Ethics and Professional Rules of Conduct

Question 1

What are the general theories of ethics ?

Answer 1

Dentology - The theory of right and wrong based on strict rules i.e. an action could be wrong even if it has good consequences
Consequentialism - The theory of right or wrong based on the consequences of the action i.e. a wrong action (lie or break a promise) could be right if it brings good consequences.

Question 2

On what ethical principles the RICS Rules of Conduct are based ?

Answer 2

1 Honesty
2 Integrity
3 Competence
4 Service
5 Respect
6 Responsibility

Question 3

What is in your opinion the purpose of RICS Rules of Conduct ?

Answer 3

They provide a structure for making ethical decisions about how to behave as a professional.

Question 4

Can you list al the Rules of Conduct and explain their obligations towards RICS members ?

Answer 4

Rule of Conduct 1 HONESTY INTEGRITY
Members and firms must be honest, act with integrity and comply with their professional obligations, including obligations to RICS.
Rule of Conduct 2 COMPETENCE
Members and firms must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise.
Rule of Conduct 3 SERIVCE
Members and firms must provide good-quality and diligent service.
Rule of Conduct 4 RESPECT
Members and firms must treat others with respect and encourage diversity and inclusion.
Rule of Conduct 5 RESPONSIBILITY
Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession.

Question 5

What are the new AML regulations 2023?

Answer 5

The 2022 Money Laundering and Terrorist Financing Regulations, effective from 1 April 2023, will require businesses subject to the MLRs to conduct checks of the register of overseas entities (ROE) at Companies House for dealings with corporate entities.

Question 6

When did Bribery Act 2010 came into force?

Answer 6

The Bribery Act 2010, which came into force on 1 July 2011, makes it an offence for a UK national or person located in the UK to pay or receive a bribe, either directly or indirectly.

Question 7

How should RICS regulated firm control any potential Bribery ?

Answer 7

By creating a written policy, including risk assessment
By implementing a register for any gifts and hospitality.

Question 8

What is Fire safety Act 2021 (The FSA) ?

Answer 8

The FSA amends the Regulatory Reform Order 2005 to clarify the scope of fire risk assessments under that order.

Question 9

What is Building Safety Act 2022 (The BSA)?

Answer 9

The BSA includes requirement for the demonstrable competence of practitioners.

Question 10

What are RICS ethical principles ?

Answer 10

The maintenance of reliable services to clients, sustaining proper standards of conduct and behaviour, and upholding the reputation of the profession.

Question 11

What is IES ?

Answer 11

International Ethics Standard established in December 2016.
The IES has 10 international ethics Standards and RICS has distilled these into the new Rules of Conduct.

Question 12

When the New RICS Rules of Conduct took an effect ?

Answer 12

The new Rules of Conduct took effect from 2 February 2022.
The new Rules of Conduct apply to both Members and Firms globally. The new Rules of Conduct replace the existing Rules of Conduct for Firms and for Members and the Global Professional & Ethical Standards.

Question 13

What The Rules of Registration for Firms (Version 6, effective from 1st April 2020) require ?

Answer 13

Firms must register for regulation if they provide surveying services to the public, or they operate in a regulated area of the UK, and if at least 50% of the firm’s principals are RICS members.

Question 14

Is RICS monitored by Government ?

Answer 14

The RICS operates under a self-regulatory model.
Members are not regulated by government, but internally monitored and inspected by the RICS and based on its regulatory framework.
External regulation and or legislation will only be required if self-regulation is not working.

Question 15

What are RICS regulatory goals ?

Answer 15

Proportionality
Accountability
Consistency
Targeting
Transparency

Question 16

What is RICS’ Conflict of interest statement about ?

Answer 16

Conflicts of interest First Edition March 2017 is an RICS Professional Statement and mandatory to follow. It became effective from 1st January 2018, and it states if there is a material risk of a conflict of interest, you must not proceed.

Question 17

How Conflict of Interest can be identified ?

Answer 17

Many firms, including the
smallest firms, noted that
electronic databases were used
to identify conflicts of interest.
The electronic databases allow
employees to check if there
are any potential conflicts of
interest before an engagement
is initiated.

Question 18

What is conflict of interest ?

Answer 18

A conflict of interest arises in a situation where there may be a potential risk that the professional judgement of an RICS-regulated firm or member will
be compromised when undertaking an assignment.

Question 19

What are the most common conflicts that arise ?

Answer 19

• A ‘party conflict’ – a situation in which the duty to act in the interests of a client or
  other party in a professional assignment conflicts with a duty owed to another client
  or party in relation to the same or a related professional assignment.
• An ‘own interest conflict’ – a situation in which the duty to act in the interests of
  a client in a professional assignment conflicts with the interests of that same RICS
  member/firm.
• A ‘confidential information conflict’ – a conflict between the duty of an RICS
  member to provide material information to one client, and the duty of that RICS
  member to another client to keep that same information confidential.

Question 20

What is informed consent?

Answer 20

Informed consent occurs when a party who might be adversely affected by a conflict
of interest acknowledges the existence of that risk but still agrees to instruct an RICS regulated firm or RICS member to proceed with the assignment.

Question 21

How should RICS member proceed if an actual or potential conflict of interest is identified ?

Answer 21

The professional statement
prohibits RICS members and regulated firms from proceeding with an assignment,
unless informed consent is obtained from the affected parties. C

Question 22

What’s the purpose of PII ?

Answer 22

PII cover compensates the firm for losses incurred as a result of a successful claim for negligence. RICS publish minimum requirements for this.

Question 23

What thresholds must a successful claim meet?

