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JR APC REVISION OCT 2024 > Ethics > Flashcards

Ethics Flashcards

1
Q

Why is the public considered a stake holder

A

Public interest and market confidence: red book valuation help ensure transparency and fairness in the property market

Regulation and accountability: conducted to strict ethical and professional standards, helps protect the public from potential malpractice or misleading valuations that could harm buyers sellers or lenders.

Public economic impact: if a valuation is inaccurate it could lead to over and under valuation of properties affecting everything from personal financial decisions to broader economic conditions like housing affordability.

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2
Q

What are the 5 RICS rules of conduct

A

1) members and firms must be honest, act with integrity and comply with their professional obligations

2) Member and firms must maintain their professional competence

3) members and firms must provide a good quality and due diligent service

4) members and firms must treat others with respect and encourage diversity and inclusion

5) members and firms must act in the public interest and take responsibility for their actions

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3
Q

What are the 4 levels of membership

A

FRICS
MRICS
Assoc RICS
Trainee/Student

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4
Q

When was the RICS founded

A

1868

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5
Q

Who is the president of RICS

A

Tina Paillet

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6
Q

What are the RICS main roles

A

To maintain the highest standards of education and training

To protect consumers through strict regulation of professional standards

To be the leading source of information and independent advice on land, property, construction and associated environmental issues

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7
Q

Bichard review June 2022

A

Independent review of the RICS which made 36 reccomend actions, all have been accepted by the RICS and are in the process of being integrated.

Key reccomend actions include focus on diversity and inclusion, empowering and enabling members through greater support for regional boards and creating a public interest panel to advise the governing council

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8
Q

What are the benefits of being an RICS member and what would It mean to you to become chartered

A

It would mean a lot to me as it would help further progress my career, as being an RICS member will provide me with the STATUS and RECOGNITION of my skillset. it will provide me with access to CPD and KNOWLEDGE sharing and a wider NETWORK

Status
Recognition
Market advantage
Knowledge
Network

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9
Q

When must a firm register for the rics

A

If more than 50% of principals are rics members then a firm must be registered if 25% are then it can be registered

Each firm must nominate a responsible principal

Only RICS members and firms can use the RICS logo

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10
Q

What is a principal in a firm

A

Sole practitioners/directors/partners or board members or anyone equivalent who is able to work autonomously in a firm

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11
Q

Information required by RICS for registration

A

Type of business and staffing details
Name of responsible principal
Statutory regulated activities
Nature of clients
CHP
PII
whether the firm holds client money

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12
Q

When have you used 2 of the rules of conduct and provide examples

A

Competence I was asked to value a public house but given that this is a trading property which would require a profits method valuation I did not feel that neither I or my supervisor had the expertise and declined the instruction

Good due Diligent service- providing loan security valuation reports which have been peer reviewed to ensure a high quality and also delivered within the clients time scales

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13
Q

What are some mandatory professional obligations for RICS members

A

Comply with CPD

Cooperate with RICS

Promptly provide all information reasonably requested by the standards and regulation board or those exercising delegated authority on its behalf

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14
Q

Mandatory obligations for firms

A

Publish a CHP

PII cover for all previous and current work

If having a sole principal having relevant cover in place in the case of death or inability to work

Cooperate with RICS

Promptly provide all information requested by the standards and regulation board

Display in the business literature that they are regulated by RICS

Report to RICS any matter that they are required to report under the rules for registration of firms

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15
Q

What are the three levels of disciplinary action

A

Action by head of regulation

Disciplinary panel

Appeal panel

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16
Q

What are practice alerts

A

Key tools for warning or alerting the profession to emerging areas of risk over which the RICS has concerns

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17
Q

Definition of conflict of interest

A

A conflict of interest arises when a member or firms independence and impartiality is threatened due to the existence of a conflict between two clients

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18
Q

Conflict avoidance vs management

A

Avoidance Is declining the instruction

Management is putting information barriers in place to manage the conflict

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19
Q

What are the three types of conflict of interest

A

Party conflict
Personal conflict
Confidential information conflict

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20
Q

What is informed consent

A

Only be given in writing by the party if the person explaining is completely transparent about any material factors and sure that the party affected know what they are doing

Surveyors should only seek informed consent if satisfied it benefits all relevant parties

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21
Q

What are timescales for dealing with a complaint

A

Acknowledged within 7 days and investigated within 28 days

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22
Q

Minimum levels of PI

A

Firms turnover 100k or less is £250000
100-200k is 500k and over 200k u require 1M of cover

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23
Q

Maximum level of uninsured excess

A

Up to 10M= the greater of 2.5% of the sum insurer or £10.000
If firms turnover is over 10M then there is no set limit

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24
Q

What can you do to help avoid negligence in valuation

A

Detailed site notes and photographs

Keep up with markets and cpd

Cap the professional liability excess on your PII policy in the terms of engagement

Ensure your competent

Clearly understand the clients instructions and confirm precise instructions in writing in the TofE

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25
Q

What is PII for?

