out online, failure results in a penalty.
it includes: type of business and staffing, nature of clients, training provision, PI details, whether the firm holds client money, CHP & records
Handling client money
RICS regulated firms that operate a client account must
Set clear segregation of duties for employees
A principal oversees the client money in accounting functions
Principles cannot override controls
Competent and knowledgeable staff are to process clients money with cover provided for long term absence
Accounting systems and data must be secure
Client money must be kept septate and clearly identifiable wit the word client included in the bank account names
Client must always have access to funds
We must agree to the terms and advise the client on the bank details
The account must not be overdrawn
We must maintain client ledgers and provide a running balance
RICS organigram
Privy council, boards, professional groups
RICS documents hierarchy
Professional standards
These are the documents which set requirements for competent and ethical practice e.g. our existing professional statements and rules of conduct
Practice information
These documents provide advice or practice support to RICS members and firms eg existing guidance notes
RICS rules of conduct
RICS documents hierarchy definition
These Rules set out the standards of professional conduct
and practice expected of members and firms registered for
regulation by RICS.
International standards
RICS documents hierarchy definition
High-level standard developed in collaboration with other
relevant bodies.
RICS professional statement
RICS documents hierarchy definition
Mandatory requirements for RICS members and regulated
firms
RICs Guidance Note
RICS documents hierarchy definition
A document that provides users with recommendations or an approach for accepted good practice as followed by
competent and conscientious practitioners.
RICS code of practice
RICS documents hierarchy definition
A document developed in collaboration with other
professional bodies and stakeholders that will have the
status of a professional statement or guidance note.
RICS jurisdiction notice
RICS documents hierarchy definition
This provides relevant local market information associated with an RICS international standard or RICS professional statement.
This will include local legislation, associations and professional bodies as well as any other useful information that will help a user understand the local requirements connected with the standard or statement.
This is not guidance or best practice material, but rather information to support adoption and implementation of the standard or statement locally
Party conflict of Interest definition
a situation in which the duty of an RICS member or a regulated firm to act in the interests of a party in a professional assignment conflicts with a duty owed to another party in relation to the same or a related professional assignment
reason for avoiding conflicts of interest
The most important reason for avoiding conflicts of interest is to prevent anything getting in the way of your duty to advise and represent each client objectively and independently, without regard to the consequences to another client, any third party, or your own interests and that the clients and in turn the public can be confident you are doing so
Own Interest Conflict interest definition
a situation in which the duty of an RICS member (working independently or within a non-regulated firm or within a regulated firm) or a regulated firm to act in the interests of a client in a professional assignment conflicts with the interests of that same RICS
member/firm (or in the case of a regulated firm, the interests of any of the individuals within that regulated firm who are involved directly or indirectly in that or any related
professional assignment
Confidential Information conflict definition
a conflict between the duty of an RICS member or firm to provide material information to one client, and the duty of that RICS member or firm to another client to keep that same information confidential
Three types of conflict of interest
Party conflict
Own conflict interest
Confidential information conflict
Confidential Information definition
confidential information, whether held or disseminated electronically, verbally or in hard copy
Confidential information refers to sensitive or proprietary data that is disclosed under an agreement restricting its use and disclosure to unauthorized parties.
Information Barrier definition
the physical and/or electronic separation of individuals
(or groups of individuals) within the same firm that prevents confidential information
passing between them
‘Informed Consent definition
Consent given willingly by a party who may be affected by a Conflict of Interest, that party having demonstrated to the RICS member
– is entirely transparent about any material factors and
– is sure that the party affected understands what they are doing concerned that the party understands:
Can you tell me about the Levitt report?
’- A review commissioned by Governing Council in Jan 2021 to examine governance issues that followed an internal audit of the Institution’s treasury management function in 2018.
- Made 18 recommendations, including to carry out an independent review on RICS’ governance, purpose and strategy (Bichard Review).
Can you tell me about the Bichard review?
’- Will make firm recommendations on the purpose and governance structure of RICS
- Provide advice on values, culture and strategy for an incoming leadership team and Governing Council to take forward
How would you go about closing down a RICS firm?
’- Inform RICS, clients, employees, and insurers
- Return client’s money
- Recommend where existing clients can go to see out their business
- Retain project information for min. 6 years, or 12 years if under deed
What are the penalties that RICS can enforce?
’- Fixed penalty notice/caution
- Regulatory compliance order
- Disciplinary Panel
RICS Regulation - Sanctions Policy Guidance to RICS Disciplinary, Registration and Appeal Panel Rules 2019