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Mandatory- Elite APC Commercial Real Estate 2021 > Ethics - JL > Flashcards

Ethics - JL Flashcards

1
Q

Why do you want to become a member of RICS? What is the role of RICS?

A 
Status
Recognition
Market Advantage
Knowledge
Network

Role of RICS:

1) Protect consumers through strict regulation – R
2) Leading source of information and advice – A
3) Maintain the highest standards of education and training – T

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2
Q

What are the key functions of RICS? What is a Royal Charter?

A

The Royal Institution of Chartered Surveyors promotes and enforces the highest professional qualifications and standards in the development and management of land, real estate, construction and infrastructure.

Granted by royal prerogative. The body in question has to demonstrate not just pre-eminence and financial stability but also that bringing it under public regulation in this manner is in the public interest

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3
Q

Who is the current RICS president?

A

Kath Fontana

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4
Q

What do you understand by the term self-regulation?

A

RICS self-regulates, meaning that it operates within it’s own published regulatory framework, rather than being legislated by Government.

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5
Q

Can you tell me what you understand by the principles of better regulation? What is a Bye-Law?

A

PACTT -
Proportionality - penalty proportional to the breach
Accountability to all members and the public
Consistency - treating all members the same
Targeting - serious breaches
Transparency to all members, clients and the public.

Bye Law - a rule made by a company or society to control the actions of its members.

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6
Q

Give an example of one of the RICS Bye-Laws.

A

Bye-Law 5.2.1 requires all members to conduct themselves in a manner befitting membership of the RICS.

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7
Q

Tell me what are the 5 professional & ethical standards.

A

Act with Integrity
Always provide a high standard of service
Act in a way that promotes trust in the profession
Treat others with respect
Take responsibility

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8
Q

Tell me about a key principle of the Rules of Conduct for Firms.

A

Responsible principle
Professional behavior
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
Training and Continuing Professional Development (CPD)
Complaints handling- Alternative Dispute Resolution (ADR) mechanism
Clients’ money
Indemnity

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9
Q

Tell me about a key principle of the Rules of Conduct for Members. What disciplinary procedures can the RICS impose?

A

Ethical behaviour -
Members shall at all times act with integrity and avoid conflicts of interest
and avoid 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
Continuing Professional Development (CPD)
Solvency
Information to RICS
Cooperation

Action by Head of Regulation
Regulatory tribunal
Appeal panel

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10
Q

In what circumstances can these be imposed?

A

This can be triggered by someone complains to the RICS, an allegation by a client or third party because of information received or established by the RICS.

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11
Q

When did RICS last update their disciplinary panel rules?

A

1st October 2019

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12
Q

What are the different levels of action within these procedures? What do you understand by the term professional practice?

A

Disciplinary
Compliance order
Unlimited fine per breach proportionate to offence
Impose restrictions upon future continued RICS registrations
Expulsion from membership or removal of firm
Require publications of results of hearing in the Modus magazine on the RICS website and in local newspaper local to where firm or member is based.

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13
Q

What money laundering regulations or legislation are you aware of? What is a red flag of money laundering?

A

Money Laundering, Terrorist Financing and transfer of Funds (Information on the Payer) Regulations 2017 - as amended 2019. Red flags - High risk countries or non face to face business relationships.

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14
Q

What bribery legislation are you aware of? What is a bribe?

A

Bribery Act 2010. A bribe can be the giving, offering , promising or receiving of an advantage such as a payment, gift or services for an action which is illegal or a breach of trust.

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15
Q

What are the penalties for accepting a bribe?

A

Maximum 10 years or unlimited fine. Companies also face unlimited fines.

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16
Q

What are the penalties for being involved in money laundering? What constitutes an offence under the Bribery Act 2010?

A

Maximum 14 years or unlimited fine for assisting. Maximum 5 years or unlimited fine for tipping them off about suspicion or failing to report.

Offences
Bribing
Receiving a bribe
Bribing a foreign public official
Failing to prevent bribery
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17
Q

What constitutes an offence under the current money laundering regulations? What is Professional Indemnity Insurance (PII)?

A

Under the Crime Act 2002-
Concealing criminal property - (converts, transfers, disguises).
Arrangements - facilitates by or behalf of another person.
Acquisition use and possession of criminal property.

Professional indemnity protects clients, surveyors and third parties against negligence claims when there is a duty of care breach and a claim for damages arises.