Answer 23

The complainant must prove that you have provided a service and that they have suffered financial loss as a result.

Question 24

What is negligence?

Answer 24

Negligence is a breach of duty of care to provide reasonable care and skill or, to put it simply, a failure to provide a duty of care that should reasonably be expected from a chartered surveyor.

Question 25

What’s the definition of a remedy to a breach of contract?

Answer 25

A remedy for breach puts the claimnant into the position that they would have been in had the breach not occurred.

Question 26

Run off cover

Answer 26

RICS have a requirement of a minimum of six years after cessation of trade for consumer claims for runoff cover. You can obtain cover for longer periods than six years, or higher levels if this is adequate or appropriate.
Firm should undertake a risk assessment about whether run-off cover is required for a longer period of time to cover the ‘long-stop’ period of 15 years.

Question 27

How long after the services a claim can be brought ?

Answer 27

The limitation period for bringing a claim against a member for breach of contract will expire six years from the date on which the member performed the service required under the contract.

Where the claim is brought as one for the tort of negligence, rather than for breach of contract, the period will often be longer.

Question 28

What is a long stop ?

Answer 28

Long stop refers to claims for financial loss or property damage.
It is based on the change introduced in 1986 to the Limitation Act 1980, which allowed an extra period for a claim in negligence to be brought.
A claimant can bring a claim in negligence up to three years after the date on which the claimant learned about their entitlement to bring the claim. This three-year period applies even if it results in a period longer than the conventional six-year period referred previously, but it is subject to a ‘long-stop’ period of 15 years from the date of the negligent act

Question 29

For how long members should retain their files after providing any professional services ?

Answer 29

Given the ‘long stop’ date of 15 years, RICS recommends that members retain their files for 15 years after providing any professional services.

Question 30

What PII should include?

Answer 30

The policy must also include RICS minimum policy wording, provide a minimum level of indemnity based on turnover, and provide a maximum level of uninsured excess.

It must be underwritten by an RICS approved insurer, and it must cover past and present employees and provide runoff cover.

There should be a £1m aggregate limit for consumer claims. It is automatically included within the RICS minimum wording, and this should be done by insurers without any premium paid to trigger this.

Question 31

What is the minimum level of indemnity for Firm’s turnover in the preceding year £100,000 or less?

Answer 31

Minimum limit of indemnity is 250k

Question 32

What is the minimum level of indemnity for Firm’s turnover in the preceding year £100,001 to £200,000

Answer 32

Minimum limit of indemnity is 500k

Question 33

What is the minimum level of indemnity for Firm’s turnover in the preceding year £200,001 and above

Answer 33

Minimum limit of indemnity is £1,000,000

Question 34

What is a maximum uninsured excess with limit of indemnity Up to and including £500,000

Answer 34

The greater of 2.5% of the sum insured, or £10,000

Question 35

What is a maximum uninsured excess with limit of indemnity Over £500,000

Answer 35

2.5% of the sum insured

Question 36

What is Arrangements for death and incapacity about ?

Answer 36

A firm which has sole practitioner or a sole Director in corporate practice, should have in place appropriate arrangements in the event of that sole principal’s death or incapacity or other extended absences.

Question 37

When Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 has been amended ?

Answer 37

The Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020 (the “amendment regulations”) amended the existing Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

Question 38

What are the recent updates to the money laundering and terrorist financing regulations?

Answer 38

From 10 March 2022, before establishing a business relationship with a customer when carrying out due diligence, any discrepancies found in trusts must be reported to HMRC or
If the discrepancy relates to a company, an unregistered company, a limited liability partnership or eligible Scottish partnership, to Companies House.
Customer Due Diligence (CDD) is required on both buyers and sellers,
Companies need to nominate an MLRO which is a money laundering reporting officer.
The cash payment limit has been reduced to €10,000 so companies are not allowed to receive a greater sum than this or its currency equivalent in cash.

Question 39

Who does Bribery Act 2010 apply to?

Answer 39

It captures all UK businesses operating at home or overseas and it also captures non-UK businesses operating in the UK.

Question 40

What is a bribe?

Answer 40

A bribe is a financial or other advantage to encourage that person to perform their functions or activities improperly or to reward that person for having already done so.

Question 41

What are the offences?

Answer 41

It is an offence to offer a promise or give a bribe. It is also an offence to request, agree to receive, or accept a bribe.

Question 42

What are gifts and hospitality considered as?

Answer 42

These are defined in the Act as promotional expenses. So those that are reasonable and proportionate in terms of gifts and hospitality are quite acceptable.

Question 43

What is your company policy on these?

Answer 43

My employer introduced gift and hospitality register to record gifts offered and given to others, as well as any gifts received or accepted by the organisation.
Gifts/hospitality that is declined are also noted so that the organisation is aware of pressures staff may face and where they are likely to arise.

Question 44

Why does it have that policy?

Answer 44

It is an offence under the Bribery Act 2010 to accept any gift or consideration as an inducement or reward for:
* doing, or refraining from doing, anything; or
* showing favour or disfavour to any person.

Question 45

Countering Bribery and Corruption, Money Laundering and Terrorist Financing – 1st Edition published 1st February 2019.

Answer 45

In addition to the legislation around these matters, RICS has issued a Professional Statement:

Countering Bribery and Corruption, Money Laundering and Terrorist Financing – 1st Edition published 1st February 2019.

It became mandatory on 1st September 2019.

Question 46

In relation to bribery and corruption RICS-regulated firms should:

Answer 46

prepare a written policy covering anti-bribery and corruption including a risk assessment.

Question 47

In relation to bribery and corruption RICS members should: