Ethics - KT Qs

Question 1

List the 5 New Rules of Conduct?

(“Chairman asks these questions at the end - answers should be quick and confident”)

Answer 1

1) Members & Firms must act with HONESTY, INTEGRITY and comply with their personal & professional obligations to RICS.

2) Maintain PROFESSIONAL COMPETENCE and ensure necessary expertise.

3) Must provide a GOOD-QUALITY and DILIGENT service.

4) Must treat others with RESPECT and encourage DIVERSITY & INCLUSION.

5) Must act in the PUBLIC INTEREST and maintain public confidence in the profession.

Question 2

What are the 7 obligations for firms?

Answer 2

RICS regulated firms MUST:

1) Publish a RICS approved COMPLAINTS HANDLING PROCEDURE and maintain complaints log

2) Ensure adequate and appropriate PROFESSIONAL INDEMNITY INSURANCE

3) If a sole principal, make appropriate arrangements for their professional work to continue in the event of their incapacity/death (LOCUM AGREEMENT).

4) Firms must COOPERATE WITH RICS

5) Promptly provide all information reasonably requested by the STANDARDS & REGULATION BOARD

6) Display on thier business literature an RICS designation / LOGO KIT.

7) Report to RICS any MATTER they are required to report under the Rules for Registration.

Question 3

Tell me about your firm’s gift policy?

Answer 3

If a gift is under £50 we are able to accept, as long as it is LOGGED on the firm’s GIFT REGISTER.

The gift register is regularly reviewed by the Compliance Officer.

We do not accept cash or events where the donor is not present.

If in doubt, company policy is to politely refuse.

Question 4

Why is it necessary to have a policy on gifts?

Answer 4

To comply with the BRIBERY ACT (2010).

(To ensure transparency and protect against claims of bribery/corruption).

Question 5

What is the definition of a bribe?

Answer 5

A GIFT or INCENTIVE which impairs professional judgement.

(or a service for an action which is illegal, unethical or a breach of trust).

Question 6

What are the 4 offences under the Bribery Act (2010)?

Answer 6

Must not:

1) Give a bribe
2) Recieve a bribe
3) Bribe a foreign public official
4) Fail to prevent bribery

Question 7

What are the principles of the Bribery Act (2010)?

Answer 7

1. Proportionality
2. Top-level commitment
3. Risk Assessment
4. Due Diligence
5. Communication
6. Monitoring & Review

Question 8

A client is happy with some work you have done for them and invites you to their box at a local football match. Are you going to take up their offer? What would you tell them?

Answer 8

I would politely decline, as this is against my companies gift policy (value under £50).

However, I am aware the Bribery Act (2010) states that hospitality is not prohibited. It states that offering a client reasonable and proportionate hospitality will not constitute an offence such as tickets to a major sporting event, so long as this is accurtely recorded in the company gift register.

Question 9

Why did you accept the bottle of wine in your Level 2 example?

Answer 9

Because the value was less than £50, I was able to accept as long as the gift was logged on the company GIFT REGISTER.

This is in accordance with my firm’s gift policy.

The law say if a gift is “REASONABLE and PROPORTIONATE” it will not consitute as an offence.

I had regard to the RICS ETHICAL DECISION TREE when determining my response (decision was informed with clear reasoning).

Question 10

What is the Bribery Act (2010)?

Answer 10

The key legislation to consider for gifts and bribery - it aims to reduce bribery in commercial activity.

It is based on 6 principles and outlines 4 offences.

Firm’s must demonstrate they have taken steps to prevent bribery to include the identification of potential risks, staff training and regular review.

Question 11

Once qualified, how much CPD will you be required to undertake?

Answer 11

20 hours year (at least 10 formal)

Question 12

What is the difference between formal / informal CPD?

Answer 12

FORMAL = Structured learning where there are CLEAR LEARNING OBJECTIVES and outcomes (e.g. training course / seminar).

INFORMAL = Self-managed learning (e.g. private study / on-the-job training).

Question 13

Why does RICS uphold standards for public advantage?

Answer 13

As per the ROYAL CHARTER (granted by Privvy Council in 1881).

This means that the organisation can work as a self-regulatory body and act in the PUBLIC INTEREST.

Question 14

How is Disciplinary Action taken?

Answer 14

THREE levels of disciplinary action:

1) Head of Regulation
2) Disciplinary Panel
3) Appeal Panel

The first step is action by the HEAD OF REGULATION. For low-level breaches, they can serve a FIXED PENALTY NOTICE or a REGULATORY COMPLIANCE ORDER (written document between RICS and a member that they are LIABLE for disciplinary action).

For more serious cases, the matter can be referred to the DISCIPLINARY PANEL. They can Reprimand/Fine/Expulsion from membership.

APPEAL PANELS can consider a members appeal against review of a decision.

Question 15

What are the core RICS guidance documents?

Answer 15

RICS has introduced two new document types: Professional Standards & Practice Information.

1. Professional Statements & Guidance Notes are merging to form PROFESSIONAL STANDARDS. These are:

• MANDATORY requirements where the word ‘MUST’ is used.
• BEST PRACTICE where the word ‘SHOULD’ is used.

