ETHICS JC Flashcards
ETHICS
Answer
What standards are required for sole practitioners to be compliant with the RICS regulations ?
Rules of conduct for firms.
What are the different status types of RICS documents?
- Professional Standards
- Practice Information
What is meant by ‘treat others with respect’?
Be courteous, polite and consider cultural sensitivities and business practices
Never discriminate, encourage the fair and respectful treatment of clients
Why are the ethical standards important?
Create a clear and streamlined guide to members to ensure that clients and anyone else who deals with the RICS has confidence in the profession
What factors does the RICS Decision Tree consider?
Sufficient facts Legality Ethical standards Consultation of appropriate people Clear reasoning Impact if actions made public
Give some examples of how you reflect the RICS ethical standards in your work.
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What is the RICS Decision Tree?
Flowchart to help members decide how to act in difficult situations where their professional ethics may be at stake
What is a ‘Chinese Wall’? (now informed consent/ information barrier)
An information barrier within an organisation used in order to prevent exchanges or communication that could lead to a conflict of interest
What is meant by ‘act with integrity’?
Being honest and trustworthy in all that I do
Transparent, respecting confidential information, not taking advantage of anyone, not allowing bias or pressures affect my judgement or obligations, not accepting gifts or hospitality that might suggest an improper obligation, acting in the interest of the public
What is meant by ‘take responsibility’?
Be accountable for my actions and dont blame others if things go wrong
Always act with skill, care and diligence, respond to complaints in the appropriate professional manner, prepare to question things that don’t seem right
What is a bribe?
The exchange of something of value in return for someone doing or agreeing to do something improper in a business context
Bribery also covers the offer or request for a bribe, even if it is not completed
What is meant by ‘provide a high level of service’?
Ensuring the best possible advice, support or performance is given to my clients
Be clear about the service being provided, act within my scope of competence, transparent about fees and any other costs or payments, communicate with clients in a way that allows them to make informed decisions
What are the penalties under the current bribery legislation?
A maximum 10 years’ imprisonment and/or an unlimited fine
Give some examples of where conflicts of interest may arise.
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What is a conflict of interest?
A situation which effects the impartiality of one party. Anything that impedes or might be perceived to impede an individual’s or firm’s ability to act impartially and in the best interest of a client.
What should a surveyor do if a conflict of interest arises?
Should be dealt with by implementing openness and transparency
Declare any conflicts of interest clearly to all parties ASAP and offer to stand down from acting for any party
All parties can then decide how they wish to proceed and if there are any objections you must stand down
Your neighbour asks you for help in designing a loft conversion - what would you do?
No terms and conditions
No PII
Potential conflict of interest
Follow the RICS Decision Tree
Say no and offer to set up a formal meeting with a director of my firm
Alternatively, refer them to the RICS ‘Find a Surveyor’ service
Who does the current bribery legislation affect?
Near-universal jurisdiction, allowing for prosecution of UK individuals or companies doing business overseas, as well as overseas individuals or companies doing business in the UK
What is meant by ‘promote trust within the profession’?
Act in a manner, both in professional and private life, that promotes me and my firm in a positive way
Promote the highest standards globally, amending behaviour to suit others, fulfil obligations
What legislation exists in relation to bribery in the UK?
Bribery Act 2010
How would you define ethical behaviour for a chartered surveyor?
Acting in accordance with the 5 RICS professional and ethical standards
What procedures should RICS corporate members follow in relation to preventing bribery?
RICS corporate members should follow the 6 principles in preventing bribery practices:
Proportionate procedures - procedures should be proportionate to the bribery risks the company faces
Top level commitment - zero tolerance to bribery
Risk assessment - the company should periodically assess the internal and external risks of bribery
Due diligence - systematically investigate employees and business partners (the level of which should be informed by the risk assessment)
Communication (including training) - communicate policies, operate confidential whistle-blowing service, provide training
Monitor and review - periodically review procedures and make improvements where necessary
What are facilitation payments and what is their legal status?
