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APC Commercial > Ethics > Flashcards

Ethics Flashcards

1
Q

Who is the current RICS President

A

Tina Paillet

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2
Q

What is the role of the RICS?

A

To work in the public interest to:
- advance knowledge
- uphold standards
- inspire current and future professionals

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3
Q

What is the Royal Charter and what does it mean?

A

In 1881 royal charter granted to RICS. The royal charter means to promote the usefulness of the profession in the public advantage.

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4
Q

Name the principles of better regulation

A

Proportionality
Accountability
Consistency
Targeting
Transparency

Think PACTT!

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5
Q

What is the role of the RICS Governing Council?

A

To set strategic direction and policies of the institution

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6
Q

What is the role of the RICS Regulation Board?

A

To oversee regulatory function of RICS, ensure members adhere to prof stands and ethics.

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7
Q

What date are the Rics rules of conduct effective from?

A

2nd feb 2022

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8
Q

What are the 5 rules of conduct?

A
  1. Be honest and act with integrity
  2. Maintain professional competence
  3. Provide good quality and diligent service
  4. Treat others with respect and encourage diversity and inclusion.
  5. Act in public interest and prevent harm and maintain public confidence in profession
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9
Q

What is an example of Rule 1 of the rules of conduct?

A

Identify actual or potential conflicts of interest. Only provide further advise on conflicted instruction if in line with Rics professional standard conflict of interest

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10
Q

What is an example of Rule 2 of the rules of conduct?

A

Only undertake work that you are competent to do so. Keep up to date with current regulations/stands. Do cpd etc

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11
Q

What is an example of Rule 3 of the rules of conduct?

A

Understand clients objectives before proceeding with instruction

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12
Q

What is an example of rule 4 of the rules of conduct?

A

Do not bully, victimise or harass anyone

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13
Q

What is an example of rule 5 of the rules of conduct?

A

Respond to complaints made against them promptly, openly and professionally

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14
Q

What 6 ethical principles are the rules of conduct based on?

A

Honesty, integrity, competence, service, respect and responsibility.

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15
Q

What is Bye Law 1?

A

Application and definitions. Sets out who bye laws apply to and the definitions of the document.

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16
Q

What is bye law 2?

A

Membership and registration. Includes specific classes of rics eg honorary members, fellows, professional members, etc. the eligibility of classes. The procedure to being a member. Member privalges and obligations and registration of firms.

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17
Q

What is bye law 3?

A

Designations. Info on use of MRICS, FRICS, chartered surveyor, etc.

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18
Q

What is bye law 4?

A

Contribution to funds. Includes info on failure to pay member subscription.

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19
Q

What is bye law 5?

A

Conduct. Includes the liability for both members and firms, powers of which the rics have to discipline and any appeals and reviews.

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20
Q

What is bye law 6?

A

Governing council, officers and staff. Sets out composition, duties and powers and appointment for both the governing council and officers. Also mentions appointment and duties of ceo.

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21
Q

What is bye law 7?

A

Subordinate boards, committees and groups. Sets out what boards the governing council should set out eg standards and regulation board. And the responsibilities for each board.

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22
Q

What is bye law 8?

A

Procedure for general meetings. Talks about when meetings should take place and structure of these meetings.

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23
Q

What is bye law 9?

A

Accounts and audit. Talks about publishing of annual accounts and the appointment of auditor.

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24
Q

What is bye law 10?

A

General. Includes info on trustees, property and funds of rics. Along with rics contracts and administration procedure.

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25
Q

When were the RICS bye laws updated?

A

February 2020

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26
Q

What are bye laws?

A

Rules made by the RICS to control actions of members.

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27
Q

Document relating to disciplinary panel rules?

A

RICS Regulation - RICS Disciplinary, Registration and appeal panel rules. Version 8 effective from October 2019

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28
Q

What is a Regulatory Compliance order?

A

Regulatory compliance order- agreement between rics and member that member has fallen short and they are liable for disciplinary order. Punishment usually consists of a caution, reprimand, fine of up to £2000 per breach, conditions on the rics member continuation membership or a req that member stoops certain actions within specific time.

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29
Q

What is the role a disciplinary panel?