2. PRACTICE INFORMATION documents are also being created.

• This is SUPPLEMENTARY guidance for members to follow. Guidance is NOT mandatory and does NOT provide explicit recommendations.

Question 16

Can you give me an example of a new Professional Standard as of 2023?

Answer 16

RICS Professional Standard: Comparable Evidence in Real Estate Valuation (2023).

RICS Professional Standard: Code for Leasing Business Premises (2023).

Question 17

What are Members obligations to RICS and what are firms obligations to RICS?

Answer 17

RICS Members must: (3)

1) Comply with the CPD requirements set by RICS (20 hours per year, at least 10 formal).

2) Co-operate with RICS

3) Provide all information reasonably requested by the Standards & Regulations Board.

RICS Firms must: (7)

1) Publish an RICS approved COMPLAINTS HANDLING PROCEDURE and complaints log

2) Ensure all work is covered by adequate and appropriate PROFESSIONAL INDEMNITY INSURNACE.

3) If sole principal, make appropriate arrangements for their professional work to continue in the event of their incapacity/death (LOCUM AGREEMENT).

4) Co-operate with RICS

5) Provide all information reasonably required by the Standards & Regulations Board.

6) Display business literature a designation they are RICS Regulated (logo kit)

7) Report to RICS any matter they are required to report under the Rules

Question 18

How much Professional Indemnity Insurance is required for a sole trader turning over £90,000 pa?

Answer 18

£250,000.

£100,000 less = £250,000

£100,001 to £200,000 = £500,000

£200,001 more = £1 million.

Question 19

What is Professional Indemnity Insurance?

Answer 19

Mandatory for Surveyors working in practice

To protect clients, surveyors and third parties against NEGLIGENCE claims where there is a duty of care breached and a claim for damages arises.

Question 20

What do you understand about the ‘Ethical Decision Tree’?

Answer 20

The Ethical Decision Tree = a FRAMEWORK of questions that members should ask themselves when facing a situation in which they are asked to face in a POTENTIALLY UNETHICAL MANNER.

(It encourages a process rather than a snap decision).

It encourages members to consider the LEGALITY of one’s actions and their consistency with the Rules of Conduct, as well as having clear reasoning before making an informed decision).

The ULTIMATE TEST is the FINAL STAGE = Whether members would be content to have their decisions or actions MADE PUBLIC.

Question 21

What is a Conflict of Interest?

Answer 21

When your ability to act IMPARTIALLY or OBJECTIVELY is compromised.

There are 3 main types of Conflict:

1. ‘Party Conflict’
2. ‘Own Interest Conflict’
3. ‘Confidential Information Conflict’

Question 22

How would you MANAGE a Conflict of Interest?

Answer 22

In accordance with the RICS Professional Statement: Conflicts of Interest (2017). THREE stage process:

1) CONFLICT AVOIDANCE - Consider whether the conflict is irresolvable because your impartiality is compromised and should be avoided.

2) WRITTEN ADVICE TO BOTH PARTIES - Set out in writing the nature of the conflict, how you intend to manage it (information / ethical barrier) and request INFORMED CONSENT from both parties.

3) CONFLICT MANAGEMENT - Once you have recieved informed consent, IMPLEMENT the information / ethical barrier.

Question 23

What does RICS say about Dual Agency?

Answer 23

Dual Agency is where an agent has a contractural agency relationship with both the seller and the buyer at the same time.

This is BANNED and MUST NOT HAPPEN

Question 24

What are the main types of Conflict of Interest that can arise?

Answer 24

1) PARTY CONFLICT (two parties acting on the same or related instruction).

2) OWN INTEREST CONFLICT (Personal interest)

3) CONFIDENTIAL INFORMATION CONFLICT (relating to work between two parties that is confidential).

Question 25

How would you quote for a fee & how do you approach fee negotiations?

Answer 25

Fees should be MARKET BASED (in line with market) and agreed on an ad-hoc basis.

NO UNDERCUTTING (of other firms).

Healthy competition is encouraged but agressive fee cutting (undercutting) is not allowed.

Avoid price fixing, agressive fee cutting or collusion with competitors.

You can negotiate with a prospective client on fees, as long as you are still able to provide a high standard of service and have regard to the above.

Question 26

In your Level 2 example you’ve mentioned confidentiality. What governs confidentiality for RICS members?

Answer 26

RICS Bye Law 5 (conduct).

Rule 1 of the Rules of Conduct (2022) act with honesty, integrity and professional/personal obligations to RICS.

Question 27

How long should you keep client files for?

Answer 27

Held for a minimum of 6 years before disposal and destroyed securely.

Question 28

What do you include in your Terms of Engagement for an agency instruction?

Answer 28

Proposed Fee Agreement

Clear Scope of Work / Basis of Agency

Reference to my firm’s Complaints Handling Procedure

Any expenses to be paid

My firm’s contact details

Question 29

Where in the members rules does it talk about competence?

Answer 29

Rule 2

Memebers & Firms must maintain their PROFESSIONAL COMPETENCY and ensure that services are provided by competent individuals who have the NECESSARY EXPERTISE to carry out instructions.