Also known as ‘grease’ or ‘speed’ payments
Unofficial payments made to public officials in order to secure or expedite the performance of a routine government action
Illegal under the Bribery Act 2010
If a contractor wants to buy you lunch on the day of an interim valuation, how would you respond?
Reject the offer, as it may improperly influence your decisions/judgement or give the appearance of doing so
A contractor invites you to their Christmas dinner dance - would you go?
Maybe, however only offer or accept gifts and hospitality that you would be happy for others to know about
Question whether the gift is proportionate and reasonable in terms of value and frequency
Reject if it may improperly influence your decisions/judgement or give the appearance of doing so
A contractor gives you a bottle of champagne at Christmas. Would you accept it?
Maybe, however only offer or accept gifts and hospitality that you would be happy for others to know about
Question whether the gift is proportionate and reasonable in terms of value and frequency
Reject if it may improperly influence your decisions/judgement or give the appearance of doing so
What considerations should RICS members have in relation to offering or accepting gifts and hospitality?
Only offer or accept gifts and hospitality that are customary, proportionate and reasonable in terms of value and frequency
Never offer or accept any gift or hospitality if it may improperly influence your decisions/judgement or give the appearance of doing so (e.g. consider the timing of the gift)
Only offer or accept gifts and hospitality that you would be happy for others to know about
Follow the policies and procedures of your employer in relation to gifts, hospitality and promotional expenditure - e.g. record in company’s gifts and hospitality register
Report any concerns about bribery to your employer or to RICS Regulation
What is the purpose of the current UK legislation on bribery?
Criminalises bribery in the UK, making it a criminal offence to directly or indirectly:
Offer, promise or give a bribe
Request, agree to receive or accept a bribe
What would you do if a contractor offers you a gift such as a scale rule with the contractor’s name on it?
Accept it, as it is a bona fide promotion intended to improve the image of an organisation
Would the offer or acceptance of gifts or hospitality amount to a bribe?
Could amount to a bribe if they are intended to induce someone to behave in a manner that breaches an expectation that they will act in good faith and impartially
However, bona fide hospitality and promotion intended to improve the image of an organisation, better present products and services or establish cordial relations is seen as an established and important part of doing business and is not criminalised under the Act
Describe a conflict of interest you have experienced and how it was resolved.
As my firm is multi-disciplinary, there are certain clients who employ different disciplines. To prevent any wrongdoing, my firm ensures they are separate fee amounts, there is an information barrier and there is informed consent.
What standard are judgements under the current bribery legislation based upon?
Judgments are decided based on the ‘reasonable person’ test
Would you go against the recommendations of a chartered surveyor?
Yes providing there is reason for it (e.g. not acting within the RICS rules of conduct or ethical standards)
You have put in a fee bid to a client. They contact you and say that another practice has quoted a lower fee, but they would like you to do the work. They ask you to reduce your fee to match the other practice. What should you do?
The other practice may not exist and could be a negotiating tactic. The scope of the works may be different.
Avoid price fixing, aggressive fee cutting or collusion with competitors.
Original fee quote should have been a reasonable reflection of the works required.
Reducing costs may mean corners are cut and quality is reduced in order to make a profit.
Client may be expecting the same next time as well and this will not be sustainable.
Can chartered surveying practices work for a client, but not charge a fee?
Commercial decision based on the opportunity and risk (i.e. may be charitable work).
Need to question quality of work and incentive if no fee is in place.
Legal advice required regarding the formation of a contract (i.e. no consideration).
Can one part of a chartered surveying practice work for a client, whilst another part of the practice is working for a different client who has conflicting interests to the first?
Yes, providing a Chinese wall is effectively implemented (now information barrier).
Teams should be physically separated in different parts of the building (or in different buildings)
Requires a compliance officer to monitor the ‘wall’ - education and training must be made available to those managing the wall
If you saw one of your team send out an interim valuation that over values the works, what do you do?
Talk to them initially and point out the error
Suggest the error is corrected before issuing
Escalate to a director if the error was purposeful
Consider reporting through firm’s whistleblowing procedure if necessary
If you were self-employed, would you consider adjusting your PII to carry out a piece of work or decline to do the work?
