Ethics

Question 1

What is the RICS’ motto?

Answer 1

“Est Modus in Rebus” – Latin for “There is measure in all things”

Question 2

What is the RICS’ mission statement?

Answer 2

• 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 professional expertise.

Question 3

When was the RICS founded?

Answer 3

1868.

Question 4

Who is the President of RICS?

Answer 4

Tina Paillet (Pa-yey).

Question 5

Who is the President Elect of RICS?

Answer 5

Justin Sullivan.

Question 6

Who is the RICS CEO?

Answer 6

Justin Young.

Question 7

How is the RICS structured?

Answer 7

• The RICS was founded in 1868 with the Royal Charter being granted by the Privy Council in1881.
• The RICS is self-regulated and internally monitored meaning that it is not regulated by the Government or external parties.
• The Bye-Laws determine how the RICS is regulated.
• The Governing council manage and agree the strategy for the RICS.
• The new governance structure is under review following the Bichard Review.

Question 8

What is the structure of RICS as of October 2023?

Answer 8

Governing Council (GC)

• The governing body of RICS under the Royal Charter. The role of GC is to set the strategy and vision of RICS. Underneath GC are the RICS Board and the Standards & Regulation Board.

RICS Board

• Delivers the RICS business plan and oversees operations, excluding standards and regulation.
• The Board is supported by the Membership Services Committee, Knowledge & Practice Committee, Audit, Risk Assurance & Finance Committee and Nominations & Remuneration Committee.
• The Membership Services Committee sits over the World Regional Boards (WRBs). These are responsible for the strategy and business plan for the five world regions: Americas, Middle East & Africa, Asia Pacific, Europe and UK & Ireland.

The Standards & Regulation Board

• Exercises the regulatory function of RICS, including strategy, governance, structure, policy and operational oversight in the public interest. It is accountable to GC, but not specifically directed by them.
• The Board also oversees RICS professional standards, entry and admission to the profession, education and qualification standards, regulatory operations, regulatory schemes (such as the Firm Registration, Valuer Registration, Designated Professional Body Scheme and Client Money Protection Schemes), dispute resolution services and Regulatory Tribunal (plus their associated rules). It is independently led and comprises both non-members and Members of RICS.

Question 9

What is the Royal Charter and what is its purpose?

Answer 9

• A document granted by the Monarchy and advised by the Privy Council, which defines an organisation’s objective, constitution and grants it power to govern its own affairs.
• The Royal Charter requires the RICS to promote the usefulness of the profession for the public advantage in the UK and in other parts of the world.

Question 10

What are bye-laws?

Answer 10

• Set out in the Royal Charter and determine how the RICS is regulated.
• 10 Bye-Laws in total.
• The Bye-Laws include disciplinary information.

Question 11

What are the RICS’ 5 principles of better regulation?

Answer 11

PACTT

• Proportionality
• Accountability
• Consistency
• Targeting
• Transparency

Question 12

What is the difference between RICS ethics and rules?

Answer 12

• Ethics are a set of moral values.
• Rules of Conduct are a framework that we work to.

Question 13

When and why did the Rules of Conduct change?

Answer 13

• Effective from 2nd February 2022.
• Previous RoC had been in place since 2007.
• After consultation with members, firms and the public, it was voted that the rules would be updated and merged into one new document.
• Intention to provide a greater clarity through one document, encompassing RoC for firms, RoC for members, example behaviours.

Question 14

What are the changes to the new Rules of Conduct?

Answer 14

• They replace the previous RoC for members, RoC for firms and the Global Professional and Ethical Standards.
• Appendix A contains professional obligations for firms (7) and members (3).
• Example behaviours are provided.
• More focus on evolving technologies, global challenges and diversity and inclusion.

Question 15

What are the new Rules of Conduct?

Answer 15

• 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.

Question 16

Explain your understanding of Rule 1?

Answer 16

• RICS Members and firms should not allow themselves to be influenced improperly through the acceptance of work referrals, gifts or hospitality.
• Members and Firms must also be sure to identify conflicts of interest and not provide services or advice where these conflicts of interest occur.
• This could be a scenario where you have reduced impartiality due to an existing relationship, for example being friends with a Main Contractor who has subsequently been selected to submit a tender would form a conflict of interest.

Question 17

Explain your understanding of Rule 2?

Answer 17

• To ensure compliance with Rule 2, Members and firms must only act for clients where they have the necessary knowledge, skills and resources to carry out the work competently.
• Firms must supervise any employees or subcontractors undertaking work on their behalf, for example requesting that a Junior Surveyor undertakes a complex valuation due to resourcing issues would create problems in achieving compliance with this Rule. Instead, an experienced and suitably qualified surveyor should be asked to undertake the valuation.

Question 18

Explain your understanding of Rule 3?

Answer 18

As an RICS member or regulated Firm we must also be sure to understand a clients’ project specific requirements before acting on their behalf. The clients’ scope of services should be agreed along with any exclusions and timescales for achieving each of the deliverables before signing up to formal terms of engagement.

Question 19

Explain your understanding of Rule 4?

Answer 19

• The RICS also expects its members to respect the rights of others and treat others with courtesy.
• We need to ensure that everyone is treated fairly and look to eliminate any instances of discrimination on the basis of age, disability, gender, pregnancy, race, religion or sexual orientation.
• RICS members and firms also need to adopt a no tolerance policy of bullying or harassment.

Question 20

Explain your understanding of Rule 5?

Answer 20

• Members and firms are required to question practices and decisions that they suspect are not right and raise concerns with colleagues, senior management, clients or the RICS.
• When making public statements we need to ensure these do not undermine public confidence in the profession.
• When receiving and processing complaints, we need to ensure these are dealt with promptly, openly and professionally.
• In complying with Rule 5, a useful sense check to ensure compliance is to ask ourselves if we would be comfortable in standing behind our actions if these were brought into the media or a public forum.

Question 21

What are the professional obligations of members?