Question 30

Tell me what you know about Money Laundering?

Answer 30

Law = Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

ALL letting agents MUST register with HMRC if they let individual property for more than the equivalent of Є10,000/month or more.

As a minimum, Customer Due Diligence (CDD) checks MUST be carried out on both Landlord & Tenant.

Enhanced Due Diligence (EDD) must be undertaken if any RED FLAGS occur (e.g. high risk third-country,) or you are dealing with a PEP or associated member.

A firm MUST appoint a Money Laundering Reporting Officer (MLRO) to report Suspicious Activity Reports (SARs) to the National Crime Agency.

The law requires firm-wide RISK ASSESSMENTS and firm’s must provide STAFF TRAINING for AML.

Question 31

Assuming you are successful in becoming a chartered surveyor and you wish to set up on your own. What is the first thing you must do?

Answer 31

Do you want the RICS requirements or the Legal requirements?

RICS requirements:

1) INFORM RICS of your new practice.

2) Appoint ‘RESPONSIBLE PRINCIPAL’ for all RICS Communication

3) Arrange PROFESSIONAL INDEMNITY INSURANCE

4) Obtain RICS approval for COMPLAINTS
HANDLING PROCEDURE & set up a complaints log

5) Appoint a Complaints Handling Officer (must be external if you’re a sole practitioner).

6) Use RICS logo kit - designation

7) Plan for succession / future running of the business if sole practitioner (Locum Agreement).

8) Ensure completion of the RICS ANNUAL RETURN at the end of each year.

Legal requirements:

1) Ensure Compliance with CURRENT EMPLOYMENT LAW (e.g. National Living Wage)

2) Inform HMRC (VAT + Tax reasons)

3) Bribery Act (2010) compliance

4) Equalty Act (2010) compliance

5) Health & Safety Act (1974) compliance

6) Appoint a MLRO

7) Requirement to Disclose Business Name

8) Register for Data Protection (Data Protection Act, 2018).

Question 32

What is the 6th EU Anti Money Laundering Directive?

Answer 32

The UK has implemented the 6th EU AML Directive into the regulations to ensure compliance with AML.

The regulations focussed on Estate Agents to say that:

ALL letting agents MUST register with HMRC if they let property for more than the equivalent of €10,000 / month or more.

As a minimum CDD checks must be carried out on both Landlords and Tenants on new sales and any letting/re-letting.

EDD checks MUST be undertaken if any RED FLAGS occur (dealing with a high-risk third country) or dealing with a PEP or associated member.

Question 33

What does Ethics mean to you, and why is it so important for RICS?

Answer 33

Ethics = Acting with honesty, integrity and ensuring clients interests are properly cared for, alongside the wider public interest.

Ethics are important to create a clear and streamlined guide to members to ensure that the wider public have CONFIDENCE in the profession.

Question 34

What is the Structure of the RICS?

Answer 34

RICS is currently governed (under the terms of its Royal Charter) by various internal councils and boards.

The GOVERNING COUNCIL is in charge and provides strategic and management direction. The current President is Ann Gray FRICS.

The STANDARDS & REGULATIONS BOARD (SRB) and Management Board report into the Governing Council.

BUT i am aware the SRB resigned en masse & interim SRB board have been appointed earlier this year. I am aware of the Bichard Review (2022) into the governance structure.

Question 35

What information do firms have to provide to RICS annually?

Answer 35

CPD Records

Professional Indemnity Insurance

Complaints Handling Procedure and Records

ANNUAL RETURN

Type of business and staffing

Question 36

What basis does Professional Indemnity Insurance cover work on?

Answer 36

Fully retroactive and on an EACH & EVERY, ‘CLAIMS MADE’ basis.

This means policies cover claims made during the period of insurance, regardless of when the negligent act occured.

Question 37

What is required in the RICS Annual Return?

Answer 37

The RICS contacts contacts all regulated firms on an annual basis to ensure all information held on the firm is correct and up-to-date, including:

Professional Indemnity Insurance details

Complaints Handling Procedure

Staff Training

Clients Money Handling Procedures

Question 38

What is the RICS Client Money Protection Scheme?

Answer 38

This is a method of ‘last resort’ in instances where an RICS Regulated firm is unable to repay a client’s money.

The scheme is split into two parts:
1. Client Money Protection for Surveying Services
2. Client Money Protection for Residential Agents

Question 39

What does RICS say about Handling Clients Money?

Answer 39

Client money MUST be held in a separate, named bank account with the word ‘client’ clearly identifiable.

A client must be able to have their monies on demand.

Payment of interest is agreed with a client and accounts must be kept in credit.

Regular bank RECONCILIATION checking that payments recieved are transferred to the bank account.

SIGNATORIES must be agreed with authorised staff and 2 SIGNATURES should be required.

All firms handling clients money need to display their procedures docuement on their website.

Question 40

How do you assess your competence and carry out conflict of interest checks?

Answer 40

Competence = Assess Skills, Understanding, Knowledge (SUK).

Conflict of Interest check = In line with company policy. Send a Conflict of Interest check email across the company to all employees outlining details of the property and the client. Then wait a reasonable time for a response (1 week) before proceeding.