Ethics Flashcards
When was the RICS founded?
Founded in 1868 with the Royal Charter being granted by the Privy Council in1881.
What is the royal charter?
It defines the objectives of the constitution and gives powers to govern itself.
Authority to regulate.
The RICS motto is ‘Est Modus in Rebus’ - what does it mean?
There is measure in all things
The RICS has 3 main roles - what are they?
- To maintain the highest standards in education and training
- To protect consumers through strict regulation of professional standards
- To be the leading source of info and independent advice on land, property, construction and associated environmental issues (RICS 2015)
How is the RICS structured?
The RICS is self-regulated and internally monitored.
The Bye-Laws and RICS regulations set out the governance of the institution.
Governing Council runs the RICS, providing management and strategic direction.
The Standards and Regulation Board and the Management Boards report to the Governing Council.
Then there are 17 specialist professional groups responsible for outlining standards of competence and practice.
Who is the CEO of the RICS?
Justin Young
What are the 4 levels of RICS membership?
FRICS
MRICS
AssocRICS
Trainee/student
How would you become FRICS?
You need evidence of four of the fellowship characteristics:
5 or more years MRICS
Leadership role
Professional/technical achievement
Academic achievement
Raising profile of RICS
What was the Bichard Review?
It was an independent review conducted by Lord Bichard in 2022. It was commissioned in response to governance and leadership concerns within RICS after a governance scandal in 2018-2019.
What are some example recommendations that came from the Bichard Review?
RICS agreed to adopt all the Bichard recommendations (36 in 7 key areas).
eg. increased focus on diversity and inclusion across the profession and within the RICS governance.
AND
Greater leadership on issues that matter most to society eg sustainability.
RICS future foundations - what are they?
On the back of the Bichard review, the RICS published 5 Future Foundations:
Vision
Mission
Strategic goals
Values
A world class organisation
5 benefits of being an RICS member
Status - professional credentials provide client confidence
Recognition - in governments and markets
Market advantage - RICS status gives you competitive advantage
Knowledge - lots of standards and guidance
Network - access to professionals worldwide
Regarding whether a firm should be regulated, RICS ‘Rules for the regulation of firms’ 2022 states…
if 50% of Principals (eg director, partner, sole practitioner) of a UK surveying firm are RICS members then it has to be regulated
if at least 25% are then it can apply to be regulated.
4 examples of info required by the RICS for registration of a firm…
Type of business and staffing details
Name of responsible principal
Statutory regulated activities - eg financial services
Nature of clients
Complaints handling procedure details
Professional indemnity insurance details
Whether the firm holds client money
What is a Responsible Principal?
someone in a firm who is responsible for ensuring all steps are taken to comply with the RICS
When were the new rules of conduct published?
October 2021
When were the new rules of conduct effective from?
February 2022
The rules of conduct are supported by how many supporting case studies?
12
The Rules of Conduct are based on what 6 ethical principals?
honesty
integrity
competence
service
respect
responsibility
What is RICS rule of conduct 1?
Members/firms must be honest, act with integrity and comply with professional and RICS obligations
Why were the new rules of conduct brought in?
To simplify the structure and to provide clear behaviour examples for each rule.
What is RICS rule of conduct 2?
Members/firms must maintain professional competence and ensure services are provided by competent individuals with the necessary experience
What is RICS rule of conduct 3?
Member/firms must provide good quality and diligent service
What is RICS rule of conduct 4?
Members and firms must treat others with respect and encourage diversity and inclusion
What is RICS rule of conduct 5?
Members/firms must act in the public interest, take responsibility for actions, prevent harm and maintain public confidence in the profession
What is an example behaviour of rule 1?
Members and firms do not allow themselves to be influenced improperly by others (eg. gifts, hospitality or payments) or by their own self-interest.
Members and firms are open and transparent with clients about their fees and services
Example behaviour of rule 2?
Members and firms only undertake work that they have the knowledge, skills and resources to carry out competently
Members maintain and develop their knowledge and skills throughout their careers by undertaking relevant CPD.
Example behaviour of rule 3?
Members and firms understand clients’ needs and objectives before accepting any professional work.
Members and firms undertake their work in a timely manner.
Example of rule 4?
Members and firms treat everyone fairly and do not discriminate against anyone on any improper grounds.
