Ethics Level - 1 Flashcards
Why do you want to become a member of RICS?
Professional recognition - enhances personal credentials
Networking opportunities - leading to new business opportunities
Access to resources and training - career enhancement
Ethical standards - ensure integrity and professionalism providing client confidence
What is the role of RICS?
Professional body that represents and regulates property professionals worldwide. Its primary role is to promote and enforce the highest international standards in land, property, construction and environmental issues.
Some of the key roles include:
Maintaining high standards of education and training
Protecting consumers through regulation and professional standards
To be the leading source of information and independent advice on real estate
What are they key functions of RICS?
- Setting and enforcing professional standards - including ethics, competence and conduct
- Providing education and training - accredited degree programmes and CPD
- Conducting research - thought leadership and helping to inform industry practice
- Advocating the profession - working with policymakers and stakeholders to shape the regulatory environment
- Promoting sustainability
- Providing dispute resolution services
What is a Royal Charter?
A formal document issued by the Crown that grants certain rights, powers and privileges to an organisation or institution. It establishes the rules and regulations that the institution must follow. Royal Charters are typically reserved for institutions that provide a public service or have an important national or international role. It reflects a long and distinguished history and commitment to serving the public interest.
Who is the current RICS President?
Ann Gray FRICS
What do you understand by the term self regulation?
Self regulation refers to the ability of a professional organisation to regulate and govern itself without external intervention or oversight. This is important for the RICS as it enables the institution to set and enforce high ethical and professional standards for its members, and maintain the integrity and credibility of the profession.
Can you tell me what you understand by the principles of better regulation?
A set of guidelines and practices aimed at promoting effective and efficient regulation that achieves its intended outcomes while minimising unnecessary burdens on individuals, businesses and society. The principles of better regulation are often used as a framework for evaluating existing regulations and developing new ones.
Key principles include:
1. Proportionality
2. Transparency
3. Accountability
4. Targeting
5. Consistency
6. Flexibility
What is a Bye-Law?
A rule or regulation made by an organisation to govern its own affairs or the behaviours of people within its jurisdiction.
Give an example of an RICS Bye-Law
RICS Bye-Law 3: Code of Ethics and Professional Conduct - sets out the ethical and professional standards that RICS members must adhere to in their professional activities.
Explain the new RICS Rules of Conduct - what do they replace?
They represent a significant update and modernisation of the regulatory framework for the profession, with a focus on promoting ethical behaviour, strengthening requirements for firms and enhancing disciplinary procedures.
They replace the previous Rules of Conduct for Members and Firms and the 5 Global Professional and Ethical Standards.
When do the new RICS Rules of Conduct take effect?
2nd February 2022
Who do the RICS Rules of Conduct relate to?
They relate to all members and firms regulated by the RICS
What are the 6 ethical principles that the Rules of Conduct are based on?
- Integrity
- Competence
- Objectivity
- Confidentiality
- Professional behaviour
- Respect for the law
What are the 5 Rules of Conduct?
Rule 1: members and firms must be honest, act with integrity and comply with their personal obligations, including obligations to the RICS
Rule 2: Members and firms must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise
Rule 3: Members and firms must provide good-quality and diligent service
Rule 4: Members and firms must treat others with respect and encourage diversity and inclusion
Rule 5: Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in their profession
Give an example behaviour for each Rule of Conduct
Integrity = a member of RICS who discloses any potential conflicts of interest to their client, and takes steps to manage/mitigate the conflicts to ensure advice remains impartial and in the best interest of the client.
Competence = a member of the RICS who keeps their knowledge and skills up-to-date by regularly attending professional development courses.
Objectivity = a member of the RICS who provides independent and impartial advice and recommendations to their client, without being unduly influenced by any personal, financial or other interest.
Confidentiality = a member of RICS who ensures that all confidential information provided by the client is securely stored and accessed only by authorised personnel.
Professional behaviour = a member of the RICS who behaves in a professional and courteous manner towards their clients, colleagues and the wider community. As well as not engaging in behaviour that could damage the reputation of the profession.
Respect for the law = a member of the RICS who complies with all relevant laws, regulations and standards, such as anti-money laundering regulations and data protection laws.
What disciplinary procedures can the RICS impose?
- Reprimand
- Fine
- Suspension
- Expulsion
In what circumstances can disciplinary procedures be imposed?
If a member or firm fails to meet the professional and ethical standards set out by the RICS
When did RICS last update their disciplinary panel rules?
January 2021 with effect from 1st February 2021
What are the different levels of action within the procedures of the disciplinary panel?
- Investigation
- Case Examiner
- Informal resolution
- Regulatory settlement
- Disciplinary hearing
- Appeals
What do you understand by the term professional practice?
The application of specialised knowledge, skills and judgement by individuals or organisations in the performance of professional services for clients. Characterised by a commitment to ethical conduct, ongoing professional development and adherence to professional standards.
What money laundering regulations or legislation are you aware of?
