Ethics Flashcards
Why do you want to become a member of RICS? (SRMKN)
- Status
- Recognition
- Market advantage
- Knowledge
- Networking
What is the role of RICS? (MPL)
- Maintain the highest standards of education and training
- Protect consumers through strict regulation of professional standards
- Leading source of information and independent advice on land, property, construction and associated environmental issues (RICS 2015)
What is a Royal Charter?
A Royal Charter is an instrument of incorporation, granted by the Queen, which confers independent legal personality on an organisation and defines its objectives, constitution and powers to govern its own affairs.
Who is the president of the RICS?
Timothy Neal since December 2018
Who is the president-elect?
Kath Fontana
What do you understand by the term self-regulation?
Rics has its own Internal RICS regulation which if not adhered to can impose three levels of disciplinary action:
- Action by Head of Regulation
- Disciplinary panel
- Appeal panel
Can you tell me what you understand about the principles of better regulation? (PACTT)
- Proportionality – regulators should only intervene when necessary. Remedies should be appropriate to the risk
- Accountability – Regulators must be able to justify their decisions and be subject to public scrutiny to promote complete fairness.
- Consistency – Regulators must adopt a common sense approach and that rules and standards must be joined up and implemented fairly. Regulation should be predictable in order to give stability and certainty to those being regulated.
- Targeting – Regulators should be focused on the problem and minimise side effects and that regulations should focus on the problem and avoid a scattergun approach.
- Transparency – Regulators should be open and keep regulations simple and user-friendly.
What is a bye law?
Is a rule or law made by an organisation to control the actions of its members
Give me and example of one of the RICS Bye-Laws?
B2.1 Classes B2.1.1 – The Members of RICS shall consist of the following classes: (a) Chartered members, comprising: (i) Fellows; (ii) Professional Members; (b) Non-Chartered members; and (c) Honorary Members B4.3 Payment – A person shall be liable for the payment of his fees, subscription, levy or other sums payable while he is or was in membership
What are the five professional and ethical standards? (AAATT)
- Act with integrity
- Always provide a high standard of service
- Act in a way that promotes trust in the profession
- Treat other with respect
- Take responsibility
What are the Key principles of Rules of Conduct for Firms? (PCSC CCI)
- Professional behaviour – A firm shall always act with integrity and avoid conflicts of interest and avoid any actions or situations that are inconsistent with its professional obligations
- Competence – A firm shall carry out its professional work with due skill, care and diligence and with proper regard for the technical standards expected of it
- Service – A firm shall carry out its professional work with expedition and with proper regard for standards of service and customer care expected of it.
- Training and continuing professional development (CPD)
- Complaints Handling – A firm shall operate a complaints handling procedure and maintain a complaints log. The complaints handling procedure must include an alternative dispute resolution (ADR) mechanism that is approved by the Regulatory Board
- Clients’ Money – A firm shall preserve the security of clients’ money entrusted to its care in the course of its business practice.
- Indemnity – A firm shall ensure that all previous and current professional work is covered by adequate and appropriate indemnity cover which meets standards approved by the Regulatory Board.
What are the 7 principles of the Rules of Conduct for Members? (ECSC SIC)
- Ethical Behaviour – Members shall at all times act with integrity and avoid conflicts of interest and any actions or situations that are inconsistent with their professional obligations
- Competence – Members shall carry out their professional work with due skill, care and diligence and with proper regard for the technical standards expected of them
- Service – Members shall carry out their professional work in a timely manner and with proper regard for standards of service and customer care expected of them.
- Continuing Professional Development (CPD) – Members shall comply with the RICS’ requirements in respect of CPD
- Solvency – Members shall ensure that their professional finances are managed appropriately
- Information to the RICS – Members shall submit in a timely manner such information, and in such form, as the Regulatory Body may reasonably require.
- Co-operation – Members shall co-operate fully with RICS staff and any person appointed by the regulatory Board (RICS 2013)
What Disciplinary Procedures can the RICS impose?
- Fixed Penalties – procedure used for breaches of the Rules relating only to the supply of information to the RICS by firms and members.
- Consent Orders – Procedure used for low level breaches of the Rules as for some minor breaches which could easily be corrected. The consent order is a written document which states the terms upon which the member or firm must take or desist from taking certain actions in a specified time period.
