Ethics New Flashcards
When was RICS Founded?
1868
When Was RICS Given Royal Charter?
By Privy Council in 1881
What are the 4 levels of membership?
- Member RICS
- Fellow RICS
- Associate RICS
- Trainee
How do you become a fellow?
Evidence of 4 fellowship characteristics
1. 5 of more years as MRICS
2. Have a leadership role
3. Raising the profile of RICS
4. Professional, technical or academic achievement
Who is the CEO of RICS
Justin Young
Who is chair of the governing council?
Nicholas Maclean
Who is the current president of the RICS
Nicholas Maclean
What is the UK Structure
4 National Associations
10 Regional Boards
Local Associations
What is the Levitt Review
Public exposure of the lack of clarity, purpose and structure of RICS governance arrangements, resulting in an indepedent review of the purpose, governance and strategy of RICS.
What recommendations were included in the Bichard Review?
Included:
1. Empowering members through greater support for regional boards, increased member engagement and focus on younger members.
2. A new simplified, clear and accountable governance structure.
3. Increased focus on diversity and inclusion across the profession.
What is the role of RICS?
- Maintain high standards in education and training.
- Protect consumers through strict regulation of professional standards.
- Leading source of information independent advice on land, property, construction and associated environmental issues.
What are the 5 benefits of being an RICS member?
- Status - gives client confidence
- Recognition - promotion of your professional excellence to governments and markets.
- Market Advantage - gives you a competitive advantage.
- Knowledge - International practice standards, professional guidance, CPD and knowledge sharing.
- Network - Access to 125,000 professionals worldwide.
What are the benefits of regulation for firms?
CPS
1. Confidence - for clients as firms are monitored by RICS regulation.
2. Professionalism - firms have to provide clear, impartial and expert advice.
3. Security - firms have to have recognised complaints procedure, access to free independent redress and professional indemnity insurance.
When must a firm be regulated?
If 50% or more principles are RICS members
What is the minimum number of RICS members within a firm for it to apply to be regulated?
25% of principles.
Who from a firm liaises with the RICS?
A regulated firm must nominate a responsible principle who ensures measures are in place to enable compliance with RICS requirements including report to RICS when required.
What is included in the RICS annual return?
- type of business and staff details
- Statutory regulated activities
- Nature of clients
- CHP and Records
- Professional Indemnity Insurance details
- Whether the firm holds client money.
Who can use the RICS logo?
Only RICS members and firms can use the logo
Is there anything about RICS that should be included in the Terms of Engagement?
Regulated firms must include a prescribed text in TOE to explain what being regulated by RICS means.
When were the rules of conduct updated?
Drafted in 2021 and came into effect February 2022.
Why were the rules of conduct updated?
Simpler structure with a single set of rules for both Members and Firms with clear example behaviors for each rule. Focused on respect, diversity and inclusion.
What is rule number 1 of the Rules of Conduct?
Members and firms must be honest, act with integrity and comply with the personal obligations, including obligations to RICS.
Can you give an example of a time when you have complied with rule 1?
????
What is Rule 2 of the Rules of Conduct?
RICS members and firms must maintain their professional competence and ensure services are provided by competent individuals with the necessary expertise.
Give an example of when you have complied with rule 2
I ensure I stay on top of my CPD requirements, undertaking at least 48 hours of CPD every 12 months , at least 50% of which is formal CPD. I am aware that once I qualify this will reduce to 20 hours, with 10 hours formal and that I log this on the RICS CPD management system.
What is rule 3 of the RICS rules of conduct?
Members and firms must provide good quality and diligent service
What is an example of when you have complied with rule 3?
Whilst working on the disposal of scrub land, I needed to measure the land for the valuation. Some of the land was difficult to access and I knew that the measurement exercise was beyond my ability so instructed a land surveyor to undertake the measurement instead.
What is rule 4 of the Rules of Conduct?
RICS Members and Firms must treat others with respect and encourage diversity and inclusion.
Can you give an example of when you have acted in accordance with rule 4?
I have undertaken ‘Lets Talk About Race’ training at work which discussed unconscious bias and helped me to recognise and manage my own biases.
What is rule 5 of the Rule of Conduct?
RICS members and firms must act in the public interest, take responsibility for their actions and act in a way to prevent harm and maintain public confidence in the profession.
Give an example of when you have acted in line with rule 5?
??? When undertaking public consultations on a new housing development, I took detailed minutes and actions of meetings with local residents and distributed this to all attendees to demonstrate that their views would be considered as the project progressed.
What are the Obligations to the RICS outlined in Appendix A?
RICS members and firms must:
Cooperate with the RICS
Promptly provide all information requested by the Standards and Regulation Board or those acting on their behalf.
RICS members must comply with CPD requirements.
RICS firms must:
Have sufficient level of professional indemnity insurance.
Have a complaints handling procedure which includes an ADR provider approved by RICS.
If a sole principle make arrangements for work to continue in the event of incapacitation or death.
Display business literature in line with RICS policy to denote they are regulated by RICS
Report any matter they are required under the rules of regstration.
What are three of the obligations in appendix A and how do you fulfill them?
- Members must comply with their CPD obligations - Once I am qualified I will undertake a minimum of 20 hours of CPD (10 formal) and log it on the RICS CPD Log.
- Cooperate with RICS - I ensure to always follow the rules of conduct and all other RICS technical guidance in my day to day role.
- Firms must have sufficient PII - the Council has PII for all employees.
How is RICS regulated?
Self regulated
What triggers disciplinary procedures?
- Someone complaining to the RICS
- An allegation received by a client of third party
- Information received by the RICS
What are the three levels of disciplinary procedures?
- Action by the head of regulation
- Regulatory tribunal
- Appeal panel
Does the RICS provide any support for decision making?
- Ethics decision tree - a flow chart which encourages members to ask themselves questions to aid in decision making, including ‘would I be happy to read about my actions in the paper’
- Case studies of different ethical scenarios
- RICS regulation confidential hotline offers assistance to members who have been unable to gain an answer from the decision tree.
What is the initial stage of investigation for disciplinary procedures?
Investigation by the Head of Regulation
What are the 4 actions that can be taken by the head of regulation?
- Fixed penalty notice
- Make a regulatory compliance order
- CPD sanctions
- Refer the matter to disciplinary panel.
What is the procedure for more serious breaches?
Regulatory tribunal - this is decided by the head of regulation during disciplinary procedures
What are the outcomes of the regulatory tribunal?
- Compliance order
- Unlimited fine per breach proportional to the offence
- Conditions upon future continued RICS registration
- Expulsion of member or firm
- Publication of results must be put in Modus or a local newspaper where the member works.
Once a member has been investigated and a decision about their offence has been made, are their any options available to them?
Yes- they have the right to appeal at an appeal panel
What happens at the appeal panel?
The panel will review the decision based on the heard and any new evidence . They can either uphold the action taken or vary the penalty.
Who makes up the Regulatory Tribunal and Appeal Panel?
50% RICS members 50% are lay members (not RICS)
Is there any guidance on the use of social media?
Use of Social Media, Guidance for Members 2021, version 2 2024
What is in the RICS Guidance Note on the Use of Social Media 2021 (v2 2024)?
Remind members about the high standards of professional behavior expected by the RICS
RICS will consider a number of factors as to whether social media use is in breach of the rules of conduct. This includes:
Content is dishonest of misleading
Content is discriminatory
How closely connected it is to professional life.
If content is abusive, aggressive or harassing.
Whether the content shared is confidential or private
Can you give an example of social media activity which may cause reputational damage to the profession?
A member posting racist tweets. The views of that member are not reflective of the RICS, however the members association with the profession may cause the public to assume those views are accepted and cause reputational damage.
How do you set fees?