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18
Q

Can you tell me about the RICS requirements in relation to PII?

A 
rics professional indemnity insurance 2020
Turnover                Min indemnity
£100,000 or less - £250,000
£100,001 to £200,000 - £500,000
£200,001 and above - £1,000,000

Uninsured excess
Up to and including £500,000 - The greater of 2.5% of the sum insured, or £10,000
Over £500,000 - 2.5% of the sum insured

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19
Q

What would you do if you received a notice of a PII claim from a client or their solicitor?

A

I will instruct a solicitor and contact my insurers

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20
Q

If you were providing services outside of your usual scope to a client, what might you need to do in relation to your PII cover?

A

For a consumer (any natural person acting for purposes outside their trade, business or
profession) claims, the requirement is for a limit of £1,000,000 in all for a period of six years
from the expiry date of the policy in force at the time of cessation. RICS’ minimum policy
wording will automatically provide this coverage. - Ask about this one!

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21
Q

What is an annual return?

A

An annual return is a document that all registered companies must provide which shows a snapshot of important (non-financial) information about the company’s internal structure.

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22
Q

Tell me what you understand about Complaints Handling Procedures (CHP). When and how can the RICS be involved in a complaint about a firm or member? Can you tell me about the CPD requirements for members of RICS?

A

Stage one - In house
Valid complainant to the whom the firm owes a duty of care
Quick clear and transparent
Nominated person
Acknowledged in 7 days and investigated with 28 days.

Stage 2 - ADR- Third party resolution
If the complainant is not happy with the review.
Independent redress scheme ie CEDR, The property redress scheme and the RICS Dispute Resolution Service.

RICS if a mem ber fails to respond to the complainant or prevents the prart gaining access to independent redress mechanism.

CPD requirements - minumum 20 hours - 10 hours formal and the rest informal.

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23
Q

Why is CPD important?

A

To ensure the RICS members are properly trained and competent to do their work. To update and refresh my understanding of the evolving RICS regulation, statements and standards.

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24
Q

Are you aware of any new guidance?

A

Government Code of Practice for Commercial Property Relationships during the Covid-19 Pandemic.

RICS Draft UK Guidance Note - Valuation of properties in multi-storey, multi-occupancy residential buildings with cladding, 1st edition

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25
Q

What is double dipping (dual agency)?

A

An agent has a contractual agency relationship with both the buyer and seller at the same time.

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26
Q

Why is double dipping (dual agency) an unacceptable practice? How would you close down a regulated firm?

A

It represents a conflict of interest and must not be undertaken by any RICS members from 1st January 2018.

Closing regulated firm -
Inform RICS of closure
Clients informed at the earliest opportunity and hand over arrangements made to new firm
Return any monies held to clients
Inform insurers and purchase run off cover for min of 6 years.
Retain a copy of client files and records for a minimum of 6 years.

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27
Q

What can you tell me about RICS guidance relating to bribery, corruption or money laundering?

A

Bribery, corruption, money laundering and terrorist financing

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28
Q

What status does it hold?

A

It is a professional statement and it is mandatory and globally applicable for RICS members and regulated firms. Effective from 1st September 2019.

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29
Q

What are some of the key principles of this guidance?

A

Part 1 mandatory requirements
Bribery and corruption - don’t offer or accept bribes, procedures the comply with law, reporting to authority, act with due diligence, retain records.
ML and TF - Don’t facilitate or be complicit, systems in place to comply with laws, report suspicion.

Part 2 Guidance - good practice
Written policy, code of behavior for staff, transparency, gifts register, staff training, keep up to date with legislation.

Part 3 Supplementary guidance on concepts in 1&2.
Risks based approach -
3 Ws - Who you act for, what you are doing, why you are being asked to do something.
Dealing with Politically exposed persons
Identify beneficial ownership. read others

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30
Q

What must/should firms/members do to comply with the guidance?

A

Part 1 mandatory requirements
Bribery and corruption - don’t offer or accept bribes, procedures the comply with law, reporting to authority, act with due diligence, retain records.
ML and TF - Don’t facilitate or be complicit, systems in place to comply with laws, report suspicion.

Part 2 Guidance - good practice
Written policy, code of behavior for staff, transparency, gifts register, staff training, keep up to date with legislation. read others

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31
Q

What are the current RICS rules for registration of firms? When did these last change? What were the key changes?

