Ethics - L3 Flashcards
How many different types of RICS document statuses are there ?
There are a number of document types. This includes (can be found within the first few pages of many RICS documents) :
• Rules of conduct for members and firms, updated Feb 2022
• International standards - High-level standard developed in collaboration with other relevant bodies
• RICS professional statements (PS) - Mandatory requirements for RICS members and regulated firms
• RICS guidance note (GN) - A document that provides users with recommendations or an approach for accepted good practice as followed by competent and conscientious practitioners
• RICS code of practice (CoP) - A document developed in collaboration with other professional bodies and stakeholders that will have the status of a professional statement or guidance note
• RICS jurisdiction guide - This provides relevant local market information associated with an RICS international standard or RICS professional statement. This will include local legislation, associations and professional bodies as well as any other useful information that will help a user understand the local requirements connected with the standard or statement. This is not guidance or best practice material, but rather information to support adoption and implementation of the standard or statement locally
What is the status of a RICS professional statement ? who does it apply to ?
Mandatory
RICS trainees, members, regulated firms
How does your behavior differ professionally and personally ?
My approach and behaviour does not change.
What information is required by the RICS for registration and in the annual return?
• Type of business and staffing details
• Statutory regulated activities - such as for financial services
• Nature of clients
• Complaints handling procedure and records
• Professional indemnity insurance certificate
• Whether the firm hold clients’ money
Why do you want to become chartered ?
• Gold standard in my profession
• Offers guidance and support from RICS
• Designation will help my career
• I am committed to lifelong learning
• I want to give back to the up and coming surveyors
What is the RICS ethical decision tree?
The RICS decision tree assists me in making informed decisions , confirming my actions are ethical and legal.
What are ethics?
Moral principles that govern an individuals behaviour.
What are the three types of due diligence?
• Simplified Due Diligence – Where you determine the business relationship is low risk of money laundering/terrorism
• Enhanced Due Diligence – for high risk customers and transactions with greater threat to financial sector
• New Customer Due Diligence – doing the checks to ensure your client is who they say they are.
What are the three benefits of regulation for firms?
CPS:
• Confidence - for client as regulated firms are monitored by RICS regulation
• Professionalism - firms have to provide clear, impartial and expert advice
• Security - firms have to have recognised CHP, access to ADR and PII cover
Why does you firm have Terms of Engagement? What should be included in Terms of Engagement?
Creates a contract with the client and clear definition of what is expected and on what terms etc.
Sets out the proposed fee basis, payment of expenses and that a copy of the firm’s complaints handling procedure is available upon request.
How would you close down a practice?
• Inform the RICS
• Inform clients and arrange for them to be handed over to a new firm
• Return any clients’ money
• Set-up professional indemnity run-off cover for a minimum of 6 years
• Retain a copy of client files and record for a minimum of 6 years
How long should files be kept for?
• A minimum of 6 years before disposing and destroying them securely (although can be sued for negligence for up to 15 years)
What do the new rules state about the use of the RICS logo and designation?
• Use of the RICS logo has been restricted to members and regulated firms only
• The ‘regulated by RICS’ designation must be displayed clearly to ensure visibility
• Prescribed text that must be included in the terms of engagement
• Companies are only allowed to use ‘chartered surveyor(s)’ designation in trading name and not company name
How would you limit the risk of working with a client or contractor who may be financially unstable ?
• Screening process:
• Dun & Bradstreet credit check
• Company search (Account information from Companies House)
• Internet search (Client website for additional information judgement on reliability)
If your client asked you to lower your fees because of their limited funding, what would you do ?
The client would have to pay the required price for the level of service required or reduce the scope of works involved. I could consider if the scope of work could be reduced however on the client request i would not just lower my fees.
How do you know you are competent ?
Having the knowledge and skills to undertake an instruction. If you have dealt with that type of property and location and you’ve carried out that task, you are deemed as competent. This can be defined as :
• Skills
• Knowledge
• Attitude
• Training
• Experience
If faced with a situation that you felt was unethical, how would you proceed?
Using the decision tree:
• Do I have sufficient facts?
• Is the matter legal?
• Is it in line with RICS Professional and Ethical Standards?
• Have I consulted with appropriate people?
• Do I have clear reasoning in reaching my decision?
• Would I be content for my actions to be made public?
If answered no to any of the above, I would not proceed with the situation alone and would consult senior staff with direction on how to proceed.
What are the CPD requirements?
• Qualified/MRICS member – 20 hrs per year, min 10 hours formal
• Student member – 48 hrs per year (Min 24 formal)
What is the difference between formal and informal training ?
