Ethics Level 1 - Sept 2023 S.S Flashcards
1
Q
Why do you want to become a member of RICS?
A
To be a member of the RICS is the gold standard in our profession. RICS is known worldwide for high Quality of standards and profesionalism.
2
Q
What is the role of RICS?
A
To promote and enforce the highest professional standards in the development and management of land, real estate, construction and infrastructure.
3
Q
What are the key functions of RICS?
A
RICS develops and enforces leading international standards to protect consumers and businesses, ensuring the highest level of professionalism
4
Q
What is a Royal Charter?
A
A Royal Charter, granted by the sovereign on the advice by the privy council is given to bodies that work in the public interest.
5
Q
What is the Royal Charter of RICS
A
The Royal Charter given by the sovereign on the advice of the privy council dated the twenty-sixth day of August 1881 for the RICS to act in the public interest.
6
Q
Who is the current RICS president?
A
The current president of the RICS is Ann Gray
7
Q
Who is the president elect?
A
Tina Paillet
8
Q
What do you understand by the term self regulation?
A
RICS self-regulates, meaning that it operates within its own published regulatory framework, rather than being legislated by Government. The interim standards and regulation board oversees regulation for RICS Members and RICS regulated firms.
9
Q
Who does the Interim Standards and Regulation Board report to?
A
Governing Council
10
Q
What is Governing Council.
A
The executive body responsible for directing the affairs of RICS.
11
Q
Can you tell me what you understand by the principles of better regulation?
A
P - Proportionality
A - Accountability
C - Consistency
T - Targeting
T - Transparency
12
Q
What is a Bye-Law?
A
A regulation made by a local authority or corporation
13
Q
What is a RICS Bye-Law
A
the Bye-Laws of RICS, made from time to time pursuant to Articles 16 and 17 of the Charter and approved by the Members
14
Q
What documents are RICS governed by?
A
The constitutional documents consist of the Royal Charter, Bye-Laws, Regulations and Standing Orders.
15
Q
Can the Royal Charter or bye-laws be amended?
A
Only by a membership vote and approval by the Privy Council.
16
Q
Who approves changes to Regulations and Standing Orders?
A
Governing Council.
17
Q
What are the 6 ethical principles that the Rules of Conduct are based on?
A
Ethical principles of
1 - honesty & integrity
2 - competence
3 - service
4 - respect
5 - responsibility
18
Q
Give an example of one of the RICS Bye-Laws.
A
Bye Law 5.1 - The rules of conduct apply to all members and firms regulated by RICS.
19
Q
Explain to me the new RICS Rules of Conduct - what do they replace?
A
They replace the older versions which had been in place since 2007 for members and firms which were Rules of conduct for members Rules of conduct for firms Global ethical principles
20
Q
What date were the new rules of conduct effective from
A
2nd February 2022
21
Q
What are the 5 Rules of Conduct
A
Rule 1 Members and firms must be honest, act with integrity and comply with their professional obligations, including obligations to 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 the profession.Plus the appendix setting out the main professional obligations to RICS.
22
Q
Give an example behaviour for each Rule of Conduct
A
Rule 1 - Members and Firms not to allow themselves to be influenced by others for instance in receiving referrals, gifts, payments, hospitality or by their own self interest.
Rule 2 - Members and Firms only undertake work that they have the knowledge, skills and resources to carry out completely.
Rule 3 - Members and firms communicate to clients the material information on which their professional advice and opinion is based.
Rule 4 - Members and firms respect the rights of others and treat others with courtesy.
Rule 5 - Members and firms support directors, partners, employees, colleagues or clients who have acted in good faith to report concerns.
23
Q
What type of document is the Rules of Conduct
A
Global Standard
24
Q
Who do the rules of conduct relate to?
A
Members and Firms
25
What are the core professional obligations of firms and members to RICS?
Members:
- Comply with CPD Requirements
- Cooperate with RICS
- Provide all information requested by standards and regulation board
Firms;
-Publish complaints handling procedure including dispute resolution provider
- Maintain complaints log.
- Have appropriate Professional Indemnity cover for previous and current work.
- Sole principal must have arrangements for work to continue
- Cooperate with RICS.
- provide all information requested by standards and regulation board.
- That they are regulated by RICS on their literature.
- Report any matter that is required under the Rules for the Registration of Firms.
26
What disciplinary procedures can the RICS impose?
- Fixed penalty (fine by RICS)- Consent order (written agreement between RICS and member/firm, may require them to undertake certain corrective actions or restrain them from taking actions for specified period, and may require to pay a fine)- Disciplinary panel (more serious breaches, held in public. Burden of proof on RICS, balance of probabilities approach adopted)
27
In what circumstances can these be imposed?
"- Complaint to the RICS- Allegation by client or 3rd party- Information received or established by RICS"
28
Can you explain the steps of the RICS Ethics Decision Tree?
- Sufficient facts?-
- Legal?-
- In line with RICS Rules of Conduct?
- Have you consulted with apt people, to make informed decision?
- Clear reasoning in reaching decision?
- Is your decision informed?
- Would you be content for actions to be made public?If yes to all of above, decide what action to take, act and record decision and reasoning.Otherwise, DO NOT PROCEED"
29
How can a disciplinary proceeding be triggered?
- Complaint to the RICS- Allegation by client or 3rd party- Information received or established by RICS
30
When did RICS last update their disciplinary panel rules?
2nd February 2022 now called RICS Regulatory Tribunal Rules
31
What are the different levels of action within these procedures?
1. Action by Head of Regulation
2. Disiplinary Panel
3. Appeal Panel
32
What do you understand by the term professional practice?
That a surveying practive should act in a professional manner and follow RICS stnadards and guidance at all times.
33
What money laundering regulations or legislation are you aware of?
"- Countering Money Laundering, Bribery, Corruption and Terrorist Financing- Conflicts of Interest- Client Money- RICS Property Measurement"
34
What is a red flag of money laundering?
Common characteristics that either individually or in combination might indicate potential misuse of the real estate sector for money laundering or terrorist financing purposes.
35
What bribery legislation are you aware of?
The Bribery act 2010
36
What is a bribe?
‘The offer, promise, giving, demanding or acceptance of an advantage as an inducement for an action that is illegal, unethical or a breach of trust’
37
What are the penalties for accepting a bribe?
Under the Bribery Act 2010 maximum of 10 years imprisonment, an unlimited fine or both.
38
What are the penalties for being involved in money laundering?
Offences under the Regulations are punishable with a maximum penalty of two years’ imprisonment (for individuals) and/or an unlimited fine. For a legal entity, the maximum penalty is an unlimited fine in relation to offences under POCA and the Regulations.POCA - Proceeds of Crime Act
39
What constitutes an offence under the Bribery Act 2010?
Bribing another person (offering, promising or giving a bribe)
- Being bribed (requesting, agreeing to receive or accepting a bribe)
- Bribing a foreign public official
- Failure by a commercial organisation to prevent bribery
40
What constitutes an offence under the current money laundering regulations?
Facilitate or be complicit in money laundering or terrorist financing activities.
41
How long should you keep anti money laundering records for?
A minimum of 5 years
42
RICS professional standards - what are the various standards and what is their status?
- Professional statements - mandatory requirements, with details of regulatory interventions if these requirements are not met (i.e. Client Money Handling)
- Guidance notes - non-mandatory requirements, recommendations of best practice in undertaking given tasks (i.e. Life Cycle Costing)
- APC - requirements and guidelines relating to entry into the profession
- Data standards - ensure software programmes and technology can adopt RICS standards into their offering
- Code of Practice - mandatory / recommended - says within the documents (i.e. code of measuring practice)
- Standards - (i.e. IPMS)
- Information papers - (i.e. rights of 3rd parties act, how to apply to construction contracts)
- Consumer guides - intended for use by public - consumer guide for homeowners on Party Walls etc
- Best practice (i.e. Cost benchmarking - clarified need to have large pool of data)
43
What are the two new RICS document catogories being looked at by the Standards and Regulation Board
Professional Standards and Practice Informaiton
44
What is Professional Indemnity Insurance (PII)?