Answer 21

• 1 - Members must comply with the CPD requirements set by the RICS which requires 20 hours of CPD for each calendar year, 10 hours of which must be formal CPD.
• 2 - Members must cooperate with RICS.
• 3 - Members must promptly provide all information reasonably requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf.

Question 22

What are the professional obligations of firms?

Answer 22

• 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 professional indemnity cover that meets the standards approved by RICS.
• 3 - Firms with a sole principal must make appropriate arrangements for their professional work to continue in the event of their incapacity, death, absence from or inability to work.
• 4 - Firms must cooperate 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 report under the Rules for the Registration of Firms.

Question 23

Why do the RICS have Rules of Conduct?

Answer 23

• To provide a framework that we can all work to and so the client knows they are getting a set level of service.
• As well as being an important tool for the Institution, the Rules of Conduct are also a useful professional guide for individual institution members.

Question 24

Can you provide an example of when you have complied with Rule 1 of the RoC?

Answer 24

When receiving an enquiry for a terminal schedule of dilapidations, I identified a conflict of interest (party conflict) due to the fact that we had previously acted on behalf of the tenant. The prospective client was the landlord of the property, who was informed of the conflict and decided against using our services.

Question 25

If the prospective client did want to instruct yourselves to undertake the terminal schedule of dilapidations, despite the conflict of interest, how might you go about managing this?

Answer 25

• Obtain prior written informed consent from both the landlord and tenant, ensuring that all parties are fully aware of the implications of the conflict are consenting willingly.
• Maintain records of steps taken regarding managing the conflict.
• Set up information barriers (have a surveyor from another office carry out the instruction).
• If it were not possible to set up an effective information barrier it may be more ethical to decline the instruction.

Question 26

Can you provide an example of when you have complied with Rule 2 of the RoC?

Answer 26

• I ensure that I do not undertake any work in which I am not competent to do.
• I carry out regular CPD in line with the RICS CPD policy.

Question 27

Can you provide an example of when you have complied with Rule 3 of the RoC?

Answer 27

• I ensure that any work I undertake is done so to a high standard, following relevant guidance set out by RICS.
• A clear client brief is established and terms of service are set out within fee proposals, including the services to be provided, fees, timescales and any exclusions and assumptions.

Question 28

Can you provide an example of when you have complied with Rule 4 of the RoC?

Answer 28

• I always treat others with courtesy and respect no matter who I am dealing with.
• I am encouraging of diversity within the workplace and always work collaboratively with colleagues regardless of their age, sex, ethnicity, religious beliefs etc.

Question 29

Can you provide an example of when you have complied with Rule 5 of the RoC?

Answer 29

When using social media I ensure that I use it responsibly and do not make any statements that may undermine the reputation of the profession or RICS.

Question 30

What are the RICS’ CPD requirements?

Answer 30

• All RICS members (AssocRICS, MRICS and FRICS) must undertake at least 20 hours of CPD each year. This must be completed by 31st December and recorded online (or using the RICS mobile app) by 31st January. At least ten hours must be formal (structured) CPD
• Every three years, CPD relating to ethics must be undertaken.

Question 31

Can you please explain the RICS Ethics Decision Tree?

Answer 31

Provided step by step guidance and considerations on how to deal with ethical decisions.

Steps:

• Do you have sufficient facts on the issue?
• Is it legal?
• Is it in line with RICS Rules of Conduct?
• Have you consulted with appropriate people to make an informed decision?
• Do you have clear reasoning in reaching your decision?

Question 32

What information do regulated firms need to provide to RICS annually?

Answer 32

• It is called annual return and carried out on-line.
• Failure to do so leads to a fixed penalty.
• It includes:-

o Type of business and staffing.
o Nature of clients.
o Training provision.
o Complaints handling procedures details and records.
o PI insurance details.
o Whether the firm holds clients’ money

Question 33

What is a bribe?

Answer 33

An exchange of something of value in return to the person receiving it promising to do something improper in their line of business.

Question 34

Is there any RICS guidance you are aware of surrounding bribery?

Answer 34

Countering bribery, corruption, money laundering and terrorist financing, 1st edition, February 2019 – Professional Standard

Question 35

What is the primary UK legislation surrounding bribery?

Answer 35

The Bribery Act 2010.

Question 36

What are the offences under the Bribery Act 2010?

Answer 36

• To offer, promise or give a bribe (Section 1)
• To ask for, agree to or receive a bribe (Section 2)
• To bribe a foreign public official – including facilitation payments (Section 6)
• Failure of a corporate organisation to prevent a bribe on its behalf (Section 7)

Question 37

Under what circumstances are facilitation payments ok?

Answer 37

• When under duress, for example when there is a risk of life, limb or liberty.
• You should put safety first, make the payment and report the matter immediately or as soon as is practicable to your manager or your ethics compliance contact.

Question 38

What are the 6 principles of prevention under the Bribery Act 2010?

Answer 38

• Proportionate procedures
• Top-level commitment
• Risk Assessment
• Due diligence
• Communication (including training)
• Monitoring and review

Question 39

What are the penalties under the Bribery Act 2010?

Answer 39

Up to 10 years’ imprisonment and/or an unlimited fine.

Question 40

Under what circumstances would you be comfortable accepting an offer of a gift or hospitality from a client or contractor?

Answer 40

• If it is genuinely and proportionately for business purposes.
• If it would be rude to decline for cultural reasons and the value was reasonable.

Question 41

What might you consider before accepting a gift or hospitality?

Answer 41

• Is the value of the offer proportionate to the work undertaken?
• Who is the intended recipient; is it an individual or a range of people, such as a project team?
• Is the offer reasonable and proportionate?
• Is the offer for genuine business purposes?
• When was the offer made? Was it near a critical business decision or contract award, or at a regular business marketing event?
• How easy is it to politely decline the offer?
• What are my company policies on gifts and hospitality?

Question 42

What would you do after accepting an offer of a gift or hospitality?

Answer 42

• Inform my manager or senior management of receiving a gift / hospitality.
• Include details of the gift on the gifts and hospitality register.
• Follow the company’s procedures / policy.

Question 43

Please tell me what you understand about conflicts of interest?