Formal has a learning objectives and a defined learning outcome, i could reference the CPD decision tree for further guidance.
What is a complaints handling procedure?
A procedure to allow and define the procedure for clients to raise a complaints. This may include ADR and relevant timescales for the process.
What must a complaints handling procedure include ?
The procedure must include an Alternative dispute mechanism approved by the standard and regulation board. The procedure can be based on the RICS forms. Issued with terms of engagement, nominated person also details investigated within 28 days, record the complaints, advise PI insurers of complaint etc.
What options are available if you couldn’t resolve the complaint?
• Property Ombudsman
• RICS Dispute Resolution
• Escalation etc
Where would you find the RICS requirements for professional indemnity cover ?
• Professional indemnity insurance requirements
• Regulation Document
• Version 9 with effect from 1 April 2022
How many years after an instruction has been completed can a Professional Indemnity claim be made ?
15 years (Limitations Act)
What type of cover would you need to cover a claim brought after a firm or member ceases to trade ?
Run off cover
What cover do you need?
• PII insurance - Professional indemnity insurance covers financial loss, personal injury and property damage resulting from your negligent act or error while you’re working for a client.
• PLI insurance - Public liability insurance is there to protect you if a member of the public is injured (or their property is damaged) and your business is faced with a compensation claim as a result. It can cover you when you’re working at client sites or in public.
• Employers Liability Insurance - Employers’ liability insurance covers you and your business for compensation costs if an employee becomes ill or injured as a result of the work they do for you. It’s legally required of all businesses with one or more employees.
• Building Insurance (if you own your own premises)
Why do you need PII insurance?
Consultants provide expert advice and therefore face risks associated with making mistakes or errors in judgement that could cost a business in profits. When profits are lost due to any negligence or perceived negligence businesses often respond with lawsuits. It also protects the client, surveyor and firm.
What are the providers for PI insurance? Under RICS PII Requirements guidance – July 2019
Minimum levels of indemnity cover
• up to £100,000 = £250,000
• £100,001 - £200,000 = £500,000
• £200,001 + = £1,000,000 of cover
Run off cover
• Run off cover must also be held for a minimum of 6 years for a limit of £1million.
Maximum uninsured excess
• Up to and including £500,00 = the greater of 2.5% of the sum insured, or £10,000
• Over £500,000 = 2.5% of the sum insured
What status is the RICS Professional Indemnity Insurance Requirements document?
A regulation document
What is meant by each and every claim ?
• This is one of the two types of cover/policy
• Each and every is cover for each claim that does not add up, the opposite is aggregates, where the claims and added up to a certain agreed value.
• You could have each and very claim up to £100,000 per claim or you could have £100,00 aggregate(which is a lot lower cover)
What measures should be taken to try and avoid PI claims?
• Keep full and detailed records of meetings, conversations etc
• Record recommendations and advice given
• Use proper letters of engagement, scope of services and terms of engagement
• Don’t advise on a specialism outside your field of experience
• Use RICS guidelines
• Avoid poor management and excessive workloads
What if the loss exceeds the cover provided by the PII insurance?
The professional / firm is liable for the difference – in assets etc
What basis should PII be underwritten ?
On a claims made basis
What should a PII policy contain?
• Must be on a claims made basis
• Must be on an each and every claim basis
• Policy wording is written on a full civil liability basis
• Underwritten by a listed insurer
• Covers past and present employees
• Run-off cover
• Minimum level of indemnity required by the RICS
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)
What is meant by the term ‘maximum level of uninsured excess’?
The part of each claim the firm must pay itself
What year did the Money Laundering Regulations come into force in the UK?
1994
In the RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing February 2019 - RICS Members and Firms must do what in relation to bribery and corruption ?
In relation to bribery and corruption RICS-regulated firms must:
• 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 corruption laws 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
• 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 or corruption; in determining Countering bribery, corruption, money laundering and terrorist financing 6 RICS professional statement Effective from 1 September 2019 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.
In relation to bribery and corruption RICS members must:
• 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 (as specified in local legislation); where there is no local legislation the activity should be recorded and, if possible, reported to a senior manager.
Can you name any Money Laundering Red Flags?
• Cash-only buyers
• An unusual sale price (too low or too high)
• Payments from multiple/different source to counterparty
• Funds provided by unknown third parties
What due diligence do you apply in relation to money laundering ?
My company has a policy relevant to this, I would always air on the side of caution. For example as a business do not accept cash or cheque payments. Any red flag would be raised suitably.
What is money laundering?