A

To hear disciplinary cases involving regulated members, to make findings of fact in relation to allegations brought by the RICS in order to determine whether regulated member is liable to disciplinary action and if so, what sanction should be imposed.

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30
Q

What sanctions can a disciplinary panel issue?

A

Fines, cautions, conditions or an order to de-register regulated member.

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31
Q

What is the Bichard Review?

A

Commissioned by RICS Governing Council in December 2021 following Levitt Review which looked into treasury management issues at RICS during 2018/19. The Bichard report was released in June 2022.

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32
Q

Can you list some of the recommendations found within the Bichard Review?

A

36 recommendations total.

  1. Governing Council consider global strategy and delegation framework to give approp freedoms, resources and responsibilities and areas boards, whilst managing maintaining globally consistent standards.
  2. RICS Matrics should be re-invigorated to give younger members stronger voice.
  3. Diversity and Inclusion Panel should be established to provide advice to Standards and Regulation Board.
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33
Q

What are the 5 main categories of red flag indicators outlined regarding money laundering?

A
  1. The client
  2. The parties
  3. The source of funds
  4. The transaction
  5. The instructions
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34
Q

What are some red flags for money laundering?

A
  • if a client is secrative or evasive about who they are, the beneficial owner, the source of funds, the reason for the transaction or what the big picture is.
  • if the client has criminal associations.
  • If client avoids personal contact without good reason.
    -If the client is a PEP subject to sanctions.
    -If there is no obvious commercial purpose to transaction.
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35
Q

What bribery regulation are you aware of?

A

Bribery Act 2010 (effective July 2011)
RICS Professional Standard - Countering Bribery, corruption, money laundering and terrorist financing (effective September 2019)

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36
Q

What are some things listed in the RICS PS - Countering bribery, corruption, money laundering and terrorist financing?

A

for bribery and corruption:
- report any activity breaching anti-bribery and corruption laws to relevant authorities.
- declare gifts, hospitality, etc to employwer.
-Retail info detailing who firm met req of this PS.
for money laundering and terrorist financing:
-report any suspicions of money laundering or terrorist financing activities to relevant authorities.
-provide appropriate training to staff.

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37
Q

What constitutes an offence under the Bribery Act 2010?

A

Person located inn UK paying or receiving a bribe directly or indirectly.

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38
Q

How long should you keep AML records for?

A

At least 5 years.

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39
Q

What are the reasons that Firms are to have PII cover?

A
  • If Firm faces claim, its protected from financial loss that its cant meet from own resources.
  • To protect both the member and firm against consequences of liability to pay damages to 3rd parties in respect of breaches.
    -The client doesnt suffer financial loss.
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40
Q

What is the minimum level of PII indemnity for Firms?

A

Not fixed. Based on turnover for each firm.

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41
Q

What is run-off cover and how long is a member or firm required to have it for?

A

Run-off cover is a type of PII cover for businesses that have stopped trading. Required to have cover for 6 years.

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42
Q

What are some penalties of breaching the Bribery Act 2010?

A

-Individuals can face 10 years in prison
-Individuals and companies can face unlimited fines.

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43
Q

Can you tell me about the RICS requirements in relation to PI?

A

As per the Professional indemnity insurance requirements (version 9, 2022), Firms must ensure all previous and current professional work is covered by adequate and appropriate PI cover.

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44
Q

What is the minimum level of indemnity for Firm’s?

A
  • £250k for turnover of less than £100k
  • £500k for turnover between £100,001k and £200k
  • £1m for turnover above £200k
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45
Q

What is a PII aggregate clause?

A

Most PI policies include this clause and it allows number of similar claims to be treated as single claim.

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46
Q

What is the maximum level of uninsured excess for PI cover?

A

-Greater of either 2.5% of sum insured or £10k for Firms with liability up to £500k.
-2.5% of the sum insured for Firms with liability above £500k.

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47
Q

What does ‘claims made’ mean in terms of PI cover?

A

Means that policy covers claims made first against insured during period of insurance regardless of when negligent act occurred.

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48
Q

How long can a PII cliam arise after work undertaken?

A

6 years from date client suffered financial loss.

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49
Q

What is an assigned risks pool (ARP)?