- CPD Sanctions – These sanctions place an obligation on a member to follow the CPD requirements
- Action by Disciplinary Panel – Procedure used for more serious breaches of conduct. The Head of Regulation can consider that a hearing is required under the discipline rules. 50% of the membership of this Panel are lay members.
How can a disciplinary procedure be triggered?
A disciplinary procedure can be triggered by:
- Someone complaining to the RICS
- An allegation by a third party
- Because of information received or established by the RICS
What are the three levels of actions within disciplinary procedures?
Three levels of disciplinary action:
- Action by Head of Regulation
- Disciplinary panel
- Appeal panel
What do you understand by the term professional practice?
Ones professional responsibility. Refers to the conduct and work from someone in a particular profession
What money laundering legislation are you aware of?
1) The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017
Business’ must:
- Provide staff training
- Conduct a written money laundering and terrorist financing risk assessment for the firm
- Ensure appropriate record keeping, policies and procedures
2) Proceeds of Crime Act 2002 – creates a set of criminal offences intended to combat money laundering (AML offences)
What Bribery legislation are you aware of?
The Bribery Act 2010
Promote anti-bribery practices amongst businesses, and came into force on 1 July 2011. An organisation will commit a criminal offence, if it fails to prevent bribery that is intended to get or keep business or an advantage in the conduct of business for the organisation.
What is 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.
What constitutes and offence under the bribery act?
1) Bribing
2) Receiving a bribe
3) Bribing a foreign public official; and
4) Failing to prevent bribery
What constitutes an offence under the money laundering regulations?
Where the proceeds of criminal activities are converted into legitimate assets
1) Tipping someone off who is under suspicion
2) Assisting a criminal to obtain, hide or invest funds
3) Failing to report knowledge or suspicion
What is PII insurance?
Professional Indemnity Insurance
Can you tell me about the RICS requirements in relation to PII?
Appropriate cover assessed on annual turnover/estimated turnover for a new business (and then adjusted)
Firm’s turnover in the preceding year Minimum level required for each claim
- £100,000 or less = £250,000
- £100,001 to £200,000 = £500,000
- £200,001 and above = £1,000,000
What is an annual return?
Submitting an Annual Return is an annual requirement for RICS professionals who are in the Valuer Registration (VR) scheme and Firms who are regulated in Firm Regulation (FR).
- The number of individual valuations you have performed in the last 12 calendar months, although they can request up to 36 months.
- The best estimate amount for the highest value valuation you carried out in the last 12 months.
- The estimate amount of the firm’s total fee income from valuation services in the last 12 months.
- Details of your Professional Indemnity Insurance (PII).
- The availability of complaint handling procedures in your firm/organisation.
- The approved alternative dispute resolution (ADR) provider engaged by your firm/organisation under its complaint handling procedure.
Tell me what you understand about Complaints Handling Procedures.
- Mandatory in ALL terms of engagement
- A firm’s written CHP must be approved by RICS
- All complaints must be logged
- Firms must include an approved RICS Alternative
- Dispute Resolution (ADR) mechanism in their Complaints Handling Procedure (CHP).
Can you tell me about the CPD requirements for Members of RICS?
- 20 hours per year for chartered members
* 48 hours per year for trainees
Why is CPD important?
Because it is a rule of conduct
Tell me about the RICS’ guidance on dealing with Conflicts of Interest.
A member must not advise or represent a client where doing so would involve a conflict of interest or significant risk of a conflict of interest, other than where all those who are, or may be affected have provided their informed consent.
What is informed Consent?
- This can only be given in writing by the party if the person explaining the position to them is entirely transparent about any material factors and sure that the party affected understands what they are doing.
- Surveyors should only seek informed consent if satisfied that all relevant parties are best served by doing so.
Are you aware of any new guidance relating to conflicts of Interest?
• RICS Professional Statement Conflicts of Interest, 2017 (mandatory 1st January 2018) – defines three types of conflict:
- Party Conflict: work on same or related instruction for two different parties.
- Own Interest Conflict: relating to a personal interest
- Confidential information conflict: relating to work between two parties which is confidential
- Conflicts of interest - UK commercial property market investment agency, 2017
- Dual agency: where an agent had a contractual agency relationship with both the seller and buyer at the same time – must not be undertaken in any circumstances from 1st January 2018
What is double dipping (dual agency)?