Concealing the source of proceeds of criminal activity to disguise their illegal origin. This may take place through hiding, transferring and or recycling illicit money or other currency through one or more transactions, or converting criminal proceeds into seeming legitimate property.
If you ran your own firms who would you report suspicious activity to ?
• National crime agency(NCA)
• HMRC
• The Police
Can you rely on someone else’s due diligence ?
No it is your responsibility to ensure the checks are suitable and sufficient.
Give me some examples of how your firm might comply with the Money Laundering Regulations.
We report cash payments over £10K. Carry out risk assessments to make sure that we take the necessary procedures when working with clients from high risk countries or high risk sectors.
What are the principles of the Money Laundering Regulations?
Sets additional obligations for private sector firms working in areas of high money launder risk. Aims to stop criminals using professional services to launder money and to investigate large or regular cash transactions. You have a duty to report cash payments over £10K. Carry out risk assessments to make sure that you take the necessary procedures when working with clients from high risk countries or high risk sectors.
If you were given a gift what would you do ?
Log in within the gift log, I may decline the gift taking into account timings and proportionality and my companies gift handling policy.
When would accepting or providing hospitality be acceptable ?
Once al the works are complete on site and the final account agreed and there is no conflict of interest. also consider the scale, time and suitability of the hospitality and or gift.
What’s the difference between a gift and a bribe ?
A gift is a small gesture, a bribe is under the impression that some gain will result.
Can you please expand on your knowledge of Merret Vs Babb ?
• Considered if a professional employee was vulnerable to claims brought directly against them for advice given on behalf of their employers.
• Essentially, an individual provided valuation advice and was negligent. The firm the person worked for did not have adequate run off insurance, the company shut down and the client made a claim which was passed to the employee that gave the advice.
Can you please expand on your knowledge of Hart V Large ?
The Claimants brought claims in negligence against the architects instructed by the previous owners, the Claimants’ conveyancing solicitors and Mr Large. The claims against both the architect and the solicitors settled prior to trial.
Against Mr Large, the Claimants alleged that he was negligent in: (1) failing to recommend a full building survey, rather than HomeBuyer report; (2) failing to draw attention to the issues of water ingress / damp in the HomeBuyer report; and (3) failing to recommend that the Claimants obtain a professional consultant’s certificate.
The key take-aways from this case:
• 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
What is the RICS mission statement ?
Our mission is
• To be recognised in key worldwide markets as the leading body that sets and enforces standards
• Offers access to the most sought after professional status in land, property and construction.
When was the RICS founded ?
15th June 1868,
What does the RICS stand for ?
Royal Institution of Chartered Surveyors
What are the key roles of the RICS?
• Maintain the highest standards of training and professional experience
• Protect customers and consumers through a strict code of ethics
• Provide impartial advice, analysis and guidance
• Regulate and promote the profession
What are the 5 principles of better regulations?
PACTT
• Proportionality
• Accountability
• Consistency
• Targeting
• Transparency
What parts are there to the RICS ?
• Governing Council
• Regulatory Board
• Management Board
• Executive Team
• President Team
How many members does the RICS have ?
RICS has 140,000 members who operate out of 146 countries
What is the RICS motto ?
Est modus in rebes - there is measure in all things
Who gave the RICS Royal Charter?
1881 by Queen Victoria
What act covers discrimination ?
The Equality Act 2010, which came into force 1st October 2010
What are the key principles for firms to prevent Bribery ? PCR CDM
1) Proportionality
• Are the procedures proportionate to the bribery risk and the nature of the firms activities?
• Are the procedure clear, practical, effectively implemented?
• Are anti-bribery procedures in place for different payments? Hospitality, donations etc.
2) Commitment (Top Level)
• Issue a statement to staff/partners that communicate the polices
• Zero tolerance
• Select and train a senior employee to take responsibility for procedures and policy.
• Issue internal and external publications
3) Risk Assessment
• Procedures to assess the nature and extent to exposure for potential bribery.
• Accurately identify and prioritise risks a firm may face
• Written record of risk assessments and findings
• Internal risks – bonus culture, lack of bribery messages from top management
• External risks – Country (is the country particularly known for bribery) or Sectoral
4) Communication
• Embed an understanding of procedures and zero tolerance with internal and external communications
• Training should be continuous
• Whistle blowing policy established
5) Due Diligence
• Firms should carry out due diligence on their staff and partners
• Credit checks, internet checks, interviews etc
• Should get a clear statement of the nature of services offered
6) Monitoring and Reviewing
• Periodically review anti-bribery policies and assess effectiveness.