A

Can be used for Firms unable to obtain PII cover. Is used by firm until they are able to obtain their own PII cover.

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50
Q

Explain your understanding of the RICS Guidance Note - Risk, Liability and Insurance (1st Edn)?

A

The guidance note helps members understand the main risks and liabilities associated with surveying. Also guides how to draft meaningful contracts with clients in order to avoid pitfalls. Also discusses liability caps and their use in profession.

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51
Q

What is a liability cap?

A

A contractural agreement with client that they can only make claim up to amount agreed.

52
Q

Explain when you might agree a liability cap?

A

RICS recommends regulated firms use liability caps where legally permissible and following good practice principles.

53
Q

What changes did the RICS recently make the the Minimum Approved PII Wording?

A

RICS Standards and regulated board approved changes from 1st July 2024. Changes relate to EWS assessments and FRAEW only apply to UK only as they are based on changes to legislation.

54
Q

Can you tell me about the CPD requirements for members?

A

Members should undertake 20 hours of CPD per year, 50% of which should be formal.

55
Q

What is CPD important?

A

Important to continually update skills and knowledge in order to remain competent.

56
Q

Tell me about your company’s complaints handling procedure?

A

-It complies with Rule 5 of the Rules of Conduct.
-Sets out details of complaints officer.
-States a response to written complaint will be acknowledged within 7 working days.
-The complaints team will engage with member that complaint is directed at and complainee will be encouraged to provide further comments.
-If after this complainee still not satisfied they should provide written confirmation and within 28 working days an internal investigation will take place by the officer and they will let you know what action has taken place.
-If complainee hasnt raised further queries after 28 days the officer will reach out to ask if complaint has been resolved, if no response after 7 days the complainee will be taken off complaint process.
-If complainee not satisfied after investigation, they can request independent review without charge from Property redress scheme, CEDR or CEDR Solve, depending on nature of service.

57
Q

What is a Phoenix Firm?

A

Firms which close in disorderly way and then rapidly re-establish themselves as new trading entity.

58
Q

When is firm eligible to register as Regulated Firm?

A

In order to register, firm must:
- Offer prof services in surveying discipline to prof, corporate or institution clients who rely on such service.
-Have at least 25% of partners who are RICS qualified.
-Agree to observe and comply with RICS Rules of Conduct for Firms.

59
Q

Who is a ‘responsible Principal’?

A

Someone who has primary responsibility of ensuring RICS professional, technical and ethical standards upheld. All Regulated Firms must appoint this person.

60
Q

What are the rules surrounding the RICS logo and the term ‘regulated by the RICS’?

A

Only to be used by Regulated Firms.

61
Q

When were the Rules for the use of the RICS logo and designation by firms last reviewed?

A

2022

62
Q

How would you set out third party reliance in Terms of Engagement?

A

State that we will not accept any third party liability for valuations and no party should rely upon valuation figure without valuers express written consent.

63
Q

When should Firms be required to register to be Regulated Firm?

A

-If Firm provides surveying services to public.
-If Firm operates in UK.
-If at least 50% of firm’s partners are members of RICS.

64
Q

Tell me about the RICS guidance relating to conflicts of interest?

A

RICS Professional Statement - Conflict of Interest (1st Edn), effective Jan 2018 sets out rules and deals with conflict avoidance and effective manegement.

65
Q

How would you close down a Regulated Firm?

A

-Agree closure date.
-Deal with outstanding client money.
-Make arrangements in terms of files and digital records. Keep these safe for as long as required.
-Inform RICS, apply to degister your firm and ensure contact details up to date.
-Nofity PI provider and arrange for run-off cover.
Look at RICS website for full closing down checklist.

66
Q

What is a ‘locum’ and when might a surveyor need one?

A

A locum is another professional who is appointed to stand in for the surveyor if they are unable to work due to accident/illness, prolonged absence or death.

67
Q

What RICS guidance relates to client money and when was this last updated?

A

RICS Professional Standard - Client Money Handling (1st Edn, Effective Jan 2020)

68
Q

What do the RICS Rules of Conduct say about client money?

A

Rule 1 states that Firms must keep clients money safe and members must not misuse clients money.