A

2007 - Changed in 1st April 2020.
Firms must register for regulation if they provide surveying services to the public, operate in Regulated Area A (UK) and at least 50% of the Firm’s Principals are RICS Members

Registration eligibility criteria are amended so firms have to have at least 25% of RICS qualified Principals

Firms who cannot meet this can implement a plan to secure compliance or be supervised by another RICS Regulated Firm

Firms must designate a Responsible Principal who provides oversight, accountability and engagement with RICS standards and regulation.

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32
Q

When must a firm register for regulation? What are the registration eligibility criteria? Who is a Responsible Principal?

A

Firms must register for regulation if they provide surveying services to the public, operate in Regulated Area A (UK) and at least 50% of the Firm’s Principals are RICS Members

Registration eligibility criteria are amended so firms have to have at least 25% of RICS qualified Principals

Responsible Principal who provides oversight, accountability and engagement with RICS standards and regulation.

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33
Q

What happens if a firm cannot comply with the eligibility criteria?

A

Firms who cannot meet this can implement a plan to secure compliance or be supervised by another RICS Regulated Firm

34
Q

Tell me about the restrictions to th euse of the designation “Chartered Surveyors” by firms.

A

Use of the designation ‘Chartered Surveyors’ is restricted to trading names only of firms

35
Q

When did these rules last change? What changes were made?

A

Use of firm designations
Version 4
with effect from 2 March 2020

Use of the RICS logo is restricted to Regulated Firms only

Use of the designation ‘Chartered Surveyors’ is restricted to trading names only of firms

Regulated Firms must include prescribed text in their terms of engagement to explain what being Regulated by RICS means to clients

36
Q

What are the rules around the use of the RICS logo and “Regulated by RICS” designation?

A

Use of the RICS logo is restricted to Regulated Firms only.

It is essential for members of the public, clients and potential clients easily to identify firms
that are ‘Regulated by RICS.’

37
Q

What must be included in ToE relating to firm regulation? What is a locum and who might need one?

A

Regulated Firms must include prescribed text in their terms of engagement to explain what being Regulated by RICS means to clients.

Locum - A locum is effectively another professional who is appointed to ‘stand in’ for the surveyor if they are unable to work, e.g. in the event of an accident/illness, unforeseen circumstances, prolonged absence (e.g. holiday or a sabbatical) or death.

38
Q

How could a sole trader set up their CHP using a locum? What RICS guidance relates to handling client money? When was this last updated?

A

a locum may be appointed by a sole practitioner as their complaints handling officer to ensure that their Complaints Handling Procedure can be run fairly and impartially.

Clients money- RICS professional statement “ Client Money Handling 1st ed 2019 - effect Jan 2020.

39
Q

What do the RICS Rules of Conduct say about client money?

A

A firm shall preserve the security of clients money entrusted to its care in the course of its practice or business.

40
Q

Explain your understanding of the RICS Scheme Rules relating to client money protection.

A

It provides a last resort protection in instances where an RICS regulated firm is unable to repay clients money.

41
Q

What are the main schemes available to firms? When were these last updated?

A

Client Money Protection for Surveying services
Client Money Protection for Residential Agents. Client Money Protection Scheme for Property Agents (Approval and Designation of Schemes) Regulation 2018

42
Q

What is the current compensation limit?

A

£50000 limit per claim, Cap on liability is £10.3m in one financial year

43
Q

What does the annual regulatory review fee relate to? What might client money include?

A

All regulated firms who hold clients’ money pay a regulatory review fee on an annual basis. The
income generated from these fees covers the operational costs of the client money regulatory
review visit programme. The fee is set based on the number of directors/principals in each firm,
which includes both RICS members and non-member individuals

Client money - rent deposits, rents, service charges, arbitration fees, interest.

44
Q

How does this differ to office money?

A

Money of any currency belonging wholly to the RICS regulated firm or its principals.

45
Q

What are some of the key principles of the RICS Professional Statement relating to client money protection?

A

Client Money Protection for Surveying services
Client Money Protection for Residential Agents. Client Money Protection Scheme for Property Agents (Approval and Designation of Schemes) Regulation 2018

Scheme membership,
Client money
Compensation for loss of client money
Compensation Limits from scheme.

46
Q

Explain the key themes from the RICS Futures 2020 Report. Explain the potential implications of the Hart v Large case.

A

RICS Futures 2020 - Climate change , China Urban Plans. Key Markets, Ethics and Big Data & Built environment.