Answer 43

• A conflict of interest is where someone in a position of trust has competing personal or professional interests making it difficult for them to fulfil their duties impartially.
• An existing relationship will result in reduced impartiality and Chartered Surveyors have an obligation to make clients aware of this and if necessary, decline work opportunities where a conflict of interest occurs.

Question 44

Are you aware of any RICS guidance around conflicts of interest?

Answer 44

RICS Professional Standard - Conflicts of Interest, 1st edition, March 2017.

Question 45

What are the different types of conflict of interest?

Answer 45

• Party Conflict – where the duty to act in the interest of a client or other party in a professional assignment conflict with a duty owed to another client or party in relation to the same or related professional assignment.
• Own Interest Conflict – Where the duty to act in the interest of a client in a professional assignment conflict with the interests of the member or firm.
• Confidential Information Conflict – Where the duty to provide material information to one client conflicts with the duty owed to another client to keep that same information confidential.

Question 46

What would you need to have in place before proceeding with an instruction where there is a conflict of interest?

Answer 46

Prior written informed consent.

Question 47

When may obtaining informed consent not be enough?

Answer 47

• If the instruction is illegal.
• If the instruction is contentious.
• If two instructions conflict with each other.
• If the firm / member are unable to act impartially.
• Dual agency (acting for a buyer and seller – to never be done).

Question 48

What are the disciplinary processes adopted by the RICS?

Answer 48

• Fixed Penalty Notices.
• Regulatory Compliance Orders (as of 1st October 2019)
• Consent Orders (before 1st October 2019)
• Regulatory Tribunal

Question 49

What is a Fixed Penalty Notice?

Answer 49

An administrative fine and/or caution when RICS members breach the Rules:

• Rule 2 of Rules of Conduct in regards to Continuing Professional Development (CPD).
• Professional Obligations under Rules of Conduct in regards to providing information to RICS.
• Rules 13 of the Rules for the Registration of Firms in regards to payment of Fees.
• First breach will attract a caution. Second breach within 10 years of a caution will result in a caution and a fine.

Question 50

What is a Regulatory Compliance Order?

Answer 50

A Regulatory Compliance Order is an agreement between RICS and a Regulated Member (either an RICS professional or a RICS-regulated firm) that they are liable for disciplinary action. In agreement the regulated member:

• accepts that they have fallen short of the standards expected; and
• accepts the proposed sanction; and, in some cases,
• accepts to take steps to meet the standards expected and/or to prevent it happening again.

Question 51

What is a Consent Order?

Answer 51

RICS may only enter into a Consent Order in relation to any concerns or information received prior to 1 October 2019, when the Regulatory Compliance Order were introduced.

A Regulated Member agrees to accept a Consent Order with the Head of Regulation which can contains the following terms:

• To take a certain action within a specified period of time
• To desist from taking a certain action within a specified period of time
• Pay a fine (up to £2,000 per breach or equivalent currency value)
• Pay RICS’ costs

Question 52

What is the Bichard Review?

Answer 52

• The Birchard Review was an independent review commissioned by the RICS Governing Board in December 2021 into the purpose, governance and strategy of the RICS.
• This was commissioned following the Levitt Review and aimed to create a new sense of purpose and direction of the RICS.

The review advised on 36 recommendations that are currently being implemented which include:

• Commercial Activity will now be separated from other activities within the RICS and led by a suitable qualified executive with strong commercial experience who reports to the Commercial Committee.
• RICS Matrics should give younger members a stronger voice through an improved governance structure with an appropriately selected representative from the community of younger members to sit on the Governing Council.
• A Diversity and Inclusion Panel will be setup to provide advice to the RICS Board and Standards and Regulation Board.
• Improvement of Technology within the RICS.
• A Public Interest Panel will be setup to advise the Governing Council.

The Governance Structure will be updated to include a Public Interest Panel, Sustainability Panel, Commercial Committee and Audit, Risk, Finance & Assurance Committee.

Question 53

What were some of the recommendations of the Bichard Review?

Answer 53

Lord Bichard makes 36 recommendations and suggests a phased timetable for implementation.

The report’s recommendations include:

• A renewed and increased focus on the public interest remit of RICS, including amending the Royal Charter and creating a public interest panel to advise Governing Council
• Maintaining self-regulation, through greater independence for regulatory functions
• Increased focus on Diversity and Inclusion across the profession and within RICS governance
• Empowering and enabling members through greater support for regional boards, alongside increased member engagement, with renewed focus on younger members
• Undertaking an independent review of RICS’ governance and effectiveness at delivering against its Charter for the public advantage once every five years
• A new simplified, clear, accountable governance structure
• Showing greater leadership on the issues that matter most to society, such as sustainability and climate change

Question 54

What do you understand about the Levitt Review?

Answer 54

• The Levitt Report was commissioned by the RICS following a Treasury management audit in 2018.
• Prior to the Audit the RICS had to extend its overdraft facility by circa £3m due to inaccurate cashflow forecasting.
• The treasury management audit offered a ‘no assurance verdict’ on RICS internal financial control procedures and following this the Levitt report was commissioned as an independent review.
• The conclusion of the Levitt report illuded to an internal power struggle due to its two board structure made up of a Management Board and Executive Board.

Question 55

Why do you want to become a member of RICS?

Answer 55

• MRICS status provides clients with confidence that members are competent and work to the highest professional standards.
• Achieving MRICS status will enhance my career progression and opportunities.

Question 56

What are the requirements when setting up an RICS regulated firm?

Answer 56

• At least 25% of the regulated firm’s principals must be RICS members.
• The firm must offer professional services in surveying disciplines to professional, corporate, institutional and other clients who rely on such services.
• The firm must agree to observe and comply with RICS Rules of Conduct for Firms, including working to RICS standards.
• RICS regulated firms must designate a responsible principal.
• Registration for regulation is mandatory form firms who: provide surveying services to the public, operated within Regulated Area A and at least 50% of principals are RICS members.

Question 57

What should you do when closing down and RICS regulated firm?