69
Q

What were the key themes of the RICS futures report?

A

Population growth, urbanisation and sustainability.

70
Q

What might client money include?

A

rent, service charge, arbitration fees, interest credited to client account, etc.

71
Q

What do if your firm is holding surplus client money?

A

-Ensure all efforts made to trace client or owners of money.
-Hold surplus money in client suspense account.
-Hold surplus money for at least 3 years.
If after 3 years you may donate to registered charity.

72
Q

What is whistleblowing?

A

Reporting any wrongdoing you see if your place of work.

73
Q

Explain your understanding of the RICS Levitt review?

A

Review that follows concerns raised regarding the treasury management audit in 2018.

74
Q

What does the case of Hart V Large relate to?

A

Relates to negligence over home buyers survey that did not identify significant damp problems what led to issues with water ingress. The High court found that the surveyor was negligent and the court of appeal supported this decision.

75
Q

What is the Ethics Decision Tree

A

Provides members with a framework of questions which the member should ask themselves when being asked to act in a potentially unethical manner.

76
Q

What are the 3 benefits of regulation for firms?

A
  1. Confidence - for clients as regulated firms monitored by the RICS.
  2. Professionalism - Firms have to provide clear, impartial and expert advice.
  3. Security - Firms to have a recognised complaints handling procedure, access to free and independent redress scheme and PII Cover.
77
Q

What is Formal CPD?

A
  • All forms of structured training that has clear learning objectives and outcomes.
78
Q

What are some examples of Formal CPD?

A

Structured online training, professional courses/seminars and self-managed learning that can be assessed by an expert third party.

79
Q

When starting a new Firm, what are some RICS Requirements?

A

-Inform RICS of new practice and complete Firm Details Form

-Appoint Responsible Principal for all RICS communication.

-Register with RICS for regulation of firm by Regulation Board.

-Arrange PII cover and send details to RICS.

-Set up client money handling procedures, including protection scheme.

  • Register for RICS VRS if undertaking RB GS Vals.

-Obtain RICS approval for CHP.

-Set up complaints log.

-Appoint complaints handling officer.

-Use logo kit from the RICS for all practice material to comply with the designation ‘Regulated by the RICS’.

-Ensure CPD logged on CPD management system.

-Ensure completion of online RICS Annual Return at end of each year.

80
Q

When setting up new firm what statutory compliance must be undertaken?

A

-Requirement to disclose business name
-Equality act 2010 compliance
-Bribery act 2010 compliance
-Appoint AML officer as per regulations.
-Financial Services Act 2012/Financial Services and Markets Act 2000 compliance
-HS 1974 compliance
-Asbestos register
-Register for data protection (as per DPA 2018)
-Inform HMRC for VAT and Tax registration.
-Ensure compliance with current employment law.
-Ensure insurance compliance for employer and public liability.
-Fire safety compliance
-Estate agency compliance

81
Q

What does the Proceeds of Crime Act 2002 do?

A

Provides power to enforcement agencies to recover money in civil and criminal proceedings which are deemed a proceed of crime in UK.

82
Q

What are the 4 offences listed in the Bribery Act 2010?

A
  1. Bribing
  2. Receiving a bribe
  3. Bribing a foreign public official
  4. Failing to prevent a bribe
83
Q

What are the penalties for breaching the Bribery Act 2010?

A

Policed by Serious Fraud Office. Penalties include maximum 10 year imprisonment and/or unlimited fine for individuals/companies.

84
Q

What are the 6 main areas of good practice set out in RICS Professional Statement - Client Money Handling, 1st Edn, Effective Jan 2020?

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
85
Q

What are some things Firms should do in relation to Bribery and Corruption?

A

-Prepare written policy covering anti-bribery and corruption and review periodically.
-Encourage transparency by implementing register for gifts, hospitality, etc.
-Provide clear guidance to staff.

86
Q

When can you accept a gift?

A

Only accept gifts or hospitablity that are customary, proportionate and reasonable in terms of value and frequency.

87
Q

What is the hierarchy for RICS Publications?