Hart v Large: Bolam test - reasonable care
The key take-aways from this case are relevant to the requirements set out in the new RICS Home Survey Standard, coming into effect on 1st March 2021, namely:

Being clear on the report about the scope of inspection including limitations, caveats and actions available to the client;
Recommending justifiable further investigation;
Taking all reasonable steps to ensure clients understand the differences between the levels of service, including the extent and limitations of each option

47
Q

Explain what you understand by the RICS consultation on ethics and the Rules of Conduct.

A

The nine-week consultation - The updates to RICS ethical standards will enable professionals to demonstrate how they can respond to changing priorities from society and firms who are seeking advice in making sustainable decisions, as demand grows for businesses that strive to be good for the planet and contribute positively to society.

48
Q

Explain your understanding of precedent set in Burgess v Lejonvarn.

A

It was established at a preliminary issues hearing that, whilst there was no contract between the parties, the Defendant did owe the Claimants a duty of care.

49
Q

Tell me about RICS guidance on dealing with conflicts of interest

A

RICS Global Professional Statement on Conflicts of Interest 2017

50
Q

Who is a “qualified member” of RICS

A

Qualified RICS members are recognised by these designatory letters that are awarded on a combination of qualifications and experience:

51
Q

How do you ensure that you comply with bribery legislation?

A

Follow the principles of the Bribery Act 2020 and my companies internal policy

52
Q

How do you ensure you comply with money laundering regulations?

A

Follow the RICS statement for countering money laundering, bribery and terrorist financing 2019 1st edition and my companies policies

53
Q

Tell me about an instance of when you have been offered a gift or hospitality by a client.

A

When I was gifted some concert tickets by one of our instructed agents, I declined the gift because the policy (PHP gifting policy) had a cut off of and told them it was unnecessary and I was happy with the service they provided.

54
Q

Tell me about what you would do if you felt that an instruction was outside your scope of experience or knowledge.

A

I would explain why I have to decline the instruction to the client and refer them to a colleague that has that experience or knowledge.

55
Q

Tell me about how you would handle a client complaint.

A

By following my companies complaints handling procedure. Which is responding to the written complaint by acknowledging within 7 days and investigating within 28 days. Doing it in a quick, clear and transparent manner.
Notifying the complaints handling officer.

56
Q

Tell me about your understanding of your firm’s process for escalating a complaint to Alternative Dispute Resolution (ADR).

A

Answer

57
Q

Tell me about a conflict of interest check you have carried out.

A

Use valution level 2 example - I checked ownership information on land registry, whether there was also any ownership conflicts on the land with my client.

58
Q

If you identified a potential or actual conflict of interest, how could you handle this?

A

According to the RICS Professional Statement on Conflicts of Interest 2017, I will start the process of handling it :
Conflict avoidance - Consider whether I want to accept or decline the client after considering whether the conflict is resolvable
Written advice to both parties - If i intend to accept the instruction, I will set out in writing:

  • The nature of the conflict & circumstances and proposals to manage the conflict ie information barriers etc
  • Be clear as I can to ensure both parties can make a decision.
  • Request written confirmation of informed consent to act if I was proceeding

Conflict management - implement and manage the proposal to manage the conflict.

Informed consent
Reject the instruction
Information barrier

59
Q

Tell me about an instance of when you have handled client’s money

A

What is good practice for holding client money? What is the RICS Guidance?
Rule 8, Rules for Firms
- Obligation to keep accurate records
- Keep client accounts separately
- Word ‘client’ must be in the account name
- Client able to have the monies on demand
- Regular bank reconciliation
*NEW REQUIREMENT: publish procedures for handling Client Money on their website
RICS Client’s money: General advice for firms 2011
RICS Client Money Protection 2019

60
Q

How would you keep clients money securely and safely held?

A

Obligation to keep accurate records

  • Keep client accounts separately
  • Word ‘client’ must be in the account name
  • Client able to have the monies on demand
  • Regular bank reconciliation
61
Q

How do you ensure you comply with your firms bribery and gifts policy

A

By refusing any gifts that might improperly influence decisions I make in business transactions involving a PHP group company. Cash or gifts that are instantly cash convertible should not be accepted.

Gifts with value in excess of £100 require written approval of employee’s line manager & must be reported to the Groups compliance office, to add to the gifts register.

If i am unsure I will ask the Groups compliance officer.