Answer 57

• Agree the closure date.
• Seek advice if the firm is insolvent.
• Inform staff and deal with any redundancies, ensuring you direct them to Government support if necessary.
• Inform clients and let them know if another firm could take over ongoing work (at the discretion of the client).
• Deal with any outstanding money in client accounts (in line with the RICS Professional Statement Client Money Handling).
• Notify your professional indemnity insurer to arrange run-off cover (on a claims made basis, for a minimum of 6 years).
• Make arrangements relating to hard copy and electronic files and keep them for as long as necessary (up to 15 years under the Limitation Act 1980). Any documents not required should be destroyed confidentially.
• Notify former clients to return any leases or other original documents being held for them.
• Inform RICS and fill in the firm deregistration form.
• Set up a system whereby anyone trying to contact you after closing is notified that the firm is closed, e.g., notice of closure on any physical offices, voicemail, closure notice on the firm’s website.
• Amended notepaper to confirm the firm is not practising, emergency contact number and a mail redirection to a home address.
• Contact any other parties who need to be told about the firm closure, e.g., other insurance provider, accountant, solicitor, HMRC, bank and Information Commissioner (for data protection purposes).

Question 58

How do you close down a firm?

Answer 58

• Inform RICS;
• Inform clients at the earliest opportunity and, if required, confirming hand-over arrangements to a new firm;
• Return clients’ monies;
• Inform the firm’s PII insurer and arranging run-off cover;
• Retain records for at least six years.

Question 59

What is client money?

Answer 59

• Any cash, cheque, draft or electronic transfer which an ‘RICS Regulated Firm holds for or receives on behalf of another person, including money held by a Regulated Firm as stakeholder and is not immediately due and payable on demand to the RICS Regulated Firm for its own account’. Examples include rent, service charge or interest credited to a client account.

Also includes:

• ‘fees paid in advance for professional work agreed to be performed, and identifiable as such, unless the fees are for work undertaken as a property agent as defined by the Rules of the RICS Client Money Protection Scheme for Property Agents’.

Question 60

What is the Client Money Protection Scheme?

Answer 60

• Provides free recourse (within 12 months of discovering the loss) for clients when a Regulated Firm is unable to repay a client’s money, subject to specific limits (i.e., £50,000 per claim) and exceptions. The Scheme is one of last resort, i.e., it will reimburse the client for a direct loss of funds where the firm cannot make good the loss.
• Claims may be made in circumstances such as a firm’s insolvency, the death of a sole practitioner, misappropriation of client monies or transfer of client monies to another organisation.

The Scheme is split into two categories:

• Client Money Protection for Surveying Services;
• Residential agency under the Client Money Protection Schemes for Property Agents (Approval and Designation of Schemes) Regulations 2018 (Client Money Protection for Residential Agents).

Question 61

What if mixed funds are provided by a client?

Answer 61

If mixed funds are received, they must be paid into the client account, and office money must be transferred out promptly.

Question 62

What are the RICS’ requirements for firms handling client money?

Answer 62

• Not holding office money in a client money account;
• Ensuring that the word ‘client’ is in the client account name;
• Holding all funds in a client money account over which the firm has exclusive control;
• Ensuring that client money is immediately available;
• Confirming the bank operating conditions in writing;
• Keeping comprehensive and accurate accounting records, systems and procedures. This includes regular reconciliations by a senior staff member or Principal, having disaster recovery plans in place, ensuring electronic data is held securely and avoiding overdrawn balances.

Question 63

What happens if you have surplus money in a client account and you are unable to trace the client?

Answer 63

If your firm has any surplus client money in a client account, best practice is to:

• Ensure that all efforts are made to trace the clients or owners of the money.
• Hold the surplus money in a client suspense account.
• Hold surplus money for at least three years.
• If, after three years, the client or owner of the money has not been found and no true claimants to the money have come forward, it must be donated to a registered charity. A receipt must be obtained for this transaction so should a true claimant come forward to collect the money it can be made available to them. The receiving charity should offer the donating firm an indemnity to enable the firm to recover a donation in the event of a claim.

Question 64

What is the purpose of professional indemnity insurance?

Answer 64

• To provide financial cover in the event a client suffers financial loss as a result of a breach of professional duty e.g. neglect, errors or omissions.
• PII ensures clients are able to recover any financial loss suffered.
• PII protects surveyors from financial losses.
• PII protects firms from having to meet the cost of claims from their own assets.

Question 65

What are the minimum amounts of Professional Indemnity Insurance for RICS regulated firms?

Answer 65

As of 2023, the RICS specifies minimum limits of indemnity, based on the last year’s turnover (or estimated turnover for new firms):

• £100,000 or less (last year’s turnover) = £250,000 (minimum limit of indemnity)
• £100,001 to £200,000 = £500,000
• £200,001 and above = £1,000,000

As of 2023, RICS also specifies maximum levels of uninsured excess, based on last year’s turnover:

• £10,000,000 or less (last year’s turnover) = greater of 2.5% of the sum insured or £10,000 (maximum uninsured excess);
• £10,000,001 and above = no limit.

Question 66

What are the RICS’ requirements for PII cover?

Answer 66

• Provide cover for any one claim (each and every claim basis) or be on an aggregate plus unlimited round-the-clock reinstatement basis;
• Fully retroactive (‘each and every claim made’ basis), covering claims made during the term of insurance cover irrespective of when the original act occurred;
• Include RICS’ minimum policy wording. In 2022, this included specific fire safety exclusions;
• Being written on a full civil liability basis;
• Provide at least the minimum level of indemnity based on the firm’s turnover in the previous year (or estimated for a new firm);
• Provide for a maximum level of uninsured excess based on the sum insured;
• Underwritten by an RICS-approved insurer (found on RICS website);
• Provide cover for past and present employees.

Question 67

Are you aware of any fire safety exclusions within PII policies?

Answer 67

Insurers are not permitted without specific dispensation to exclude fire safety claims on a property four storeys or less and fire safety coverage must be provided, as a minimum, on an aggregate, defence cost inclusive basis.