Commercial decision based on the opportunity and risk
Never proceed without the sufficient level of PII
What does having the PII policy written on a full civil liability basis mean?
A full civil liability basis means if a claim isn’t specifically excluded, it’s included (as opposed to a ‘negligence only’ policy, where if a claim is not specifically included, it’s excluded)
Explain the term ‘claims made basis’.
The policy at the time the claim is made will respond, not the policy in place at the time of the negligence.
Insurer will only pay out if the policy was within the period of the insurance, not after, unless there is run off cover.
Does the RICS publish any guidance on the Disciplinary Measures?
Yes, there is a large section on the RICS website.
What is the Royal Charter?
Awarded in 1881 by Queen Victoria, to maintain and promote the usefulness of the profession for the public advantage.
Can you name some of the professional groups?
Quantity Surveying and Construction.
Project Management.
Building Surveying.
Planning and Development
Commercial Property
Residential
Dispute Resolution.
What are fixed penalties and when are they issued?
A fixed penalty is an administrative fine and/or caution issued by RICS when a Regulated Member fails to provide us with information that we have requested. This information can include: a firm or valuer submitting their annual return record, updating CPD records or payment of regulatory fees.
What replaced consent orders from 1 October 2019?
A Regulatory Compliance Order is an agreement between RICS and a Regulated Member that they are liable for disciplinary action (a Regulated Member is and RICS professional or regulated firm). The Regulated Member:
- admits that they have fallen short of the standards expected
- agrees to an appropriate sanction
- in some cases, take steps to meet the standards expected and/or to prevent it happening again
What does a regulatory compliance order consist of?
1) Caution
2) Reprimand
3) A requirement that the Regulated Member gives one or more undertakings as to future conduct
4) A requirement that the Regulated Member takes or stops taking certain actions within a specified period of time
5) Conditions on the Regulated member’s continued membership of RICS
6) Conditions on a Regulated Members registration for regulation
7) A requirement that the Regulated Member pays a fine of up to £2000 per breach
Can you tell me more about the New Arbitration Service?
- Brought in due to a decline in the use of Arbitration due its slowness.
- Arbitrators are supervised to ensure they use the powers given to them under the Arbitration Act 1996 to robustly manage costs.
- Will be faster and cheaper than courts.
- Will be better than adjudication, as it will be more detailed when looking at an issue, resulting in judgements that are commercially sensible.
Can you describe the RICS governing structure to me?
Governing Council
I
RICS BOARD —- / —– Standards and Regulation Board
What are the three market sectors covered by the RICS?
Land, Property, Construction
What does the RICS state about PI insurance?
The RICS Rules of Conduct for Firms requires all regulated firms to be covered adequate and appropriate PII which meets the standards approved by the Regulatory Board
What should a PII policy contain?
1) Must be on a claims made basis
2) Must be on an each and every claim basis
3) Policy wording is written on a full civil liability basis
4) Underwritten by a listed insurer
5) Covers past and present employees
6) Run-off cover
7) Minimum level of indemnity required by the RICS
What is PII and what is its purpose?
Professional Indemnity Insurance (PII):
Protects firms against losses resulting from professional negligence, errors and/or omissions which cause financial loss to a third party
Ensures a firm’s clients do not suffer financial loss which the firm cannot meet
How would you determine what is sufficient in terms of PII runoff cover?
Should be for a minimum of 6 or 12 years, depending on how the contract was executed, however negligence claims can be made up to 15 years after work was undertaken - advice from an insurance broker should be sought as to whether to maintain for the full 15 years
What is generally excluded from PII cover?
1) Material damage
2) Theft
3) Personal injury
4) Damage to third party property
5) Work carried out prior to the inception of the policy
6) Insured v insured claims (i.e. a company suing an employee for professional negligence)
7) Insolvency
What are the minimum levels of PII required?
1) £100,000 or less turnover = min. £250,000 indemnity
2 )£100,001 to £200,000 turnover = min. £500,000 indemnity
3) £200,001 and above turnover = min. £1,000,000 indemnity
What should you do in case of a potential claim on your PII?