62
Q

How did you ensure confidential information was not divulged?

A

By checking the recipients of every email before I send it. Never discussing confidential topics with the clients. Directing sensitive topics to my line manager. Keeping all my notes and laptops safe and secure.

63
Q

Why did you decline it?

A

I felt it would compromise my ability to make an informed decision without compulsion. We have a list of other agents that receive instructions from us and it wouldn’t seem fair.

64
Q

How did you record this internally?

A

I informed my Groups compliance officer.

65
Q

When might you accept a gift?

A

If felt it would compromise my ability to make an informed decision without compulsion. Routine business lunches or dinners that conform with generally accepted business practices are permitted. If they don’t exceed £100 per head.

If i am unsure I will ask the Groups compliance officer.

66
Q

Explain how you considered the agents gift?

A

I used the decision tree which allowed me to conclude that “do not proceed”

67
Q

Give me an example of when you have acted with integrity?

A

When discussing with a tenant coming up to a lease renewal, I recommended that they instruct an agent which would have resulted in fairer terms & quicker resolution for the tenant.

68
Q

Tell me about when you have provided a high standard of service. Tell me about how you have promoted trust in the profession.

A

When a tenant had queries about itemised charges, I broke down the charges and how they were all calculated and provided him backing invoices to support the charges which resulted in him being happy with the charges and subsequently paid them. Internal decorating years - which was recharged to them.

Nominated for young surveyor of the year award 2020. Blogging about surveying life, speaking on panels to help young people.

69
Q

Explain how you have taken responsibility in your current role. Tell me about how you treat clients with respect.

A

When a rent review was agreed in on my client’s tenant. I was unable to document the review without assurances the tenant would be able to pass it through to their subtenant. I took responsibility by arranging a meeting with the tenant, subtenant reps and their finance leads. On the call we were able to reach an consensus on the terms of the sublease and shortly after the rent review was completed for my client.

I treat clients with courtesy, politeness and always consider their cultural sensitivities. I respect their point of view and business objectives

70
Q

Tell me about how you treat other surveyors with respect.

A

I treat surveyor with courtesy, politeness and always consider their cultural sensitivities.

71
Q

Explain the key steps you would take if you decided to set up in practice as a sole trader after qualifying.

A 
Complaints handling procedure 
Client money 
Professional indemnity insurance 
Inform the RICS 
Arrangements in the event of incapacity or death
72
Q

If a prospective purchaser offered you a financial incentive to accept their offer, explain how you dealt with this.

A

I will refuse thier offer and explain why they have to removed from the bidding process. I will also communicate this to the seller and why the purchaser was removed. Report to our Group Compliance officer

73
Q

What would you do if you were asked by a client to reduce a fee proposal to win new work?

A

As the Surveyor, I would have to stand by my original tender/bid. Whilst it may have been higher than the other Surveyors, I was acting with integrity providing a bid which adequately encompassed the scope of works in the first place, thus by reducing it I am undermining the fact that I am acting within my limitations. I would stand my ground and allow the client the opportunity to make an informed decision.

74
Q

What would you do if you became suspicious that a client was involved in money laundering?

A

I will report the person o the money laundering reporting officer who will report with SAR to National Crimes Agency.

75
Q

What would you do if you became suspicious that a client was involved in terrorist activities?

A

• 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 manag

76
Q

If you were to set up in practice on your own, tell me about the types of insurance you would need.

A 
PI insurance
public liability
buildings insurance
employer liability cover
directors and officers cover
contents insurance
business interruption insurance.
77
Q

At South London, how did you ensure the tenant understood the service charge without advising them.

A

I did not provide any advice or recommendation. I used a company handbook on the way our service charge is apportioned to show him how the items are relfected and calculated. I also provided him with the backing invoices for the items shown.

78
Q

Why is it important to avoid advising a party who is not your client? How did you act ethically?

A

To avoid a situation like burgess & anor v lejonvarn 2020 where a duty of care can be formed unwittingly even if no money has changed hands.

79
Q

At Freshfields, how did you act ethically during negotiations?

A

When discussing with a tenant coming up to a lease renewal, I recommended that they instruct an agent which would have resulted in fairer terms & quicker resolution for the tenant.

80
Q

Did you apply your understanding of any specific RICS guidance here?

A

Code of leasing business practice 2020

Mandatory- Elite APC Commercial Real Estate 2021 (11 decks)

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