Question 68

How long does runoff cover need to be?

Answer 68

• A minimum of 6 years for consumer claims.
• A minimum of £1,000,000 PII cover (consumer claims).
• For non-consumer claims, ‘The requirement is for firms to have adequate and appropriate run-off, but RICS would expect run-off to be a maintained for a minimum period of six years from the cessation of the practice.’

Question 69

Are you aware of any case law surrounding run-off?

Answer 69

• Merrett vs Babb.
• In this case, a valuation surveyor (Babb) conducted a mortgage valuation for a lender. His firm was subsequently closed due to bankruptcy with no run-off cover. The house purchaser successfully brought a negligence claim against the surveyor personally, even though the purchaser had not seen the valuation report and was unaware of the surveyor’s identity when they purchased the property.

Question 70

What is a liability cap?

Answer 70

• A liability cap is a contractual agreement that a client can only make a claim up to the amount agreed, even if the law would otherwise award a greater sum in damages.
• PII limit is the maximum amount the insurer will pay out for a claim.
• It is best practice to agree liability caps below the PII limit.

Question 71

What is third party reliance?

Answer 71

• Third party reliance happens when a ‘third party’ relies on advice that has been prepared for a member’s client.
• RICS-regulated firms’ PII may impose specific conditions concerning third party reliance and may exclude indemnity in relation to certain third-party claims.

Question 72

What are the expectations of RICS from society’s perspective?

Answer 72

• Expectation that RICS members and firms work to the highest possible professional and ethical standards.
• The RICS exists to provide services for the public advantage.

Question 73

What should terms of engagement include to appropriately manage risk?

Answer 73

• Scope of work
• Fee basis
• Liability cap
• Contracting entity (i.e. the firm) and exclusions of personal liability
• Proportionate liability if advice is provided alongside other professionals, such as a solicitor or architect.
• Third party reliance
• ADR method to avoid costly court litigation.
• Governing law and jurisdiction i.e. requiring any claims to be subject to English law (or the first’s home country).

Question 74

How do you conduct yourself on a personal and professional level?

Answer 74

• I ensure that I abide by the Rules of Conduct at all times and follow RICS guidance.
• I treat others with courtesy and respect and I am conscious not to do anything improper in my personal and professional life that may damage the reputation of surveyors.

Question 75

Are you aware of the different types of guidance RICS provide and the key differences?

Answer 75

• Professional Standard - Set requirements or expectations for RICS members and regulated firms about how they provide services or the outcomes of their actions. They may include:

mandatory requirements, which use the word ‘must’ and must be complied with, and/or

recommended best practice, which uses the word ‘should’. It is recognised that there may be acceptable alternatives to best practice that achieve the same or a better outcome.

• Practice Information - Set out supporting guidance to advise surveyors in delivering specific services or working in specific areas of practice. The guidance is not mandatory and does not provide explicit recommendations. Practice Information can refer to processes, toolkits, checklists, insights, research and technical information or advice.
• Rules of Conduct
• Consumer Guide – for use by the public

Question 76

Can you provide some examples of Professional Standards and Practice Information?

Answer 76

Professional Standard

• Home Survey Standard, 1st Edition, November 2019
• Dilapidations in England and Wales, 7th edition, September 2016
• Party Wall Legislation and Procedure, 7th edition, July 2019
• Residential Retrofit Standard, 1st edition, March 2024

Practice Information

• Appropriate Contract Selection, 2nd edition, April 2024
• Risk, liability and insurance, 1st edition, April 2021

Question 77

How do you make use of RICS guidance in your day-to-day role as a Building Surveyor?

Answer 77

• I ensure that I abide by the Rules of Conduct at all times.
• Review guidance prior to undertaking tasks, such as reviewing the Home Survey Standard prior to undertaking pre-purchase residential surveys.

Question 78

Can you provide some examples of the RICS guidance you have read and regularly refer to?

Answer 78

• Home Survey Standard, 1st Edition, November 2019
• Party Wall Legislation and Procedure, 7th Edition, July 2019
• Dilapidations in England and Wales, 7th Edition, September 2016
• Surveying Safely, 2nd Edition, November 2018
• Asbestos, 4th edition, May 2021
• Investigation of moisture and its effects on traditional buildings Principles and competencies Joint position statement, 1st edition, September 2022
• Technical due diligence of commercial property, 1st edition, January 2020

Question 79

What is the importance of adhering to RICS guidance?

Answer 79

• Ensures I am following the correct procedures as advised and mandated by RICS.
• If a claim of negligence were to be brought against me, proof of following relevant guidance would provide a partial defence.

Question 80

Can you please talk me through some of the CPD you have undertaken in relation to professional ethics?

Answer 80

• RICS Professionalism Module.
• Private reading of RICS guidance.
• Online webinar for anti-money laundering.

Question 81

Can you explain the term money laundering?

Answer 81

• Concealing the source of the proceeds of criminal activity to disguise their illegal origin. This may take place through hiding, transferring and/or recycling illicit money or other currency through one or more transactions, or converting criminal proceeds into seemingly legitimate property.
• The process by which the proceeds of crime are converted into assets which appear to have a legitimate origin, so that they can be retained permanently or recycled into further criminal enterprises.

Question 82

Can you outline the key definitions provided within Countering Bribery, Corruption, Money Laundering and Terrorist Financing, 1st Edition Feb 2019?

Answer 82

• Person of Significant Control (PSC): Individuals or legal entities who have significant control or influence over a company.
• Politically Exposed Person (PEP): Individuals and the family members of such individuals, entrusted with prominent public functions.
• Beneficial Ownership/Owner: Anyone who benefits from ownership of a security or property, who may or may not be on record as the owner.

Question 83

Why is it important for members and firms to adhere to the Rule of Conduction and Professional Obligations at all times?

Answer 83

• To ensure that members and firms consistently provide a high standard of service and act in the best interest of the public and their clients.
• To protect the reputation of the RICS and the surveying industry as a whole.
• To maintain focus on tackling key challenges and barriers within the industry, including those relating to sustainability, diversity and inclusion, evolving technologies and

Question 84

What content was agreed within the Party Wall Award for 11 Sim Balk Lane, Bishopthorpe?

