Ethics Flashcards
Bribery & ML Client Money CHP Conflict of Interest ToE Registration / Closing PII
How do you ensure to comply with bribery legislation? What constitutes as a Bribe and what are the offences?
Bribery is illegal
I undertake regular training and CPD.
Compliance manager
I comply with the Bribery Act 2010
Based on Six Principles prevention:
1. Proportionality
2. Top level commitment
3. Risk Assessment
4. Due Diligence
5. Communication
6. Monitoring and Review
A bribe is attempting to influence someone to perform a function improperly and the offences are bribing, receiving a bribe, bribing a public official and not having the correct measures in place.
RICS PS Countering Bribery, corruption, money laundering and terrorist financing 2019
Law comes first!
What is the penalty for bribery
Max 10 years and/or unlimited fine for individuals and unlimited fine for a firm.
Policed by the Serious Fraud Office
How do you ensure you comply with money laundering regulations?
I undertake regular training and CPD.
comply with Terrorist Financing and Transfer of Funds Regulations 2017.
I undertake due diligence, 3 different levels.
Look for any red flags
RICS PS Countering Bribery, corruption, money laundering and terrorist financing 2019.
Law comes first!
What is the penalty for money laundering
Max 14 years and/or unlimited fine for assisting with ML
Max 5 years and/or unlimited fine for tipping off someone they are being investigated
What is the ML legislation and the key provisions
Terrorist Financing and Transfer of Funds, 2017 (as amdended in 2023)
1. Written ML and TF risk assessment
2. Implement systems, policies and controls and procedures
3. Internal controls
4. Staff training
5. New customer due diligence checks
6. PEP requirements
7. record keeping
Due Diligence Levels
- Customer Due Diligence
Identify the client, passport, address, persons with significant control - EDD - PEP established in a high risk third world country.
Look for any red flags!
RICS Professional Standard Countering Bribery, corruption, money laundering and terrorist financing 2019
3 parts
Part 1 is mandatory - B&C and ML & TF
Part 2 is guidance - supporting good practice on above
Part 3 is supplementary guidance (the 3 W’s)
How do you ensure you comply with your firm’s bribery and gifts policy?
Bribe - zero policy, against the law
Speak to complaints manager
Determine the proportionality of this gift
Record the whole process
My firms policy is giving all gifts received to charity and recorded in gifts register
Tell me about an instance of when you have been offered a gift or hospitality by a client.
Meal vouchers for reducing the Rateable Value.
However, I kindly declined the gift as this was against my firms gift policy as not to suggest an improper obligation.
Tell me about what you would do if you felt that an instruction was outside your scope of experience or knowledge?
Cotswolds - recommended someone else with experience in that sector
Tell me about an instance of when you have handled client’s money. How did you keep this secure and safely?
Have not. But aware of RICS PS Client Money 2019 based on six good areas of practice (HP CRAP)
- Holding Client Money
- Providing information to the client
- Compliance
- Receipts of client money
- Accounting records and controls
- Payments from clients accounts
The word ‘client’ is on bank account. Client accounts separate
Tell me how you would handle a client complaint
Would speak to the client first
Client can make a formal complaint - CHP officer would acknowledge within 7 days and respond within 21 days
If still not satisfactory, the complaint can be escalated to an independent redress scheme. This 3rd party is provided by the company to the client, such as CEDR
Tell me about how you checked for conflicts of interest at Bermondsey Street
Conflict of interest is when independence or impartiality is threatened due to the existence of a conflict between two partes.
Cross referenced the property and the client name with the CoI database
The first initial steps was considering whether there is an actual, perceived or potential conflict of interest
I asked everyone at my firm if there is any other involvement with the client or tenant or building.
What types of conflicts could have existed at Bermondsey Street and Castle House
The conflicts are:
1. Party Conflict
2. Own interest Conflict
3. Confidential information conflict
Acting for both the Tenant and Landlord. Party Conflict, wanting to act in best interest for both clients
Confidential and Party conflict - Bermondsey St if acted for both parties then confidential information would be in conflict
If you identified a potential or actual conflict of interest, how would you handle this?
Either conflict avoidance or management
Conflict management - informed consent by two parties
Bermondsey Street - what were in your Terms of Engagement
- Name of client and person carrying out work
- Scope of works
- Declaration of any conflict of interest
- Fee basis
- CHP upon request
- PII
Needs to be clear to avoid ambiguity and negligence
What would be the implications if you started work without ToE being signed?
- No legal clarity over scope of works and fees which could cause disputes and negligence claims.
- PII not cover any damages?
- No legal case to cover any financial loses if client decides to not pay / pay less
Why did you advise the client to instruct a firm that specialised in rural valuations for Cotswold example?
Lack of local knowledge
Would not be able to provide a good quality and diligent service
Potential negligence claim as inexperienced
Therefore, advised other firm
Tell me an example when you acted with integrity
I was acting for the Landlord at a lease renewal, tenant had no representative. I acted with integrity and recommended strongly that the tenant instructs a professional, to ensure that it was fair for both parties.
Also told them to download the RICS Professional Standard: Code for Leasing Business Premises 2020
Tell me about when you have provided a high standard of service
Every instruction I do is providing a high standard of service in line with the Rules of Conduct
Always try and achieve the best result for the client
Tell me about how you have promoted trust in the profession
I adhere to the Ethical Standards
I continue with regular CPD and training
Maintain my professional obligations and act with honesty and integrity
I am transparent with everyone
Explain how you have taken responsibility in your current role
I liaise with clients on a regular basis updating them on there business rates situation. This can be for forecasting provisions, or advising whether an appeal is merited.