• Use bribery risk assessment to make decisions
• Review process in response to external or internal stimuli
• Review financial control mechanisms
What is the name of the RICS guidance on bribery and money laundering and when is it effective from ?
Professional Statement (Mandatory) - Countering bribery and corruption, money laundering ad terrorist financing, 1st edition, February 2019
What due diligence do you apply in relation to bribery ?
My company has a policy relevant to this, I would always air on the side of caution. For example as a business do not accept cash or cheque payments.
What is bribery ?
The offer, promise, giving, demanding to acceptance of an advantage as an inducement for an action that is illegal, unethical or a breach of trust.
EVIC - Exchange of value for an improper cause
What is corruption
The misuse of public office or power for private gain, or misuse of private power in relation to business practice and performance
What are the four main offenses noted in the bribery act 2010 ?
The bribery Act 2010 details the 4 offences as :
• giving a bribe
• receiving a bribe
• bribery an official
• no procedure in place
What is a facilitation payment ?
A facilitation payment is a type of bribe and should be seen as such. A common example is where a government official is given money or goods to perform (or speed up the performance of) an existing duty. Facilitation payments were illegal before the Bribery Act came into force and they are illegal under the Bribery Act, regardless of their size or frequency.
Can you identify some bribery warning signs?
Bribery warning signs include :
* Lavish gifts or hospitality being given or received
* Unexplained preferment of certain individuals for receipt of benefits
* Individual never takes time off even if they are ill, for holidays, or insists on dealing with specific contractors themselves
* Making unexpected, uncommercial or illogical decisions when accepting projects or contracts
* Raising barriers around specific roles or departments which are key in the tendering or contracting process
* Unusually smooth process of cases where individual does not have the expected level of knowledge or expertise
* Abusing decision-making processes or delegated powers in specific cases
* Agreeing contracts not favourable to the organisation either with regard to terms or time period
* Unexplained preference for certain contractors during the tendering period
* Avoidance of independent checks on tendering or contracting processes
* Bypassing normal tendering or the contractor’s procedure
* Invoices being agreed in excess of the contract without reasonable cause or explanation
* Missing documents or records regarding meetings or decisions
* Firm procedures or guidelines not being followed
* The payment of, or making funds available for, high value expenses (e.g. school fees) on behalf of others
* Requesting or making donations to charitable or political causes connected to key individuals or companies that business is being done with
* Abnormally high commission percentage being paid to a particular agency. This may be split into multiple accounts for the same agent often in different jurisdictions
* Private meetings with public contractors or companies hoping to tender for contracts
* Abnormal cash payments
* Pressure exerted for payments to be made urgently or ahead of schedule
* Payments being made through a third party country, i.e. goods or services supplied to country A, but payment to be made usually to shell company in country B
What is a PEP ?
politically exposed person (hold positions that can be abused for the purpose of laundering illicit funds or other predicate offences such as corruption or bribery)
What is the definition of IESC ?
International Ethics Standards Coalition
What is the purpose of the International Ethics Standards (IESC) ?
The purpose of the international ethics standard coalition of professional organisations in construction/property is to assert and sustain the critical role of ethics in professional practice to meet the needs of the global market and maintain public trust.
- Accountability
- Confidentiality
- Conflict of Interest
- Financial Responsibility
- Integrity
- Lawfulness
- Reflection
- Standard of Service
- Transparency
- Trust
What is required to register a firm with the RICS ?
Offer professional services in surveying disciplines to professional, corporate, institutional and other clients who rely on such services. Have at least 25% principals (a senior manager, partner or owner), who are qualified RICS professionals (MRICS, FRICS, AssocRICS). Agree to observe and comply with RICS Rules for members and firms, including working to RICS standards.
What is the obligation of a RICS regulated firm ?
Avoid conflicts of interest, ensure competence, procedures for CPD, complaints handling procedure, suitable indemnity insurance, use of suitable designation, cooperate with RICS.
What is a contact officer ?
The designated person to liaise between company and the RICS. In my company this is ????
What is required to register a firm to RICS?
‘A Firm is required to register for regulation by RICS if: a. the Firm provides surveying services to the public. the Firm is operating in Regulated Area A (UK);c. at least 50% of the Firm’s Principals are RICS Members. ‘New requirement from April 2020 that 25% of principals must be RICS-qualified members.FRICS,MRICS< AsRICS
Why would a firm volunteer to be regulated?
It allows you to use RICS designation and logo’s on marketing material to show that you offer the highest level of service and given the RICS reputation and access to clients, this would be beneficial to the company.