Answer 84

• Professional fees (agreeing and serving of Award and hourly rate for further services required).
• Content of the schedule of condition.
• Rights of access onto AO’s land.
• Manner and timing of undertaking of the works.
• Reference to drawings and planning application.

Question 85

What are the statutory timescales set out within the Party Wall Act?

Answer 85

• S1 and S6 Notices must be served within 1 month of commencing works.
• S2 Notices must be served within 2 months of commencing works.
• AO(s) have 14 days to respond to Notices.
• AO(s) can serve a counter-Notice to a S2 Notice within 1 month.
• After 14 days has passed (with no response – deemed dispute) a 10 day Notice is served, requesting the AO(s) to appoint a surveyor, or the BO will appoint one for them.
• Once the Award has been agreed, both parties have 14 days in which to appeal the Award (through the courts).
• Notices and Awards are both valid for a period of 12 months.

Question 86

How did you ensure that you acted impartially within your duties at 11 Sim Balk Lane and why was this important?

Answer 86

• I did not prioritise my appointing owners (adjoining owners) over the building owner.
• I made sure to act in the interest of the wall rather than any of the disputing parties.
• The duties of a party wall surveyor are bound by statute to resolve the dispute.
• Being impartial ensured that the agreed Award would be fair, the interests of both parties would be balanced, and that the rights of both parties under the Act would be upheld.

Question 87

At 89 Meadowfields Drive, what were the structural implications of removing load bearing elements?

Answer 87

The loads previously imposed on the load bearing element (walls) would need to be supported by something else, such as a steel beam spanning a new opening.

Question 88

What were the symptoms of condensation at 22 Kirkstone Drive?

Answer 88

• Mould growth to ceilings and walls (Stachybotrys chartarum).
• Water cascade marks down walls.

Question 89

At 22 Kirkstone Drive, what were the health risks you advised your client of with regard to the dampness you noted during your inspection?

Answer 89

• Inhaling or touching mould spores can result in an allergic reaction and can cause asthma attacks.
• Living in damp conditions can result in fatal illnesses to babies, young children, the elderly and those with underlying health (respiratory) conditions.

Question 90

Why did you think the dampness was due to condensation at 22 Kirkstone Drive?

Answer 90

This was based on an initial visual assessment, including observing mould growth to susceptible areas (corners of rooms) and within the kitchen and bathroom. The indoor air temperature was also considerably low, which would increase the likelihood of condensation occurring.

Question 91

What are the basis principles of controlling moisture within a property?

Answer 91

Ensuring adequate heating, ventilation and insulation.

Question 92

If your client at 22 Kirkstone Road asked for a report regarding the dampness noted within their property, how would you go about arranging this?

Answer 92

Issue a fee proposal to the client, outlining the scope of services, including timescales, fees, limitations and exclusions.

Question 93

Why did you feel obliged to point out the dampness within the property?

Answer 93

Due to the excessive amount of mould growth and the associated health risks.

Question 94

Can you outline some of the example behaviours associated with Rule 1 of the Rules of Conduct?

Answer 94

1.1 Members and firms do not mislead others by their actions or omissions, or by being complicit in the actions or omissions of others.

1.2 Members and firms do not allow themselves to be influenced improperly by others (as a result of, for example, giving or receiving work referrals, gifts, hospitality or payments) or by their own self-interest.

1.3 Members and firms identify actual and potential conflicts of interest throughout a professional assignment and do not provide advice or services where a conflict of interest or a significant risk of one arises, unless they do so in accordance with the current edition of Conflicts of interest, RICS
professional statement.

1.4 Firms have effective processes to identify actual and potential conflicts of interest, to enable appropriate decisions to be made on whether to accept work, and to keep records of decisions made about actual and potential conflicts of interest.

1.5 Members and firms providing advice and opinion in a professional context do so honestly and objectively based on relevant and reliable evidence, and firms have processes to ensure that directors,
partners and employees do so.

1.6 Members and firms are open and transparent with clients about their fees and services.

1.7 Members and firms act to prevent others being misled about their professional opinion.

1.8 Members and firms do not take unfair advantage of others.

1.9 Members and firms protect confidential information and only use or disclose it for the purposes for which it was provided, where they have the necessary consent to do so or where required or permitted by law.

1.10 Firms keep client money safe and have appropriate accounting controls.

1.11 Members do not misuse client money and comply with controls intended to keep it safe.

1.12 Members and firms do not facilitate any financial crime including money laundering, tax evasion, bribery or corruption. Firms have effective processes to prevent directors, partners or
employees from doing so.

Question 95

Can you outline some of the example behaviours associated with Rule 2 of the Rules of Conduct?

Answer 95

2.1 Members and firms only undertake work that they have the knowledge, skills and resources to carry out competently.

2.2 Members and firms supervise any employees undertaking work for them and ensure that these employees have the necessary knowledge, skills and resources to do their tasks competently.

2.3 Members and firms check that subcontractors have the necessary knowledge, skills and resources to do their tasks competently.

2.4 Members and firms reflect on the work they have undertaken and its impacts, and consider how they might apply what they have learned to their future work.

2.5 Members maintain and develop their knowledge and skills throughout their careers. They identify development needs, plan and undertake continuing professional development (CPD) activities to address them and are able to demonstrate they have done so. Firms encourage and support directors, partners and employees to maintain and develop their knowledge and skills, and check that they are complying with CPD requirements set by RICS.

2.6 Members and firms stay up to date and comply with relevant legislation, codes of practice and other professional and relevant technical standards. Firms ensure that their directors, partners and employees do so.

Question 96

Can you outline some of the example behaviours associated with Rule 3 of the Rules of Conduct?

Answer 96

3.1 Members and firms understand clients’ needs and objectives before accepting any professional work.

3.2 Members and firms agree with clients the scope of the service to be provided and its limitations, and timescales for the work.