Where an agent had a contractual agency relationship with both the seller and buyer at the same time – must not be undertaken in any circumstances from 1st January 2018
What do you need to do if you are setting up a new practice (RICS)?
- Complete a Firm’s Detail Form and send to RICS
- Appoint a contact officer for RICS communication
- Arrange PII and send details to RICS
- Set up procedures for handling client’s money
- Obtain RICS approval for complaints handling procedure
- Obtain a logo kit
- Ensure CPD is logged and set up a staff training plan
How would you close down a regulated firm?
- Inform the RICS
- Inform your clients and arrange handover to new firm
- Return any client monies
- Inform insurance – take out run off cover of £250,000 for a minimum of 6 years
- Retain client files and records for a minimum of 6 years
What can you tell me about any new RICS guidance relating to bribery, corruption or money laundering?
RICS Professional Statement – Countering bribery, corruption, money laundering and terrorist financing, 2019 (effective 1st September 2019)
Divided into 3 parts:
1. Mandatory requirements for anti-bribery and corruption and for anti-money laundering and terrorist financing
2. Guidance setting out supporting good practice for the above
3. Supplementary guidance on some of the concepts set out in Parts 1 & 2
Countering bribery, corruption, money laundering and terrorist financing, 2019 (effective 1st September 2019) - What status does it hold?
Professional Statement
In Countering bribery, corruption, money laundering and terrorist financing, 2019 what are some mandatory rules for firms and members in relation to bribery and corruption?
Part 1 – 1.3 Bribery and corruption: RICS regulated firms must:
- 1.3.1 In relation to bribery and corruption RICS-regulated firms must:
1. Not offer or accept, directly or indirectly, anything that could constitute a bribe.
2. Have plans in place to comply with applicable laws governing bribery and corruption, and ensure that these are followed.
3. Report any activity they are aware of that breaches anti-bribery and corruption laws to the relevant authorities (as specified in local legislation); where there is no local legislation the activity should be recorded and, if possible, reported to a senior manager.
4. Act with due diligence to perform periodic written evaluations of the risks that face the firm and that may lead to the facilitation of bribery or corruption in determining the corporate level of due diligence, the firm may consider the type of business activities they engage in and the environment in which they operate.
5. Retain information detailing how the firm has met the requirements of this professional statement.
- 3.2. In relation to bribery and corruption RICS members must:
- Same as (1) above
- Ensure they have adequate knowledge of bribery and corruption to be able to comply with the requirements of this professional statement.
- Same as (3) above.
In Countering bribery, corruption, money laundering and terrorist financing, 2019 what are some mandatory rules for firms and members in relation to money laundering?
RICS-regulated firms must:
1. Not facilitate or be complicit in money laundering or terrorist financing activities
2. Have systems and training in place to comply with these laws
3. Report any activity they are aware of that breaches anti-bribery and corruption laws to the relevant authorities (as specified in local legislation) - National Crime Agency
4. Evaluate and review periodically the risk that prospective and existing business relationships present in terms of money laundering or terrorist financing offences taking place.
5. Ensure that their responses to the risks identified are appropriate, including conducting appropriate checks on clients and customers
6. Use reliance only where there is an appropriate level of confidence in the quality of the information provided by the third party – reliance should only be taken from third parties with standards conforming to the legal requirements. Ultimate responsibility for the assessment of risk and actions taken based on this remain with the member or regulated firm.
7. Take appropriate measures to understand the client and the purpose of the transaction.
8. Verify the identity of the client by undertaking basic identity checks.
9. Record and retain information detailing how the firm has met the requirements of this professional statement.
RICS members must:
1. Same as (1) above.
2. Same as (3) above.
Can you tell me about some of the guidance in Countering bribery, corruption, money laundering and terrorist financing, 2019 in relation to bribery specifically?
Regulated firms should
- Have a written policy covering anti-bribery and corruption (updated periodically)
- Have appropriate governance and systems in place
- Implement a register including; gifts, hospitality, customer travel and hospitality, political contributions, potential conflicts of interest.
- Provide clear guidance for staff
- Appoint contactable person for compliance and ethics matters (large firms best practice). Small firms may still elect to make such an appointment depending on resource implications.
- Publish code of behaviour
- Carry out appropriate due diligence on third party suppliers in line with local legislation.
Members should;
- Declare items on register as above.