An insurance that protects professionals from claims of negligentce or breach of duty and covers legal costs, expences and claims.
45
Can you tell me about the RICS requirements in relation to PII?
£100,000 or less - £250,000
£100,001 to £200,000 - £500,000
£2000,001 and above - £1,000,000
46
What is a PII aggregation clause?
When choosing the level of insurance that is required, it is important to consider the
effect of the aggregation clause in the policy. This clause will typically provide that where
a number of claims arise from the same originating source or cause, such as a repeated
error or omission, then all claims will be treated as one, attracting only one limit of
indemnity, which may be insufficient.
47
What does ‘claims made’ mean in terms of PII?
claims that are first made against the insured during the period of insurance
regardless of when the negligent act occurred.
48
Is a PII excess usually paid for per claim?
Yes
49
In a negligence claim, what would help to show that you acted with consideration and due process?
Yes, if you acted with due care, consideration and process and followed the RICS standards and guidance then this would help against a negligence claim.
50
Can good record keeping help to provide a defence in a PII claim?
Yes, as if there are good records these can be relied upon as evidence.
51
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?
If you were doing work outside of your usual scope you may need to speak to the insurer and get specific cover for that work.
52
What is run off cover?
Run off cover is the Pii insurance cover that should run for at lease a 6 year period after a firm or sole practitioner has ceased trading.
53
What RICS requirements are there relating to run off cover?
The RICS requirements in relation to run off cover are that there is a minimum of £1,00,000 of aggregate cover for a minimum period of 6 years.
54
What changes did RICS recently make to the Minimum Approved PII Wording?
RICS changed the wording to ensure clarity of drafting
55
How long can a PII claim arise after the work is undertaken?
6 years
56
What is the Assigned Risks Pool (ARP)?
Assigned Risk Pool is arranged by RICS at a cost for firms who cannot arrange cover.
57
Who might need to access the ARP?
Firms who cannot arrange cover.
58
Explain your understanding of the RICS Guidance Note Risk, Liability and Insurance (1st Edition).
It’s a RICS practice information document April 2021 to assist both RICS-regulated firms and their
clients to understand the main risks and liabilities associated with professional services provided by RICS members
59
Explain when you might agree a liability cap.
Before any works take place and during the agtreement of the terms of engagement.
60
How would set out third party reliance in Terms of Engagement?
You would state within the terms of engagement that any relience is for your clinet only and that no relience should be relied upon by any other party or organisation.
61
What are the three key terms that should be considered from a risk perspective in the context of every instruction you undertake?
Using reasonable care and skill in relation to your Duty of Care to clients and 3rd parties. When this is breached and there is a loss there can be a claim for damages.
62
What is an annual return?
RICS regulated firms must make an annual return which would include a firm’s
professional indemnity insurance, training, complaints handling and, if applicable, clients’
money.
63
Tell me what you understand about Complaints Handling Procedures (CHP).
7 days to acknowledge 21 days
64
When and how can the RICS be involved in a complaint about a firm or member?
RICS will become involved if a member or firm fails to respond to the complaint or prevents the party gaining access to an indepenent redress mechanism.
65
Can you tell me about the CPD requirements for members of RICS?
20 hours per year
66
Why is CPD important?
Rules of Conduct, Rule 2 - Maintaining professional competance
67
Tell me about the RICS’ guidance on dealing with Conflicts of Interest.
This would be found in RICS Professional Statement - Conflicts of Interst Global 2017
68
What is double dipping (dual agency)?
This is where an agent has a contractural agency relationship with both the seller and the buyer at the same time.
69
Why is double dipping (dual agency) an unacceptable practice?
Because this is a conflict of interest and goes against the Rules of Conduct, Rule 1.
70
How would you close down a regulated firm?