3.3 Firms inform clients that they are regulated by RICS and that they may need to disclose records to RICS where required for regulatory purposes.

3.4 Members and firms inform clients promptly and seek their agreement if it is proposed that any of the terms of engagement or estimated fees or costs be changed.

3.5 Members and firms undertake their work in a timely manner; with due care, skill and diligence, and in accordance with RICS technical standards.

3.6 Members and firms communicate to clients the material information on which their professional advice and opinion is based.

3.7 Members and firms communicate with clients and others clearly and in a way they can understand.

3.8 Members and firms ensure that any referral or introduction they make for a client is in the best interests of the client and inform clients about any financial or other benefits to the member or their
firm from a referral or introduction.

3.9 Members and firms keep proper records of their work and decisions in enough detail to allow them to answer questions from clients and to allow their work to be audited for quality assurance or regulatory purposes.

3.10 Members and firms, when advising clients about projects, encourage solutions that are sustainable in that they minimise harm and deliver balanced economic, social and environmental benefits.

3.11 Members and firms understand the risks and benefits of using relevant technology.

3.12 Members and firms check that all data used is accurate and up to date, is kept securely, and that they have proper legal rights to use it and, where required, share it.

3.13 Firms have effective quality assurance processes for their work.

Question 97

Can you outline some of the example behaviours associated with Rule 4 of the Rules of Conduct?

Answer 97

4.1 Members and firms respect the rights of others and treat others with courtesy.

4.2 Members and firms treat everyone fairly and do not discriminate against anyone on any improper grounds, including age, disability, gender reassignment, marriage or civil partnership, pregnancy or maternity, race, religion or belief, sex or sexual orientation.

4.3 Members and firms do not bully, victimise or harass anyone.

4.4 Firms check that supply chains do not involve modern slavery or other abuses of the workforce.

4.5 Members and firms report abusive labour practices to proper and recognised authorities if they become aware of, or suspect, them.

4.6 Members and firms work cooperatively with others.

4.7 Members and firms develop an inclusive culture in their workplaces, support equal access and opportunity for all, and identify and address unconscious bias.

Question 98

Can you outline some of the example behaviours associated with Rule 5 of the Rules of Conduct?

Answer 98

5.1 Members and firms question practices and decisions that they suspect are not right, and raise concerns with colleagues, senior management, clients, RICS or any other appropriate person, body or organisation where they believe in good faith that it is necessary to do so. Firms provide processes to allow and support individuals within the firm to raise concerns with senior management.

5.2 Members and firms support directors, partners, employees, colleagues or clients who have acted in good faith to report concerns.

5.3 Members and firms ensure that public statements made by the firm, or in which members are (or could be) identified as members of the profession, do not undermine public confidence in the profession.

5.4 Members and firms respond to complaints made against them promptly, openly and professionally.

5.5 Members and firms do not dissuade complainants from approaching an alternative dispute resolution provider, RICS or any other regulatory body.

5.6 Members and firms cooperate with investigations into complaints or concerns, and provide information where it is reasonably requested and they can do so lawfully.

5.7 Members consider the effect that any health conditions may have on their competence or ability to undertake professional work, and inform management or clients where they require reasonable adjustments or are unable to continue to undertake work competently.

5.8 Members and firms manage their professional finances responsibly.

5.9 Members and firms take appropriate action when they consider that the rules
have been breached, and report suspected significant breaches of the Rules of Conduct by themselves or others to RICS.

Question 99

What procedures must you follow if you are starting up a new practice?

Answer 99

• 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.
• Prepare a complaints handling procedure.
• Obtain Professional indemnity insurance cover.
• Abide by the Rules of Conduct for Firms.
• Use the designation ‘Regulated by RICS’ on all practice material.

Question 100

What insurances would you need if you were starting up your own firm?

Answer 100

• Professional Indemnity Insurance.
• Employer’s Liability.
• Public Liability.
• Building’s insurance of an office premises.

Question 101

What processes do regulated firms need to put in place when handling Clients’ Money?

Answer 101

Preserve the security of clients’ money which does not belong wholly to the company.

RICS regulated firms that operate a client account must:-

o Set clear segregation of duties for employees.

o A Principal oversees the client money accounting functions.

o Principles cannot override controls.

o Competent and knowledgeable staff are to process clients’ money with cover provided for long term absence.

o Accounting systems and data must be secure.

o Client money must be kept separate and clearly identifiable with the word ‘client’ included in the bank account name.

o Clients must always have access to funds.

o We must agree the terms and advise the client on bank details.

o The account must not be overdrawn.

o We must maintain client ledgers and provide a running balance.

Question 102

What must a complaints handling procedure include?

Answer 102

• The RICS provides a model form.
• The process must include a redress mechanism.
• Details of the policy should 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 and outcomes must be recorded.
• We must note the need to advise PI insurers of a complaint immediately.
• The process must have two stages as a minimum:-

o Stage 1 is where there needs to be consideration of the complaint by a senior member of the firm or the complaints handling officer.

o Stage 2 if the issue is not resolved, the complaint is referred to an independent third party with the authority to award redress. The complainant may be expected to contribute towards costs at this stage.

Question 103

What is an independent redress scheme?

Answer 103

• It is a consumer scheme designed to handle small issues that would be disproportionally expensive to take to court.
• If the scheme judges in favour of the complainant, it is binding.
• If it judges in favour of the firm, the complainant can escalate the matter to court.
• RICS firms must specify which redress scheme they want to use, it could be an ombudsman, arbitration or sometimes adjudication.
• If the complaint relates to a large amount of money or if the complainant wishes so, he can take the matter to court.

Question 104

What do you do if you receive a letter of complaint?

Answer 104

• I would acknowledge receipt and I would forward it to my firms designated complaint handler, as per our complaint handling procedure, providing additional information as required.
• I would also highlight the importance of informing our Professional Indemnity insurance providers immediately.

Question 105

What is the purpose of the joint names on a client account?

Answer 105

For the purpose of dual authorisation.

Question 106

What does on a ‘claims made basis’ mean for PII?