Must notify insurer in the event of:
An actual claim
A written or verbal threat of a claim
Any circumstance that the firm has reason to believe may result in a claim
Any complaint notified via the firm’s CHP
How can negligence claims be avoided?
1) Good communication
2) Clearly understand client’s objectives and confirm precise details
3) Check you are competent to perform the instruction
4) Undertake work in accordance with any relevant RICS guidance
5) Keep up-to-date notes
6) Be aware of changes in legislation
7) Try and resolve any complaints as soon as possible
What is the RICS Assigned Risk Pool?
1) Insurance facility for regulated firms that find themselves unable to obtain PII in the normal market
2) Firms can remain in the ARP for a maximum of 3 years, where they will be audited and guided in how to amend their business procedures/practices ready to obtain market PII again
What is the Carsberg Report?
A report undertaken in 2005 as a result of members general dissatisfaction with the RICS’ internal Regulatory procedures.
What are the five principles of better regulation for?
Whenever RICS receive a complaint or conduct an investigation, there are five principles that dictate their regulatory process.
What is meant by proportionality as part of the 5 principles of better regulation?
Looking at the seriousness of the contravening of the rules, for example, was the contravening just the use of an old logo. Regulating when necessary and taking actions that are appropriate and legitimate.
What is meant by Accountability as part of the 5 principles of better regulation?
Making sure there is a structure in place so everyone knows what they should be doing. Able to justify any action and decision, ensuring transparency and be subjected to public scrutiny.
What is meant by consistency as part of the 5 principles of better regulation?
Making sure the rules are applied in a common way to every member and firm. Ensuring a common mind set and approach to promote fairness.
What is meant by targeting as part of the 5 principles of better regulation?
Focused and unambiguous regulation based on risk.
What is meant by transparency as part of the 5 principles of better regulation?
Ensuring clear definitions, effective consultation and communication is always used.
What must a RICS regulated firm do in relation to bribery and corruption?
- Not offer or accept, directly or indirectly, anything that could constitute a bribe
- Have plans in place to comply with applicable laws governing bribery and corruption and ensure that these are followed
- Report any activity they are aware of that breaches anti-bribery and corruptions laws to the relevant authorities (as specified in local legislation) where there is no legislation the activity should be recorded and if possible reported to a senior colleague.
- 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 and corruption; in determining the appropriate level of due diligence, the firm may consider the type of business activities they engage in and the environment in which they operate.
- Retain information detailing how the firm has met the requirements of this professional statement
What must a RICS regulated member do in relation to bribery and corruption?
- not offer or accept, directly or indirectly anything that could constitute a bribe
- ensure that they have adequate knowledge of bribery and corruption to be able to comply with the requirements of this professional statement
- Report any activity they are aware of that breaches applicable anti-bribery and corruption laws to the relevant authorities; where there is no legislation the activity should be recorded and, if possible, reported to a senior manager.
What must a RICS regulated firm do in relation to money laundering and terrorist financing?
- not facilitate or be complicit in any money laundering or terrorist financing
- Report any suspicions to relevant authority
- Evaluate and review periodically the risks that prospective and existing business relationships present in terms of ML and TF
- Ensure that their responses to the risks identified are appropriate, including conducting appropriate checks on clients and customers.
- 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, that provide the obliged market participant with a complete exchange of all legally required AML information regarding the identified party and only by confirming the identity and verification of identity of the client or counterpart in question; ultimate responsibility for the assessment of risk and actions taken based on this remain with the member or regulated firm
- take appropriate measures to understand the client and the purpose of the transaction
- verify the identity of their client by undertaking basic identity checks
- record and retain information detailing how the firm has met the requirements of this professional statement.
What must a RICS regulated member do in relation to money laundering and terrorist financing?
- not facilitate or be complicit in money laundering or terrorist financing activities
- report any suspicions of money laundering or terrorist financing activities 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.
What procedures should a RICS regulated firm have in place to prevent bribery?
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