Members and firms work cooperatively with others.
Example of rule 5?
Members and firms question practices and decisions that they suspect are not right, and raise concerns with the appropriate person.
What does Appendix A of the Rules of Conduct set out?
The core professional obligations of members and regulated firms.
How many core professional obligations are there for members and firms?
3 for members
7 for firms
Give some examples of what an RICS member must do to retain their charter ship
Comply with CPD requirements
Cooperate with RICS
Provide all info requested by the Standards and Regulation board
What must a RICS regulated firm do to retain that status?
Cooperate with RICS
Provide all info requested by the Standards and Regulation board
Publish a complaints handling procedure
Nominate a responsible principle
If a sole principal, make arrangements for work to continued if you you die or ill (locum agreement).
When considering an ethical dilemma, what could help?
RICS ethics decision tree
You consider different questions, eg is it legal? is it in line with the RICS codes of conduct? if no to any, do not proceed.
Disciplinary procedures are undertaken by who in the RICS?
Standards and Regulation Board
The RICS Regulatory Tribunal Rules 2022 sets out…
the disciplinary process
What provides an outline of the regulatory approach by the RICS?
RICS regulatory decision making 2022
3 levels of disciplinary action are?
- Action by head of regulation
- Disciplinary panel
- Appeal panel
Fixed penalties could be?
a fine or a caution
A fine could be unlimited but had to be proportionate to the offence
Tell me about Regulatory compliance orders…
It is a written document stating the terms to be followed for a specified time period following non compliance with RICS rules, eg not complying with CPD requirements
low level breaches
could get a fixed penalty or disciplinary panel
what is Action by disciplinary panel?
procedure used for more serious breaches of conduct
what are the penalties of a disciplinary panel?
fine
reprimand
expulsion
publication of the results
what is an appeal panel?
they consider a members or firms appeal against a decision
Use of social media: Guidance for RICS members was published when?
2021
what is the aim of Use of social media: Guidance for RICS members 2021?
Provides best practices and ethical considerations for RICS professionals when engaging on social media platforms. It aims to help members uphold the institution’s values, maintain professionalism, and avoid reputational risks.
What are ethics?
a set of moral values
How can a disciplinary proceeding be triggered?
Someone complaining to the RICS.
An allegation by a client or third party.
Information received or established by the RICS
What sort of breaches would expulsion be suitable for?
Fraud, dishonesty, conviction of a serious criminal offence, gross incompetence, deliberate discrimination, misappropriation of a client’s money.
What are professional standards?
Mandatory
a formal document that sets out the mandatory requirements and best practices for RICS members and regulated firms.
What are professional statements?
These documents provide both mandatory requirements and best practice guidance.
Sections marked as “mandatory” must be followed.
Other guidance in the document is advisory but strongly recommended.
what are guidance notes?
Guidance notes outline best practices but are not legally binding. However, they reflect the expected professional approach.
what are codes of practice?
Developed in collaboration with stakeholders, these provide voluntary guidance that may be considered in legal or regulatory contexts.
When considering fees for an instruction, they should be…
market based and agreed on an ad-hoc basis with clients
What are the main elements included within a fee proposal?
- Terms and conditions.
- Scope of services.
- Exclusions.
- Assumptions.
Once you and your client agreed the services that are to be provided
verbally what would you do next?
Follow up with a formal letter which includes the terms and conditions, fees and scope of services that are to be provided.
What must terms of engagement state?
Clients agreement to the proposed fee basis
Payment of expenses
A copy of the firms complaints handling procedure is available upon request
Scope of work
3 steps to follow before taking on a job…
Check professionally competent
No conflicts of interest
Confirm terms of engagement and get written approval from the client
why might you decline an instruction?
you are not competent to undertake the work
there is a conflict of interest
you do not have sufficient facts on the issue
the proposed client will not sign terms of engagement or do AML checks
What is a conflict of interest?
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
when could a conflict of interest happen?
acting on both sides of the transaction
any financial interest
personal interest
what is conflict avoidance in the context of conflict of interests?
you do not accept the instruction as there is a conflict of interest
what is conflict management in the context of conflict of interests?
when the instruction is accepted and steps are put in place to manage the conflict, eg information barrier with the written agreement of all parties
when did the RICS Global Professional standard: Conflicts of Interest 2017 come into effect?