A
  1. Rules of Conduct (for Firms and Members)
  2. International Standards (Mandatory)
  3. Professional Standards (Mandatory)
  4. Practice Statement (Mandatory)
  5. Guidance Notes (Voluntary)
  6. Codes of Practice (Mandatory or Recommended Good Practice)
88
Q

How must you negotiate fees?

A

Avoid price fixing, aggressive fee cutting and collusion with competitors. Fees must be market price, agreed on ad-hoc basis with client, must make client aware if receiving referral fees and state in TOFE.

89
Q

How long must old files be held for?

A

At least 6 years

90
Q

What is the case of Burgess V Lejonvarn (2020)?

A

Relates to negligence. Where professionals providing services on pro bono basis without contract, they still owe duty of care in tort to act with reasonable skill and are.

91
Q

What does the Limitation Act 1980 relate to?

A

Limitation period for negligence cases.

For contract - 6 years from date of negligent act, contract or omission. 3 years from date of knowledge of damage, subject to 15 years long stop from negligent act or omission.

For tort - 6 years from date claimant suffered loss.

92
Q

What is the gifts and hospitality policy at your firm?

A

Generally, receiving gifts is not appropriate. Expectations are for low value gifts.

Department head should be notified. A gift register is maintained at all offices and if the value of the gift is £50 or above per person it should be registered and reviewed by the department head.

All gifts registered will also be reviewed by Financial Partner on annual basis.

93
Q

In line with your company’s anti-bribery programme, state how you would test if a gift is acceptable?

A

-Has it been provided for the right purpose bona fide business purposes?
-No obligation placed on recipient.
-Any intention to influence decision making?
-Nature of gift is appropriate to relationship.
-Size of gift or value of hospitality is small in accords with general business practice.
-Fully compliant with local laws.
-Provision of gift/hospitality made openly.
-It is infrequent.
-Fully documented, demonstrating any approvals required.

94
Q

What is your company’s PII cover?

A

£10,000,000 limit of PI cover. Any CV above this must be countersigned by Head of Val. Wherever possible the PI cover should be limited to 75% of the Market Value. For valuations above £5m must be signed by partner of another office/region.

95
Q

What is your company’s total liability in contract and tort (including negligence), breach of statutory duty, misrepresentation and restitution?

A

£1,000,000

96
Q

What are the level of due diligence checks for AML?

A

Customer Due Diligence - Identify and verify identity of client using documents e.g passport and find beneficial owner.
For companies get details of their details from companies house.
Obtain info on intended nature of business relationship.

Enhanced Due Diligence - Additional procedures for high risk persons e.g. PEPs. More details examination of the PEPs background and purpose of transaction.

97
Q

What are some penalties of not complying with AML legislation?

A
  • Max 14 year sentence and/or unlimited fine for assisting with money laundering.
  • Max 5 years prison centre and/or unlimited fine for tipping off person and ML suspicion.
98
Q

What RICS regulation relates to social media?

A

RICS Regulation Use of Social Media for RICS Members (Version 1, effective June 2021)

99
Q

What does the RICS Regulation of the Use of Social Media state?

A

Provides guidance on the use of social media. Members to act professionally.

RICS may take action if find post to bring profession as whole into disrepute.

-RICS can start investigations if social media posts are discriminatory, dishonest, abusive, etc.

100
Q

What is a SAR in terms of AML?

A

Suspicious Activity Report. A report made when you suspect ML, should be made to your AML Officer or NCO

101
Q

What is the Ethics Decision Tree

A

A decision tree on the RICS Rules of Conduct home page. Designed to help members confirm if they are acting ethically before agreeing instructions.

Effectively, would you be happy if your actions would be made public, if not then deny instruction.

102
Q

What are the key provisions of the ML and Terrorist Financing and Transfer of Funds Regulations 2017?

A

-Requirement for written ML and TF risk assessment.
-Implement systems, policies and controls to prevent and meet requirements under regulations.
-Adopt appropriate internal controls.
-Provide staff training.
-Comply with new customer, enhanced and simplified due diligence requirements.
-Comply with requirements relating to PEPs.
-Ensure appropriate record keeping, policies and procedures.
-AML checks must be undertaken to confirm identity of proposed purchaser and check source of funds before contracts exchanged.
-Include additional high-risk factors when assessing need for enhanced due diligence and seek additional info.