RICS Professional Statement on Countering Bribery and Corruption, Money Laundering and Terrorist Financing, 2019
RICS Guidance Note on Money Laundering, Terrorist Financing and Corrupt Practices
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017 (as amended in 2019)
The Proceeds of Crime Act 2002
Economic Crime (Transparency and Enforcement) Act 2022
What is a red flag of money laundering?
Inability or unwillingness of parties to provide identity documents
Changes to parties involved in transactions
Unusual transaction features, such as unexpected urgency required by parties, potential loss-making or an unusual transaction for a client
Payment of fees, purchase or rental monies in unusual currencies
What bribery legislation are you aware of?
Bribery Act 2010
What is a bribe?
A bribe can be the giving, offering, promising or receiving of an advantage such as a payment, gift or a service for an action which is illegal or a breach of trust.
What are the penalties for accepting a bribe?
The Bribery Act is policed by the Serious Fraud Office
If this Act is breached, there is a maximum penalty of 10 years imprisonment and/or an unlimited fine for individuals; companies face an unlimited fine
What are the penalties for being involved with money laundering?
Failure to comply with regulations:
Maximum 14 years prison sentence and/or unlimited fine for assisting with money laundering
Maximum 5 years prison sentence and/or unlimited fine for tipping off a person by informing them that they are under suspicion for money laundering or for failing to report suspicion
What constitutes an offence under the Bribery Act 2010?
- Bribing
- Receiving a bribe
- Bribing a foreign public official
- Failing to prevent bribery
What constitutes an offence under the current money laundering regulations?
- Failure to carry out due diligence
- Failure to report suspicious activity
- Failure to keep appropriate records
- Knowingly facilitating money laundering or terrorist financing
How long should you keep anti money laundering records for?
5 years
What is Professional Indemnity Insurance?
Cover to protect clients, surveyors and third parties against negligence claims where there is a duty of care breached and a claim for damages arises.
Can you tell me about RICS requirements in relation to PII?
PII is mandatory for surveyors working in practice. All members must ensure that an adequate and appropriate level of insurance is in place for each instruction having considered potential liabilities which may exist. All policies must be underwritten by an RICS approved insurer.
What is a PII aggregation clause?
Provision included in a PII policy that sets a limit on the amount of money that an insurer will pay out for multiple claims that arise from the same cause or source. This is intended to prevent an insurer from being held responsible for an unlimited amount of damages arising from a single mistake or event.
What does ‘claims made’ mean in terms of PII?
Term used to describe a PII policy that provides coverage for claims made against the insured during the policy period, rather than claims arising from events that occurred during the policy period.
Is a PII excess usually paid for per claim?
Excesses can be paid on a per-claim basis or on an aggregate basis. With per-claim excess, the amount is payable for each claim made during the policy period.
With an aggregate excess, the excess amount is payable once, regardless of the number of claims made during the policy period, once the aggregate amount is reached, the insurer starts paying for the claim.
In a negligence claim, what would help show that you acted with consideration and due process?
- Documented process- having a clear documented process showing that you were acting with due care and consideration
- Professional standards - demonstrate that you were acting in accordance with industry best practices
- Adequate resources - having the appropriate staffing resource to ensure the work was done correctly
- Regular reviews - can help identify and address issues early, demonstrating proactive management of work
- Communication - maintaining clear and open communication with clients or stakeholders to show you were acting in their best interest
Can good record keeping help to provide a defence in a PII claim?
Yes, good-record keeping can help to demonstrate that the professional followed appropriate procedures, made reasonable decisions, and kept appropriate records of their actions. This helps the professional defend themselves against any allegations of negligence.
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?
Notify the PII provider to ensure that the additional services are covered under the policy.
The PII provider may charge an additional premium for the extended coverage.
What is run off cover?
Type of insurance that provides protection for professionals after they have retired or ceased trading, against claims arising from work they did before they retired or ceased trading.
What RICS requirements are there relating to run off cover?
- RICS members who cease trading must have the adequate run-off cover
- RICS requires a minimum of 6 years run-off cover
- Run-off cover must be provided by a RICS approved insurer
- Members must notify their insurer of any potential claims that may arise
- Members must maintain accurate records for the period of run-off cover
What changes did RICS recently make to the Minimum Approved PII wording?
- Cyber attacks are now covered subject to a sub-limit of £250,000
- Retroactive cover date has been extended to 1 January 2000
- Limit of indemnity has been increased to £500,000 for regulated firms
- Territorial limit has been extended to include worldwide cover
- Aggregate limit has been increased to four times the limit of indemnity (max £10m)
- Non-disclosure clause has been revised to clarify the circumstances under which an insurer can avoid a policy for non-disclosure
What precedent has caselaw set in terms of keeping adequate site notes (and therefore providing a defence in a PII claim)?
Case law has established that keeping adequate site notes can be crucial in providing a defence in a professional negligence claim.
William Hare Ltd v Shepherd Construction held that the defendant’s failure to keep adequate site notes and records contributed to the claimant’s difficulties in establishing its case.
Would a dictated report avoid the need to have any written side notes?
While dictated notes can be used as a supplement to written side notes, they may not be considered a substitute for them.