A

Used to protect clients, surveyors and third parties against negligence claims when there is a duty of care breached and damage arises

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26
Q

Six main areas of good practice as set out in RICS professional standard:Client money handling 2019

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
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27
Q

If holding client account money what must you do

A

Client accounts must be kept seperate and be clearly identifiable with the word client on the bank account and cheque book

A client must be able to have their monies on demand and the account must be kept in credit

Accurate records are kept with a running balance available

All firms handling client money need to display their procedures document on their website

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28
Q

Starting a new practice statutory compliance

A

Disclose business name

Disability discrimination compliance (Equality Act 2010)

Bribery Act 2010 Compliance

Financial services compliance

Appoint a money laundering reporting officer

Health and safety compliance (Act 1974)

Register for data protection

Estate agency compliance

Inform HMRC for VAT and tax registration

Ensure compliance with employment law (minimum working wage and hours etc)

Ensure insurance compliance for employer and public liability

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29
Q

Starting a new practice RICS compliance

A

Inform RICS of your new practice by completing a firm details form

Appoint a responsible principal for all rics communication

Register with RICS for regulation of the firm

Arrange PII send details to RICS

Set up procedures for handling client money if needed

Register for the VRS of undertaking red book valuation work

Obtain RICS approval for the complaints handling procedure

Appoint a complaint handling officer

Use a logo kit from rics for all practice material

Plan for succession if a sole practitioner

Ensure completion of an RICS annual return

Ensure cpd is logged online and set up a staff training plan

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30
Q

Closing a practice RICS Compliance

A

Inform the RICS of your retirement/ closure and de register

Return any money held by clients to their own accounts

Inform insurers and procure a professional indemnity insurance run-off cover for a minimum of 6 years from the expiry of the policy in force at the time of close

Retain a copy of client files and records for a minimum of 6 years

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31
Q

What is a bribe

A

A bribe can be the giving, offering, promising or receiving of an advantage such as a payment, gift or a service for an action which is illegal or a breach of trust

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32
Q

What are the 4 offences of a bribe

A

Bribing
Receiving a bribe
Bribing a foreign public official
And failing to prevent bribery

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33
Q

Penalty for a bribe

A

Maximum 10 years in prison and or an unlimited fine, companies face an unlimited fine

Enforced by the serious fraud office

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34
Q

When would enhanced due diligence need to occur when checking for money laundering

A

Involving a high risk country or non face-to-face business relationships

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35
Q

What are the levels of due diligence checks: Money laundering

A

Customer due diligence

Enhanced due diligence

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36
Q

Typical customer due diligence requirements for money laundering

A

Depends on the type of organisation

Private individual- 1) copy of valid passport or driving license with photo 2) copy of a bank statement, credit card bill etc. for proof of address. Can’t be more than 3 months old

Limited company- 1)certificate of incorporation, full name, registered number, registered office address, names of all directors and shareholders with more than 25% holding.
Report any discrepancies to companies house

Public accountable body- government ownership

Public limited company- London stock exchange listing

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37
Q

Customer due diligence

A

Identify client and verify identity

Make reasonable endeavours to identify beneficial owners

Obtain information on purpose and intended nature of the business relationship and proposed funding arrangements as appropriate

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38
Q

Enhanced due diligence

A

Additional procedures are required for any transaction involving a PEP or PEP family member or someone established in a high risk third country.