103
Q

What is Tort?

A

A civil wrong. Duty of Tort entitles person to receover damages for loss or injury which has been caused by actions relating to a breach imposed at law.

104
Q

For Money Laundering, when should AML checks be done for transactions?

A

If rent is £8,500 pcm or £100,000 pa

105
Q

When should AML checks be reviewed for clients?

A

2 years as per company’s AML procedure

106
Q

What are the 3 obligations for RICS members?

A

Comply with CPD requirements.
Cooperate with RICS
Provide all info reasonably requested by Standards and Regulation Board promptly

107
Q

What are the 7 obligations for RICS Firms?

A

CHP
PII
Sole Principal owners must make arrangement if unable to work
Cooperate with RICS
Provide all info reasonably requested by Standards and Regulation Board promptly
Display RICS logo
Report to RICS any matters required to report

108
Q

What happens if you don’t complete allocated CPD hours?

A

Issued with potential caution or suspension.

109
Q

What are the 6 principles mentioned within the Bribery Act 2010?

A
  1. Proportionality
  2. Top level commitment
  3. Risk assessment
  4. Due diligence
  5. Communication
  6. Monitoring and review
110
Q

What is the Clients money protection scheme?

A

Scheme set up by the RICS to provide clients with claims for money where regulated firm is unable to pay

111
Q

What details does the Firm Details Form include?

A

Firms registered name
Trading name
VAT reg no
Firm status e.g. ltd, plc, etc
Postcode
Telephone
Details for partners, employees, etc

112
Q

What are the 9 key provisions of the ML, TF and Transfer of Funds Regulations 2017?

A
  1. Required to have written ML/TF policy
  2. Implement systems to address ML/TF.
  3. Approp internal controls
  4. Staff training
  5. Do Customer, enhanced and simplified DD.
  6. Comply with req for PEPs
  7. Approp record keeping
  8. AML checks undertaken before exchange contracts on purchaser.
  9. Add high risk factors when assessing need for enhanced DD and seek add info and monitoring in certain cases.
113
Q

What types of documents are required for CDD of PLC?

A

Listing of company on London Stock Exchange.

114
Q

What types of documents are required for a CDD of a LTD?

A

Certification of incorportation
Full Name
Reg number
Registered office address
names of all directors and shareholders with more than 25% shares.

115
Q

What types of documents are required for a CDD of a private individual?

A

Valid passport with photo
Bank statement, utility bill, etc within last 3 months.

116
Q

Who polices the Bribery Act?

A

The Serious Fraud Office

117
Q

What are the three key terms that should be considered from a risk perspective in the context of every instruction you undertake?

A

Scope of work
Basis of fee calculated
Liability cap

118
Q

What 7 things are required in an annual return?

A

Type of business/staff details
Name of responsible principle
Statutory reg activities
Nature of clients
CHP details and records
PII details
Whether firm holds client money

119
Q

Is a PII excess usually paid for per claim?

A

Uninsured excess must be provided on each and every claim basis other than in respect of financial service claims which are provided on an each and every claimant basis.

120
Q

What RICS document relates to client money protection?

A

RICS Regulation - Client Money Protection (Version 1, effective April 2019)

121
Q

What is the purpose of the client money protection scheme?

A

Allows Members and Firms to offer client money protection scheme in accordance with ROC.
-Compensate clients of Firms for losses resulting from Firms failing to account for client money.

122
Q

What are the types of client money protection schemes?

A
  1. Scheme for Surveying Services
  2. Scheme for Property Agents
123
Q

What are the requirements for the client money protection scheme?

A

All Reg Firms but be members of scheme until they either cease to trade or don’t pay invoice.

124
Q

What are some policies of the client money protection scheme?

A

Scheme Member must:
1. Comply with written procedures
2. Publish procedures on website
3. Provide copy of procedures free of charge to anyone who asks.
4. Keep records and accounts
5. Repay client money without delay when requested or required.
6. Hold and maintain relevant PI cover.

125
Q

A client wants to pay in cash for the invoice, do you accept?

A

I reject as my company do not accept cash payments due to the anonymity with cash.

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