Inform RICS. Ensure Clients are informed at earliest opportunity. Hand over arrangement made with new firm. Inform Insurers and make sure run off cover in p;lace. Retain copy of client files and records for minimum of 6 years.
71
What can you tell me about RICS guidance relating to bribery, corruption or money laundering?
This would be found in RICS Professional Statement Countering Bribery, Corruption, Money Laundering & Terrorist Financing 2019
72
What status does it hold?
It is a professional statement and therefore mandatory.
73
What are some of the key principles of this guidance?
Sets out the mandatory requirements of RICS Members and Firms and giving good practice for Anti Bribery, Corruption, Anti money laundering and Terrorist financing.
74
What must/should firms/members do to comply with the guidance?
Not offer or accept anything that can be seen as a bribe.
Have procedures in place.
Report suspicoud activity to the authorities.
Review risks the firm faces periodically.
Retain records.
Use third parties to check information where necessary. Veryfy client with ID checks.
75
What are the current RICS rules for registration of firms?
Firms providing surveying survices to the public if they have RICS Members.
Can be a corporate body, partnership, LLP or sole practitioner.
If 50% of principles Members has to be regulated.
AT least 25% of principles then it can apply to be regulated.
76
When did these last change?
02/02/2022
77
Who is a ‘qualified member’ of RICS?
This who are FRICS, MRICS and Assoc RICS
78
What is a phoenix firm?
High risks arise from firms which close in a disorderly way and then rapidly re-establish themselves as a new trading entity.
79
When must a firm register for regulation?
If a firm is providing surveying services and have RICS Members
80
What are the registration eligibility criteria?
When 50% of principles then regulated, if 25% of principles then can apply to be regulated.
81
Who is a Responsible Principal?
A responsible principal can be sole practitioners, directors or partners, board memebers or person acting in authority.
82
What are the rules around use of the RICS logo and ‘Regulated by RICS’ designation?
RICS logo can only be used by Members and regulated firms. If a firm states they are regulated by RICS it has to state within its terms of engagement what being regulated by RICS means. This can only be used on a firms trading name.
83
When did these rules last change?
2nd February 2022
84
What changes were made?
In line with the new rules of conduct
85
Tell me about the restrictions to the use of the designation ‘Chartered Surveyors’ by firms.
Can only be used on the trading name of a firm. 50% of the partners or directors are chartered members. No partner or director has been expelled. The firm is registered with RICS for regulation and principle office is in UK.
86
What must be included in ToE relating to firm regulation?
An explination of what it means to be regulated by the RICS. The suggested wording by the RICS.
87
What is a locum and who might need one?
A locum is used by a sole practitioner so that there is someone to carry on work if they are unwell or pass away.
88
What RICS guidance relates to handling client money?
Professional Statement, Hadnling Clients Money 2019
89
When was this last updated?
2/2/22 in line with the new rules of conduct
90
What do the RICS Rules of Conduct say about client money?
Rule 1.10: ‘Firms keep client money safe and have appropriate accounting controls.’
Appendix A professional obligations 3 for firms: ‘Firms with a sole principal must make appropriate arrangements for their professional work to continue in the event of their incapacity, death, absence from or inability to work.’
91
Explain your understanding of the RICS Scheme Rules relating to client money protection
RICS runs a client money protection scheme for a last resort protection where firm is unable to repay clients money.
92
What are the main schemes available to firms?
Clients Money Protection Scheme.
Clients Money Protection for Surveying Survices.
Client Money protection for Residential Agents.
93
What does the annual regulatory review fee relate to?
The fee goes towards the client money regulatory review visit programme
94
What might client money include?
Holding deposits, rent, service charges and retentions.
95
What are some of the key principles of the RICS Professional Statement relating to client money protection?
Client accounts must be kept separate and clearly identifiable.
The word 'client' needs to be on the bank account and cheque book.
A client must be able to have their money on demand.
Payment of interest is agreed with clinet and accounts must be kept in credit.