More detailed examination of the background and purpose of the transaction and increased monitoring is required

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39
Q

Limit for cash acceptance

A

10,000 euros

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40
Q

Key requirements for money laundering regulations

A

Ongoing business relationship with client should be monitored
Detailed record keeping of the procedures undertaken

A senior member of staff/ board member must be appointed to take responsibility for all compliance

A nominated person (money laundering officer) must be appointed to report any suspicious activity to the national crime agency

Fire has to maintain records for min 5 years and report to companies house any discrepancies between the info the firm holds and information with companies house

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41
Q

What are some potential red flags regarding money laundering

A

Inability or unwillingness to provide documents

Changes to parties involved in transactions

Unusual transaction features such as unexpected urgency required by parties, potential loss making or an unusual transaction for client

Payment of fees, purchase or rental monies in unusual currency

42
Q

Proceeds of crime act 2002 relevance

A

Provides powers for enforcement authorities in the UK to recover in criminal and civil proceedings money and other assets which are deemed to be proceeds of crime

43
Q

Criminal offences to combat money laundering (proceeds of crime act 2002)

A

Concealing criminal property

Arrangements: if a person enters into or becomes concerned in an arrangement which they know or suspect facilitate the acquisition, retention, use or control of criminal property by or on behalf of another person

Acquisition use and possessions

44
Q

RICS Professional Standard:countering bribery, corruption, money laundering and terrorist financing 2019. How is it set out

A

Split into 3 parts

Part 1
What regulated firms must do in relation to bribery and corruption and Money laundering and terrorist financing

Part 2
Guidance

Part 3
Supplementary guidance

(Last page of ethics booklet)

45
Q

What does beneficial ownership mean when referring to new clients

A

The person who owns or ultimately controls a legally defined minimum percentage of shares or voting rights in that entity

46
Q

How do you check who a beneficial owner is

A

I would request useful documents such as certificate of corporation or an annual return for a company

47
Q

Give an example of one thing you would do to prepare for a negotiation

A

Let the reasons why your proposal would benefit the other parties

Define your specific goals and desirable outcome

Identify several alternative scenarios that your party would be comfortable with

Identify any potential weaknesses in the opposing party’s position

48
Q

What is a negotiation

A

It’s a process involving 2 or more parties where they come together to reach an end-goal to all parties involved

49
Q

Name a type of business plan

A

Strategic business plan focuses on mid-long term goals

A departmental business plan focuses on current jobs what we can improve upon, where the next job is coming from etc within that team

50
Q

How does business planning contribute to the success of a company

A

Facilitates decision making and allows setting of a time frame by predicting when the company can achieve its goals

51
Q

What is a ROI

A

Return on investment

Ratio between income and investment

52
Q

What is mediation

A

It’s where an independent and neutral third party works with both parties to achieve an agreeable solution for the dispute. Does not go to court and mediator does not advise or issue a decision

53
Q

What is Bradley hall gift policy

A

We can accept any gift below £20.

Anything higher has to be noted in the gift log and we cannot accept gifts if we have ongoing work with the gifter that may impact our impartiality. Gifts logged must be proportionate to the work undertaken

54
Q

What is Bradley halls complaint handling procedure

A

We have a 2 stage process

Initially I would pass it on to a senior colleague who would contact the client seeking resolution through clear communication and any necessary corrective actions

Step 2 would be to escalate the complaint to an independent third party such as an ombudsman or RICS dispute resolution service ensuring impartiality would promote the clients trust

55
Q

If a property adjoining yours was a part development site, would you include photos of it in your particulars? Would it be misleading to not do so?

A

It all depends on the size of the development and the impact it has on the subject,
I would most likely not include photos of the development site but mention it within the writing of the particulars to uphold my professional duty of care and avoid complaints.

We have to act transparently and I would speak to the client about how he would like to market it providing it doesn’t conflict with your duty to act ethically.

If it’s a major development I’d include photos and a brief commentary in the interest of potential buyers

56
Q

Can you give me an example of when you have used rule 1 of the RICS Rules of conduct

A

I acted with honesty and integrity when a prospective purchaser Called up asking to know what the vendor would accept and what level of offers we had received in a best bids scenario. I maintained my integrity by not disclosing specifics and advised submitting an offer according to the request for offers email

57
Q

Rule 2 example

A

I’ve ensured I was component by undertaking training sessions and CPD on HMO valuations. So that I feel comfortable on providing advice in this sector going forward.

I was also asked to value a public house by a client of Bradley halls and rejected in doing so as it’s a specialist valuation we do not undertake at Bradley hall which would require the profits method with it being trading

58
Q

Rule 3 example

A

I regularly provide a good and due diligent service writing valuation reports for loan security purposes I ensure these get checked over and counter signed before being sent to the client. I also complete the report within the timescales promoting our relationship with the client

59
Q

Rule 4 example

A

I usually work with a range of people from different backgrounds and always make sure I treat everyone equally and with respect.

60
Q

Can you give me an interesting article you have read recently

A

Yes I read about high street rental auctions are coming into effect next month as part of the regeneration act 2023.

Government has stated that councils will have the power to let vacant high street and town centre properties without the permission of the landlord to breathe new life into high streets and town centres.