January 2018
What does the RICS Global Professional standard: Conflicts of Interest 2017 state?
must not undertake an instruction if doing so would involve a conflict of interest, unless informed consent given
what is informed consent?
Written consent given willingly by a party who may be affected by a conflict of interest.
What are the 3 types of conflict of interest?
party conflict - relating to work on the same/related instruction for 2 different parties
own interest conflict - relation to personal interest
confidential information conflict - work between 2 parties that is confidential
What else must firms do to comply with the the RICS Global Professional standard: Conflicts of Interest 2017?
must keep records and have effective systems in place
What is an information barrier?
The physical and/or electronic separation of individuals (or groups of individuals) within the same firm that prevents confidential information from passing between them.
Why are conflict checks important?
- Ensure impartiality and integrity as per Rules of Conduct (2022)
- Ensure accurate work is undertaken that isn’t influenced by external factors
Give me examples of some bye-laws…
Byelaw 2 regarding membership and registration: setting out the levels of members and eligibility
Bye-law 5 – conduct within the RICS
What is a Bye-law?
A regulation or rule made by a corporation for firms or members to follow
In the context of complaints handling procedures, RICS firms must…
Have a Complaints Handling Procedure (CHP) in place.
Appoint a designated complaints officer to manage the process.
Provide clients with clear information about how to file a complaint.
Offer a two-stage process:
Internal complaint resolution (within the firm).
Independent redress mechanism (via an Alternative Dispute Resolution (ADR) provider).
What is Carter Jonas complaints handling procedure?
Complaints should be submitted within 12 months from the date that the incident occurred or completion of service, whichever is the sooner.
> CJ will acknowledge receipt of the complaint in 3 working days.
Within 15 working days of that they will respond to the complaint.
If the client is still not satisfied they can contact again and CJ have a further 15 working days to send a final response.
If client still not happy, can take complaint to an independent redress system.
CJ will advise of the appropriate redress systems in final response.
What is the RICS example complaints handling procedure?
Acknowledge in 7 days
Update in 28 days
If not agreed can take complaint to independent redress provider.
Who should you notify asap if there is a complaint?
PII insurers
as it could lead to a claim for negligence
In terms of a complaints handling officer, what would a sole practitioner be advised to do?
To nominate a surveyor in another firm to act as their complaints handling officer
Tell me about CPD for RICS members
Undertake a minimum of 20 hours a year
10 hours must be formal
Must record CPD yearly
Must maintain understanding of rules of conduct on a 3 year basis
What is the difference between formal and informal CPD?
Formal - structured learning, eg online training, professional course
informal - self-managed learning, eg private reading
What are the limitation periods for negligence in the Limitation Act 1980?
Contract - 6 years from the date of the negligence act
Tort - 6 years from the date the claimant suffered the loss
When can a negligence claim be made?
a duty of care exists to clients and third parties. When breached and there is a loss, a claim for damages (negligence) arises.
The current limitation period is 6 years from the date of negligent act
What can be done to avoid negligence claims?
Clearly understand the clients objectives and confirm precise instructions in writing in the terms of engagement
ensure you are competent to take on the instruction
Make detailed file notes and take photos
What is the purpose of professional indemnity insurance?
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
tell me about professional indemnity insurance
All firms must have PII in place
There are minimum requirements for the level of PII to have
All policies must be underwritten by an RICS insurer
adequate and appropriate run-off cover is required following cessation of trading
most firms aim to cap their liability with clients for individual instructions.
What changes did RICS recently make to the minimum approved PII wording?
Coverage for fire safety claims is now mandatory for buildings of five storeys or more, for work after July 1, 2024
An example of an insurer who is listed to underwrite professional indemnity insurance policies of RICS firms?
Everest syndicate
What is a PII aggregation clause?
It allows multiple claims to be treated as one claim.
What are minimum PI requirements?
Based on a firms turn over.
- £0-100k = £250k
- £100-200k = £500k
- > £200k = £1m
Adequate run-off cover:
* 6 years with a minimum aggregate of £1m
What happened in Merrit vs Babb?
The case dates back to 2001 and highlights the importance of having run-off cover.
A surveyor was sued for negligence by a former client.
The firm was no longer in existence therefore and had no run-off cover so the individual surveyor was pursued of damages.