Accurate records kept with a running balance available.
96
Explain the key themes from the RICS Futures 2020 Report.
Thinking ahead
Leadership and inspiration
Sustainability
New skills and multi-disciplinarity
Networks
Technology
Ethics, values and standards
97
Explain your understanding of the RICS Levitt review.
Alison Levitt QC carried out an independent review of internal governance failings.
98
What is whistleblowing?
A person reveals information about an activity within a private or public organisation which they consider illegal, immoral, fraudulant or unsafe.
99
What does good governance mean to you?
The importance of Strategy, people, culture, values and member service.
100
Explain what the Pandora Papers are and the ethical issues raised within them.
The Pandora Papers were leaked documents and ephasises the role property plays in the transfer of money around the world. This showed the importance of the client due dilligence checks that need to be carried out in relation to money laundering and identifying risks that can be posed by Politically Exposed Persons (PEP) because of their positions of influence.
101
Explain what you understand by the RICS Bichard Review.
Lord Bichard was asked by RICS to carry out a further review after the Levitt review. Lord Bichard made recommendations which RICS are now implementing.
102
Explain some of the recommendations of the Bichard Review.
Renewed and increased focus on public interest and the ammendment of the Royal Charter.
Maintaining self regulation through greater independence for regulatory functions.
Increased focud on Diversity and Inclusion across the profession and within RICS Governance.
Empowering and enabling members through greater support for regional boardsand increased member engagement with renewed focus on younger members.
Undertaking an independant review of RICS governance and effectiveness at delivering against its charter for the public advantage once every five years.
A new simplified clear, accountable governance structure.
Showing greater leadership on issues that matter most to society such as sustainability and climate change.
103
How will these recommendations be implemented by RICS?
RICS has agreed to all the Lord Bichar recommendations and changes are in hand.
104
What is modern slavery and how would you identify red flags of it?
Modern slavery encompasses slavery, servitude, human trafficking and forced labour. Red flags would include seeing people brought into a site each day, living conditions, seeing many people living in cramped conditions, how a worker is to be paid, [hysical signs of abuse.
105
Explain the implications of the Sanctions and Anti-Money Laundering Act 2018
Thers is a sanctions list which includes people living in the UK. Due dilligence in regards to your AML checks should include this and also checking clients, checking existing clients, understanding risks and red flags.
106
What is the Sanctions List and why should you be aware of it?
The sanctions list under the Anti Money Laundering Act 2018 is a list of people who are considered high risk by HM Treasury and are under financial sanctions in the UK
107
Why was the Register of Overseas Entities introduced?
The 'Register of Overseas Entities' will: provide more information for law enforcement to help them to track down those using UK property as a money laundering vehicle. require anonymous foreign owners of UK property to reveal their real identity to ensure criminals can't hide behind secretive chains of shell companies
108
What are the six RICS values published as a result of the Levitt review?
Integreity, Transparency, Inclusion, Collaboration, Advocacy, Passion
109
Explain the impact of the Economic Crime (Transparency and Enforcement) Act 2022.
Includes beneficial ownership register of overseas entities owning property in the UK.
Strengthens investigation pwoers regarding unexplained wealth orders (UWO's)
Easier prosecution of those involved in sanctions busting inability or unwillingness to provide ID information.
110
What should be included in a Terms of Engagement
1. Identity of client
2. Surveyor with responsibility
3. Comflict of interest checks and anything that needs to be put in place
4. Outline of service
5. Relevant standards, legislation or regulation
6. Scope of what you will do and not do
7. Assumptions
8. information Supplied
9. Limitations on Liability (Pii)
10. Description of the deliverable
11. Basis of Fee
12. Follow up work to be offered
143. Complaints handling procedure
111
What is the RICS Motto
Est modus in rebus
There is measure in all things
112
What are the two new RICS Document types?
* Professional standards
These are the documents which set requirements for competent and ethical practice e.g. our existing professional statements and guidance
* Practice information
These documents provide advice or practice support to RICS members and firms.