How do you treat clients with respect?
In line with Rule 4
- Open communication - if something is technical speaking with so they easily understand.
- Professional conduct - polite manner
- Professional advice and acting with integrity
How do you treat other surveyors with respect?
Treat others with courtesy
Not discriminating anyone
No bullying, victimise or harass anyone
Be friendly and professional
Explain the key steps you would take if you decided to set up in practice as a sole trader after qualifying.
RICS Compliance & Statutory Compliance
RICS Compliance:
1. Inform RICS by completing a firm details form
2. Appoint a Responsible Principle for all RICS communication
3. Register with RICS for regulation of a firm
4. Arrange PII and send to RICS
5. Set up Client money handling procedures and protection scheme
6. Valuer Registration scheme (if necessary)
7. Obtain RICS approval for CHP
8. Set up complaints log
9. CHP officer or other surveyor in another firm if sole practitioner
10. RICS logo
11. Plan for future running of practice if solo trader
12. CPD logged and staff training
13. Ensure completion of RICS Annual Return at the end of each year
Statutory Compliance:
1. Requirement to disclose business name
2. Disability discrimination compliance (Equality Act 2010)
3. Financial Services compliance
4. Bribery Act 2010 compliance
5. MLRO appointment
6. Health and Safety compliance
7. GDPR and DPA compliance
8. Inform HMRC for VAT and Tax Registration
9. Ensure compliance with current employment law
10. Ensure insurance compliance for employer and public liability
Explain what you would need to do if you were to close your practice
- Inform the RICS and deregister
- Clients are informed
- Return any monies
- Inform insurers and procure PII run off cover for a minimum of 6 years
- Retain client files for minimum 6 years
If a prospective purchaser offered you a financial incentive to accept their offer, explain how you dealt with this.
This is a bribe and against the law and therefore completely unacceptable
Would make a record of this and speak to my line manager
The Bribery Act is policed by the Serious Fraud Office and there is a maximum penalty of 10 years imprisonment and / or an unlimited fine for individuals. Companies face unlimited fine
What would you do if you became suspicious that a client was involved in Money Laundering?
Speak to my MLRO first and then report it to the authorities by submitting a Suspicious Activity Report (SAR)
If you were set up in practice by yourself what insurance would you need?
PII which is fully retroactive and works on a claims made basis.
Minimum level of indemnity is based on turnover
- Under £100k t/o = min £250,000
- 101 - 200k t/o = min £500,000
- 201k and above = min £1,000,000
What is the levels of uninsured excess
Indemnity up to £10m, then either 2.5% of £10,000 whatever greater.
Over £10m then no set limit
Where would I find information about PII
RICS UK PII Requirements wef 1 July 2024
What does ‘claims made basis’ mean
Fully retroactive, the policy covers claims that are made during the period of insurance regardless of when the negligent act occurred
What is PII aggregation clause?
more than one loss to be under the same claim. I.E there is a limit the insurer will pay over the whole cover period. An issue if more than one claim
‘Each and Every Claims’ made basis
Full limit of indemnity applies to each individual claim made against you during the policy period
What is run off cover?
Adequate and appropriate cover is necessary once trading has ceased on a fully retroactive basis for a period of 6 years
What is Assigned Risks Pool (ARP)
The ARP is open to all UK RICS regulated firms that are unable to obtain PII
What are the three key terms that should be considered from a risk perspective in the context of every instruction you undertake?
- The scope of work
- The basis on which the fee will be calculated
- The liability cap
Glasshouse Street - how did you ensure the t/o figures were not seen by anyone other than your firm and the VOA?
I sent the documents in an encrypted email by Microsoft 365. The file was also in a password protected file and I only disclosed the password to the VOA.
What is the RICS Practice Information regarding recommended practice in client contracts for insurance
RICS Practice Information - Risk, Liability and Insurance, 2021
Recommends the use of liability caps. This means the client can not make a claim higher than the amount agreed, even if the law woudl otherwise award a greater sum in damages.
Glasshouse Street - how did you store the turnover figures?
Securely on the server. Limited access controls with role based permissions.
How did you demonstrate integrity at Glasshouse Street?
- Being transparent to the client
- I obtained consent from the client before sending the figures
- Upheld confidentiality
- Acted in the clients best interests
Castle House - why did you deem this to be a possible conflict of interest?
My impartiality could have been threatened with a party conflict, acting for both the Landlord and Tenant.
How would you have put Information barriers in place at Castle House
Ensure information is completely separate
Surveyors physically separated on different floors
Virtual IT barriers
Keep a clear audit trail, firm’s compliance officer will oversee all actions
Must take reasonable steps to operate an effective barrier
How do you decide on a fee
Depends on the instruction
Fees should be market based
Firms should avoid price fixing
10% for rating
A fixed competitive price for other work
Must be 100% transparent
What type of conflict was at Castle House
3 Conflicts:
1. Party Conflict
2. Own Interest
3. Confidential Information
What is an annual return
Confirming all the factual information about that registered firm eg turnover, staff details etc
What is a conflict of interest
When a member or firms independence or impartiality is threatened due to the existence of a conflict between two parties
What is the standard for Conflict of Interest
RICS Professional Standard: Conflict of Interests 2017
Mentions:
Informed consent
Effective procedures in place
Keep records
What is a bribe
The exchange of something of value in return of acting improperly
4 offences of a bribe
- Bribing
- Receiving a bribe
- Bribing a public official
- Not having the correct measures in place
