Ethics Flashcards
What are the 5 key standards of RICS rules of conduct?
Service Trust Integrity Responsibility Respect
Why does RICS uphold standards for public advantage?
The Royal Institution of Chartered Surveyors was created in 1868 and received a royal charter in 1881. The royal charter requires RICS to “promote the usefulness of the profession for the public advantage in the UK and in other parts of the world.
How is disciplinary action taken?
The Regulatory Tribunal Rules set out the processes and decisions RICS can take and regulatory actions available .
For less serious cases where the Regulated Member admits allegations, a Regulatory Compliance Order can be used to ensure future compliance with our standards.
For the most serious cases it may be necessary to refer the case to a Disciplinary Panel.
What is the difference between RICS professional statements and guidance notes?
Professional Statements are MANDATORY.
Guidance notes represent BEST PRACTICE.
What are the RICS rules of conduct?
The Rules of Conduct are Mandatory for all RICS Regulated firms and members.
The RICS Rules of Conduct set out the standards of professional conduct and practice expected of all RICS members, students, trainees, and regulated firms.
The Rules help protect the public and uphold the reputation of the profession.
How do they differ between members and firms?
Members:
1 Interpretation
2 Communication
3 Ethical behaviour 4 Competence 5 Service 6 Continuing Professional Development (CPD) 7 Solvency 8 Information to RICS 9 Cooperation
Firms:
1 Interpretation
2 Communication
3 Professional behaviour 4 Competence 5 Service 6 Training and Continuing Professional Development (CPD) 7 Complaints handling 8 Clients’ money 9 Indemnity
10 Advertising 11 Solvency 12 Locum agreement 13 Use of designations 14 Information to RICS 15 Cooperation
How much PII is required for a sole trader turning over £90,000 pa?
£250k.
< £100,000 turnover - PII = £250,000
£100,001 - £200,000 turnover - PII = £500,000
> £200,001 turnover - PII = £1 million.
Once qualified how much CPD will you be required to undertake?
20 hours.
At least 10 of which formal.
What do you understand about the ‘Decision Tree’
A decision tree is a flowchart which can be used to decide how to deal with an ethical issue. It is more of a process than a snap decision.
The following criteria must be considered:
- Do you have sufficient advice on the issue?
- Is it legal?
- Is it in line with Global Ethical Standards?
- Have you consulted with appropriate people to make an informed decision?
- Do you have clear reasoning in your decision?
- Would you be content for your actions to be made public?
What is a conflict of interest?
Party Conflict:
A situation in which the duty of an RICS member
or a regulated firm to act in the interests of a client conflicts with a duty owed to another client or party in relation to the same or a related professional assignment.
Own Interest Conflict:
A situation in which the duty of an RICS member or a regulated firm to act in the interests of a client conflicts with the interests of that same RICS member/
firm (or in the case of a regulated firm, the interests of
any of the individuals within that regulated firm who
are involved directly or indirectly in that or any related
professional assignment).
Confidential Information Conflict:
A conflict between the duty of an RICS member under paragraph 2.2 to provide material information to one client, and the duty of that RICS member or of a regulated firm under paragraph 2.1 to another client to keep that same information confidential.
How is a conflict of interest managed?
By obtaining informed consent from all parties.
Giving Informed Consent is the way in which a party
who might be affected adversely by a Conflict of Interest acknowledges the existence of that risk, but instructs a regulated firm or individual RICS member to proceed despite that risk. The affected party can only give Informed Consent if the person explaining the position to them:
• is entirely transparent about any material factors and
• is sure that the party affected understands what
they are doing (including the risks involved and any
alternative options available) and is doing it willingly.
‘You should only seek Informed Consent in order
to proceed if you are satisfied that all of the
relevant clients’ (or other parties’) interests will be
served by you doing the work’.
Why did you advise that you couldn’t act at the Lambeth railway arch?
The Landlord of the property was a retained client of mine, for whom I was acting on several similar properties in a disposal capacity. I felt that being on the opposite side of a negotiation would have represented a Party Conflict.
Were there any mechanisms that you could put in place?
I am aware of information barriers and how they can be used to avoid conflicts of interest. However in this case I felt that would not be applicable. I work for a very small firm and would have been directly involved in transactions on both sides.
When the prospective client asked for a reduced fee was there any other way you could have handled this?
I could have suggested that we reduced the scope of work. However, I was not inclined to do this as my firm prides itself on providing a dedicated professional agency service to all our clients and a reduced fee arrangement would not have allowed us to provide the standard of service we aim to provide for all clients.
How could you have reduced the level of service and still be acting with integrity? Could the Terms of Engagement have been altered if it were not for the firms policy? Scope of service?
I could have suggested that I formally report to the client less frequently than I would on a full fee basis. If this was set out in my ToE I could have still acted with integrity. However, in practice it can be difficult to adhere to this type of agreement and feel obliged to exceed the agreed scope of works.
What did you include in your terms of engagement?
- Date
- Property Address
- Client’s contact details
- My firm’s contact details
- Scope of the instruction
- Basis of Appointment
- Fee Basis
Tell me about the review of terms of engagement? What was your role?
I streamlined the terms by simplifying some of the wording as I had noticed that clients were often slow to sign and return them.
I also noted that there was no specific wording to cover a scenario where a client identifies and agrees terms directly with an occupier, so I agreed some suitable wording with my director to protect our fee position.
What were the amendments you proposed to improve transparency around fees and adhering to mandatory professional standards?
- Our fees stated 10% of the annual rent. I suggested that we clarified that this disregarded any incentives and referred to the headline rent.
- To increase transparency, I modified the ToE to include a summary page at the front where the key terms and fees were stated explicitly.
- Our ToE stated that we reserved the right to charge a minimum fee. I suggested updating this to stipulate the actual figure so as to be as transparent as possible.
- I expanded the definitions of disposal to expressly include the surrender of a lease, or inter-company transaction.
In the probate valuation where in the members rules does it talk about competence?
Rule 4.
How did you ensure that this matter was dealt with and the client received the information they required?
I referred the client to our external valuation consultant who I knew very well and trusted to approach and represent the client professionally and competently.
Who can carry out a probate valuation? What would the surveyor need to have regard to?
A registered valuer. They would need to have regard to the Red Book - UK VPGA 15 Valuations for Capital Gains Tax, Inheritance Tax etc.
Also to inheritance tax legislation.
What is your firm’s policy on gifts?
Any gifts or hospitality must be registered on the company’s gift register.
Why is it necessary to have a policy on gifts?
It is necessary to comply with the Bribery Act 2010 and to ensure transparency and protect against claims of bribery or corruption.
What is the definition of a bribe?
‘Bribery - the offer, promise, giving, demanding or acceptance of an advantage as an inducement for an action that is illegal, unethical or a breach of trust