Caused big shock in the industry and highlighted the need for run-off cover.
How long can a PII claim arise after the work is undertaken?
Limitation Act 1980 and the Latent Damage Act 1986
up to 6 years after work completed
What is the RICS professional Standard in relation to handling clients money?
Client Money Handling 2019
With regard to handling clients money, what are some procedures chartered surveyors need to be aware of?
a client must be able to have their monies on demand
client accounts must be kept separately and clearly identifiable
To be RICS compliant when starting a new practice, what do you have to do?
Appoint a responsible principal for all RICS communication
Arrange PII and send details to RICS
Appoint a complaints handling officer
Plan for succession/ future running of the business if sole practitioner
To be RICS compliant when closing a practice, what do you have to do?
Inform the RICS of retirement or closure and deregister
return client monies
retain a copy of the clients files and records for a minimum of 6 years
What is the ‘Clients’ Money Protection Scheme’?
- This is a money protection scheme operated by the RICS.
- It contains provision for any member of the public to be reimbursed their direct loss of funds when using an RICS regulated firm.
- This is provided through an RICS insurance policy
What is the key legislation about bribery?
the Bribery Act 2010
What is a bribe?
the giving, offering or receiving of an advantage such as a payment, gift or a service for an action which is illegal or a breach of trust
What are the main principles of the Bribery Act 2010?
the offences are: making a bribe, receiving a bribe, bribing a foreign official, failure to prevent bribery
The legislation applies to all UK Entities and includes associated Persons for example sub-consultants and external advisors.
There are six principles of prevention companies should put in place:-
1. Proportionate Procedures.
2. Top Level Commitment.
3. Risk Assessments.
4. Due Diligence.
5. Communication.
6. Monitoring & Review.
Penalties of the Bribery Act…
10 years imprisonment (max)
unlimited fine for individuals and firms
You receive an invite to attend the Theatre with some members of
your Project Team but they dropped out due to illness at the last
minute, would you still attend?
- In the first instance I would declare this hospitality on my companies’ gifts and hospitality register.
- Assuming the invite was approved and I was authorised to attend, I would need to decline the invite due to the Project Team dropping out.
- Since they won’t be present, this will not be a genuine business event.
- Consequently, I would decline this hospitality at the Project Team’s expense.
A contractor invites you to lunch to a restaurant and advises they’ve
got two Michelin stars and a wine list second to none. They say they
are keen to discuss the details of their tender they are about to submit for the project you are working on. How would you respond?
- Going to what sounds like a lavish lunch paid for by a bidder in the middle of a tender process is against Company policy and could be an offence under the UK Bribery Act.
- If this were the first time, it would be OK just to decline and explain that such an invitation is inappropriate.
- However if this supplier is persistent, there is a red flag in that he wants to discuss things that he cannot put in writing, so we should report this infringement
Who enforces the bribery act?
The Serious Fraud Office (SFO)
What is money laundering?
when proceeds of criminal activities are disguised or converted and then realised as legitimate assets
How long should you keep anti money laundering records for?
5 years beginning from the date the relationship ends
What constitutes an offence under the current money laundering regulations?
possession, concealment, conversion, transfer or making of arrangements relating to the proceeds of crime. This is not limited to money or cash
RICS-regulated firms must follow legal requirements under…
The Money Laundering Regulations (MLR) 2017 (amended 2019, 2022)
Client Due Diligence (CDD) involves…
Verify the identity of clients (passport, proof of address, company details).
Identify ultimate beneficial owners (UBOs) if dealing with companies.
Check source of funds for property purchases.
The laws of the Money Laundering Regulations 2017 particularly apply to…
Estate agency and property transactions
Lettings (where rent exceeds €10,000 per month)
Valuation and financial advisory services
What are examples of ‘red flags’ in the context of money laundering?
unwillingness to provide identity docs
changes to parties involved in transactions
requests to pay in cash
Tell me about the RICS Professional Standard: Countering bribery, corruption, money laundering and terrorist financing 2019
Sets out mandatory requirements for RICS members and firms in relation to bribery, corruption, money laundering and terrorist financing
Who is the president of the RICS?
Justin Sullivan has stepped aside whilst he awaits the outcome of the legal battle he is currently involved in.
Nick Maclean temporarily takes over.