- Attend relevant training
- Be familiar with employer’s policy
- If a senior management position take a leadership role in attempting to ensure that their employer has an appropriate regime in place for addressing bribery and corruption risks.
Can you tell me about some of the guidance in Countering bribery, corruption, money laundering and terrorist financing, 2019 in relation to money laundering and terrorist financing specifically?
In relation to money laundering and terrorist financing regulated firms should;
Have a written policy in place addressing risks that cover the following issues:
- High risk situations where enhanced due diligence is required, understanding the source of funds in a transaction.
- Identifying PEPs, PSC’s and potential breaches of sanctions
- The process to be followed for customer due diligence
- The situations which simplified due diligence, standard/ordinary due diligence, or enhanced due diligence will be appropriate.
- Have appropriate governance/systems in place proportionate to the type of work the firm does.
- Provide appropriate, recurring training for staff
- Keep reports of suspicion of money laundering and terrorist financing activity confidential
- Identify the beneficial owner (anyone who benefits from the ownership of security or property, who may not be on record as the owner) of a company/client involved with a transaction
- Appoint senior person to be responsible for ensuring anti-money laundering and counter- terrorist financing policies are in place and complied with.
RICS members should:
- Keep abreast of current training offered
- Comply with employers policy
- Keep reports of suspicion confidential
- If a senior management position take a leadership role in attempting to ensure an appropriate regime in place for addressing money laundering and terrorist financing risks.
Can you tell me about any supplementary guidance in Countering bribery, corruption, money laundering and terrorist financing, 2019?
Supplementary guidance THREE W’s when assessing risk: - Who you act for - What you are doing - Why you are being asked to do something
What are the current RICS rules for registration of firms?
Eligible to register if 1-50% of the firms principals are MRICS
Must register if 50% or more
When will rules for registration of firms change?
April 2020
What are the key being made to rules for registration of firms?
- Minimum 25% firms principals MRICS to register.
- The firms with 2-24% who were previously regulated but now can no longer be will be considered on a case by case basis.
- Firms must designate a Responsible Principal who provides oversight, accountability and engagement with RICS standards and regulation
- Firms who cannot meet this can implement a plan to secure compliance or be supervised by another RICS Regulated Firm
Who is a ‘qualified member’?
AssocRICS/MRICS/FRICS – not student members
When must a firm register for regulation?
Required to register if at least 50% of the firms principals are MRICS
What are the registration eligibility criteria?
Eligible to register if 1-50% of the firms principals are MRICS
Who is a Responsible Principal?
A Firm that is registered or registering with RICS must at all times have a Responsible Principal.
A person may be appointed as Responsible Principal only if that person meets conditions A, B and C.
- Condition A is that the Head of Regulation is satisfied that the person is appropriate to hold that appointment.
- Condition B is that the Head of Regulation is satisfied that the person: a is able, through the exercise of executive leadership responsibility, to influence strategic objectives of, and significant decisions made by, the Firm; or b reports directly to a person who is so able and can demonstrate they have been delegated authority by the firm to fulfil the role of Responsible Principal.
- Condition C is that: a the person is an RICS Member; or b the person is not an RICS Member but the Head of Regulation is satisfied that: i it is impracticable for the Firm to appoint an RICS Member; and ii the person selected has sufficient experience in, and understanding of, regulatory compliance activities to carry out the duties of a Responsible Principal.
What happens if a firm cannot comply with the new rules? (For registration/regulation)
Firms who cannot meet this can implement a plan to secure compliance or be supervised by another RICS Regulated Firm
What are the rules around use of the RICS logo and ‘Regulated by RICS’ designation?
A firm that is registered for regulation must display on its business literature a designation that ensures members of the public, clients and potential clients can easily identify it is regulated by RICS
When will these rules around the use of the RICS logo and ‘Regulated by the RICS’ change?
April 2020
What changes are being made to rules around the use of the RICS logo and ‘Regulated by the RICS’ designation?
The use of the RICS logo has been restricted to members and regulated firms only
A requirement has been added that regulated firms must include a prescribed text in the terms of engagement issued to clients in respect of its surveying services to explain what being regulated by RICS means
Tell me about the restrictions to the use of the designation ‘Chartered Surveyors’ by firms.
A partnership or a company can use the designation ‘chartered surveyor(s)’ in a trading name only.