Has to be unoccupied for 366 days.

61
Q

How do you become a fellow of the rics

A

5 or more years as MRICS
Leadership role within the industry
Professional technical achievement
Academic achievement
Raising the profile of the RICS

62
Q

Who is the current Chief Executive Officer of the RICS in the UK?

A

Justin Young

63
Q

penalties for assisting with money laundering

A

14 years in jail and unlimited fine
5 years in jail for tipping them off that they are under suspicion for money laundering

64
Q

red flags for money laundering

A

Unusual currencies

Inability or unwillingness to provide documentation

changes to parties involved in transactions

unusual transaction features, such as unexpected urgency and potential loss making activities

65
Q

What is the Governing Structure of the RICS?

A

Currently, the Governing Council is in charge of the management of the RICS (chaired by Tina Paillet)

The RICS is a Royal Charter body, this requires the RICS to act in the public interest. Under the Royal Charter, the RICS’s governing body is the Governing Council, which is responsible for approving RICS strategy and vision. The regulatory board, management board and various boards and committees report to Governing council.

66
Q

What are the 5 principles of the RICS Regulation for Members and Firms?

A

The RICS is a self regulating body. The five principles for better regulation are
1. Proportionality
2. Accountability
3. Consistency
4. Targeting
5. Transparency

67
Q

Why did the RICS develop the new Rules of Conduct?

A

Ultimately to provide a simpler structure to make it easier to members and firms to understand the rules.

68
Q

What do you know about the ethics decision tree?

A

Framework of questions members can ask themselves when facing a situation where they are asked to act in a potentially unethical manner.
eg. is it legal?

69
Q

what is a professional standard

A

set requirements or expectations for RICS members or regulated firms about how they provide a service. Principles based, focus on outcomes and set a baseline expectation for competence. They set mandatory requirements and best practice.

70
Q

what is practice information

A

supplementary guidance to support surveyors in delivering specific services or working in specific area of practice. Not mandatory and does not provide explicit recommendations.

71
Q

What does RICS Professional Statement Conflicts of Interest 2017 say about multiple introductions?

A

It can happen and that in all circumstances the terms of engagement must state whether the instruction is on an exclusive or non-exclusive basis

72
Q

what is incremental advice

A

Incremental advice would be when an agent is acting for the seller in relation to a disposal and is approached by the buyer to provide a valuation.

73
Q

What would you do if you overheard confidential information?

A

This cannot be used for the surveyor’s own purposes. The client and sender should be advised of the error. The matter should be recorded in a note to the firms compliance officer.

74
Q

What does the RICS say about Professional Indemnity Insurance, other than the level required?

A

The RICS states that a firm must

1) Seek cover from an RICS approved insurer
2) Have a retroactive policy – case by case
3) Provide details of their cover as part of the regulated firms annual return to the RICS

75
Q

What RICS Professional Statement is there regarding Money laundering?

A

RICS Professional Statement – Countering Bribery, Corruption, Money laundering and Terrorist Financing 2019

76
Q

Is PII cover required for Pro Bono work?

A

Yes pro bono work is when you do work for no fee for a friend or a charity etc. PII is still required.

77
Q

What is the RICS Requirement for Run off cover once a firm closes?

A

For consumer claims a minimum of £1 million cover over 6 years and for commercial claims the firm must consider what is appropriate for at least 6 years.

78
Q

Has the RICS published anything on negligence and PII?

A

RICS Guidance Note Risk, liability and Insurance in Valuation Work 2021

79
Q

What’s the difference between a claim in contract and claim in negligence?

A

A contractual claim = claim by contracted party i.e. client
A claim in negligence = by third party

80
Q

What are the current limitation periods for negligence?

A
  1. Contractual claims = 6 years from the negligent act
  2. Tort claims = 6 years from the date the claimant suffered the loss

Set by limitations act 1980

81
Q

How might you avoid claims of negligence made against you?

A
  1. Understand client needs
  2. Terms of engagement
  3. Ensuring competence prior
  4. Detailed file notes
  5. Stay up to date with market knowledge and legislation
  6. Cap the PII excess on you PII policy in Terms of Engagement
82
Q

What are the 8 mandatory requirements of RICS Professional Statement Client Money Handling 2019?

A
  1. Confirm client money is held in client account
  2. Ensure it contains no other funds
  3. Not to hold office money in account
  4. All client money accounts include the word client in the name
  5. Ensure the money held is immediately available
  6. Only withdraw out of high interest with written consent from the client
  7. Confirm operating conditions with the banks
  8. Ensure that when a client requests, the money is held in an account both the firm and client have access
83
Q

What changes were implemented to the RICS Client Money Protection Scheme in April 2019?