Answer 106

The insurance policy that is in place at the time the breach is discovered is responsible for providing the indemnity, not the insurance policy in place when the breach was made.

Question 107

What measures should be taken to try and avoid PI claims?

Answer 107

• Keep full and detailed records of meetings and conversations.
• Record recommendations and advice given.
• Use proper letters of engagement, scope of services and terms of engagement.
• Don’t advise on a specialism outside your field of experience.
• Use RICS guidelines.
• Avoid poor management and excessive workloads.

Question 108

How can you limit your liability when agreeing terms of appointment with a client?

Answer 108

• Base the appointment on reasonable care and skill rather than fitness for purpose which is more onerous.
• If the client’s requirements are performance based, this may imply fitness for purpose. It is advisable to request a clause limiting the appointment to reasonable skill and care only.
• Run off cover must be in place.
• Execution of the appointment under hand will result in a reduced liability period of 6 years instead of 12.

Question 109

If the client gives you a lump sum fee before going on holiday, what would you do?

Answer 109

I would place the funds in a separately identified client account and agree a drawdown of monies against the services being provided with the client.

Question 110

Can you please confirm which of the Rules of Conduct apply to you actions at Tumble Twist Cottage?

Answer 110

Rule 1

1.5 - providing advice and opinion in a professional context honestly and objectively based on relevant and reliable evidence.

1.7 - Members act to prevent others being misled about their professional opinion.

Rule 3

3.6 - Communicate to clients the material information on which their professional advice and opinion is based.

Rule 4

4.1 - Respect the rights of others and treat others with courtesy.

Rule 5

5.1 - Question practices and decisions that they suspect are not right

Question 111

Are you aware of any recent case law relating to harm from toxic mould?

Answer 111

Awaab’s Law is a UK law that requires social housing landlords to address damp and mould in their properties within strict time limits. The law was introduced in the Social Housing (Regulation) Act 2023 and is named after Awaab Ishak, a toddler who died from a respiratory condition caused by mould in his social housing.

Question 113

What can a firm do if they cannot obtain PII or run-off cover?

Answer 113

They can apply to use the RICS Assigned Risks Pool or Run-Off Pool.

Question 114

What would need to be done regarding insurance in the event of a practitioner’s death?

Answer 114

The PII would need to be converted to run-off cover.

Question 115

What sort of insurance should regulated firms have?

Answer 115

• Professional indemnity
• Public liability
• Employer’s liability
• Building
• Contents
• Cyber and business interruption.

Question 116

What could be done to protect client confidentiality when reporting an issue to RICS?

Answer 116

• Anonymising confidential information
• Seeking the client’s permission to disclose information.

Question 117

What is the role of Governing Council?

Answer 117

The GC set the strategy and vision of RICS.

Question 118

What is RICS LionHeart?

Answer 118

An independent charity which supports RICS professionals and their families.

Question 119

What is RICS Matrics?

Answer 119

• Locally organised bodies that support early career-stage surveyors.
• Matrics run low-cost or free events and provide a source of networking and support.

Question 120

Under what circumstances can informed consent be obtained in respect of a conflict of interest?

Answer 120

Where the member or firm is satisfied that proceeding despite a conflict of interest is:

• in the interests of all of those who are or may be affected and
• is not prohibited by law
• and the conflict will not prevent the member or firm from providing competent and diligent advice.

Question 121

What should an RICS member or firm make sure to do throughout the process of navigating a conflict of interest?

Answer 121

Keep records of the decisions made in relation to:

• whether to accept the assignment
• the obtaining of informed consent and
• any measures taken to avoid conflicts of interest arising.

Question 122

When would it be acceptable to share a client’s personal information?

Answer 122

• when required or permitted by law
• when the client has given permission to do so

Question 123

What must every regulated firm have in place regarding conflicts of interest?

Answer 123

Effective systems and controls appropriate to the size and complexity of the business to facilitate the management of compliance with the RICS’ requirements set out within Countering Briber, Corruption, Money Laundering and Terrorist Financing 1st Edition.

Question 124

What is an information barrier?

Answer 124

The physical and/or electronic separation of individuals within the same firm that prevents confidential information passing between them.

Question 125

What must a party affected by a conflict or interest be able to demonstrate in order for them to provide informed consent?

Answer 125

That they understand:

• that there is a conflict of interest or a significant risk of one
• the facts known by the RICS member that are material to the conflict
• what the conflict of interest is or may be and
• that a conflict of interest may affect the ability of the RICS member to advise or act fully in the interest of a client.

Question 126

When considering accepting an instruction involving a conflict of interest, what should a member consider?

Answer 126

Whether their course of action could:

• be perceived to imply a lack of clarity
• cause embarrassment to the profession or
• mean that they are unable to advise and represent each client objectively and independently.

If there is a risk of the above, the member or firm should not proceed.

Question 127

How may you avoid a party conflict arising throughout a professional assignment?

Answer 127

Agree with the client restrictions on the scope of services to be undertaken.

Question 128

Can you provide an example of a where an own interest conflict of interest may arise?

Answer 128

Where there are commission or success based bonuses in relation to a professional assignment.

Question 129

How can two related firms acting for two clients with competing interests avoid a conflict of interest?

Answer 129

By ensuring that:

• the firms are separate legal entities
• there are no directors, partners or employees in common
• there is no direct or indirect fee sharing
• there is no access to information or common internal data sharing arrangements relating to the area of conflict.

Question 130

Under what circumstances can an affected party provide informed consent

Answer 130

The affected party can only provide informed consent if the person explaining the conflict is:

• entirely transparent about the conflict and
• ensures the affected party understand what they are doing and are doing so willingly.

Question 131

What should you do if informed consent is provided verbally?

Answer 131

Written confirmation of the informed consent should be provided as soon as possible and the verbal consent was provided.

Question 132

What should be considered regarding confidentiality owed to a client when explaining the material facts of a conflict of interest?

Answer 132

If it is not possible to outline the nature of the competing interest without breaching a duty of confidentiality, the member or firm should not proceed with the professional assignment.