A

RICS regulated firms that hold client money must therefore ensure that they are registered with the appropriate RICS scheme

  • RICS Client Money Protection Scheme for Surveying Services
  • RICS Client Money Protection Scheme for Property Agents
84
Q

Can you pay yourself from a client account when they owe you a fee?

A

Yes, if you have written confirmation from the client before hand.

85
Q

What are the 6 principles of the Bribery Act 2010?

A
  1. Proportionality
  2. Top level commitment
  3. Risk assessment
  4. Due diligence
  5. Communication
  6. Monitoring and review
86
Q

What legislation allows authorities to recover the proceeds of crime in the UK?

A

The Proceeds of Crime Act 2002.

87
Q

What is money laundering?

A

The proceeds of criminal activities that are disguised or converted and then realised as legitimate assets.

88
Q

What report would a firms money laundering reporting office produce should they suspect suspicious activity?

A

Produce a Suspicious Activity Report (SAR) and report to National Crime Agency

89
Q

What are the gender pay gap regulations?

A

Firms with over 250 employees are required to complete an annual report stating the difference in pay between their male and female employees

90
Q

What are the key elements of the RICS Professional Statement on Countering bribery and Corruption, money laundering and terrorist financing 2019?

A

Divided into 3 parts:

1) Mandatory requirements for anti-bribery, corruption, anti-money laundering and terrorist financing
eg. not accept a bribe or facilitate money laundering

2) Guidance setting out supporting good practice for the above
3) eg. set up a gifts register

3) Supplementary guidance on some of the concepts
eg.dealing with Peps

91
Q

Hypothetically, if a client came to you and wanted to pay your fee in a sum of £10,000 in cash what would you do?

A

You are able to accept cash of up to 10,000 euros. Based on the exchange rate this is above this. But in any case you would turn it down as it reduces the capability of people able to get a proper audit trail.

92
Q

professional indeminity insurance what is a liability cap

A

It sets a maximum financial amount that the insured (e.g., a surveyor, architect, or consultant) would have to pay if a client sues them for negligence or errors in their work.

This cap must be agreed upon with the client and is typically outlined in the terms of the professional contract. It helps manage risks and prevents unlimited exposure to claims.

93
Q

What factors must be considered when producing a business plan?

A

Main objectives to be achieved
Staffing levels
Budgets
Timescales
External factors which can affect plan e.g. economy

94
Q

How many levels are there to a business plan?

A

3
Corporate levels affect the entire company, is long term and fairly broad.
Management level- affects each area of an organisation, quite detailed.
Operational levels- affects individuals in the organisation.

95
Q

What are service level agreements?

A

Arrangements reached between the Agency and its principle key clients normally for a defined period of time under which the Agency provides services and under which the Agency receives payments for those services. The SLA normally includes details of the services to be provided, charges and terms, quality standards and monitoring and review process.

96
Q

Can you give me an example of an SLA in your organisation?

A

Bradley Hall has an SLA with Together finance which cover the key requirements of RICS. E.g. Terms of Engagement, fees, purpose of the valuation, service, delivery, timeliness and format of the report. Conflicts of interest are to be considered for each case.

97
Q

Are you aware of any RICS guidance regarding CHP?

A

RICS GN: Complaints Handling July 2016
- TOE can help reduce complaints
- Complaints must be dealt with in accordance with your PII policy
- Establish root cause of the complaint
- Record and allocate all complaints
- Establish and adhere to review process
- Don’t get defensive
- Establish a degree of empathy
- Provide clear timeframes

98
Q

If there is a conflict of interest what should you do?

A

If there is a conflict of interest I would notify my manager immediately. I would also contact all parties involved and inform them of the conflict. I would explain how the conflict has arisen and explain that although I would try not to allow it to affect my impartiality I would step down from the instruction if they required me to. If they allowed me to continue with the instruction I would make sure I recorded this in any report provided to the client.

99
Q

when is a building exempt from having an EPC

A
  • Listed buildings
  • Religious buildings
  • Temporary buildings
  • Buildings due to be demolished
100
Q

What are the exemptions of MEES?

A

Consent exemption- landlord has not had permission from the tenant.
Devaluation exemption- report obtained which states the property would be devalued by more than 5% if energy improvements are made

101
Q
A

JR APC REVISION OCT 2024 (15 decks)

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