Based on the scope of work and agreed on an ad-hoc basis. Need to be transparent with client and consumers.
What if the client comes back and says another firm will do it for cheaper?
I would assess whether the scope of work has changed and whether a reduced fee would still enable me to provide high quality service. If not, I would decline the instruction.
Can I accept a referral fee?
Only if I am completely open and transparent with my client in receiving or offering a referral fee. I would state this within the terms of engagement. I would ensure to comply with principles of the bribery act and rule of conduct.
What is a conflict of interest?
A conflict of interest is a situation in which a potential or actual risk may arise that could impair the members ability to provide impartial, independent advice.
Can you give an example of a conflict of interest?
Personal, financial or commercial interest acting on both sides of a transaction.
Is there any guidance on conflict of interest?
RICS professional statement on Conflict of Interest 2017
What are the three types of conflict?
- Party Conflict - working on same or related instruction for two different parties.
- Own interest conflict -relating to personal interest
- Confidential information conflict - unable to provide information to client as you are obliged to confidential for another.
How do you handle a conflict?
Step 1 - Conflict avoidance - refuse instruction
Step 2 - Written advice to both parties seeking informed consent
Step 3 - Conflict management - agreed plan to manage conflict.
What is dual agency?
Where the agent has a contractual agreement with both the seller and the buyer at the same time. Cannot be undertaken by a RICS member at any time
I there any guidance on complaints handling?
RICS guidance note on complaints handling 2016
What are the key points of the RICS guidance note on Complaints Handling 2016?
- Notify insurers as soon as a complaint is made
- Complaints handling procedure should be issued with terms of engagement.
- Complaints log must be maintained
- CHP and ADR must be approved by the RICS.
What Private indemnity insurance (PII)
Private Indemnity insurance protects surveyors, clients and third parties against negligence claims where there is a duty of care breach and a claim for damages arises.
Who provides Private Indemnity Insurance?
An insurance firm
What are the minimum requirements for Private indemnity insurance
PII is based on the firms annual global turnover.
If turnover is £100,000 or less, the minimum level is £250,000
If turnover is up to £200,000 then it is £500,000
If turnover is £200,000 or above, the minimum level is £1 million
How do new businesses work out their level of PII?
Estimate their annual turnover and adjust accordingly
What is the maximum level of uninsured excess required by the RICS
2.5% of the sum insured
How much PII is needed if a firm ceases trading?
A firm should have a minimum of 6 years run off cover with an aggregate of £1 million. RICS recommends longer cover as claims can be made up to 15 years after work was undertaken.
Do you need PII if the work is unpaid?
Yes- still providing a service in which a duty of care is owed and as such can be breached and damages caused.
Does RICS provide any guidance on PII?
Yes, RICS guidance note - Risk Liability and Insurance 2021. It recommends the use of liability caps and advises members to be aware of third party reliance.
What is the limitation on negligence claims?
Limitation Act 1980
Contract 6 years from the date of the negligent act, with 15 years longstop date.
Tort - 6 years from the date the claimant suffered the loss.
How can one avoid a negligence calim?
Ensure clarity in terms of engagement.
Ensure your competence to undertake an instruction.
Cap the liability excess in TOE
Follow RICS Guides and Standards
Ensure to document process - keep detailed notes and photos
Is there any guidance on Handling Client Money?
RICS Professional Statement on Client Money Handling 2019
What are the 6 areas of good practice outlined in the RICS professional Statement Client Money Handling?
Providing Information to clients
Holding Client Money
Receipts of client money
Payments from client accounts
Compliance
Accounting records and controls
If Holly Runs Please Contact Authorities
What procedures should be undertaken when handling client money?
Client accounts kept separate
Client must be written on bank account
Client must be able to have monies on demand
Payment of interest agreed and account kept in credit
Accurate records kept with a running balance available
How does the RICS aid in protecting client money?
RICS runs a client money protection scheme for claims from clients which provides last resort protection if a RICS regulated firm is unable to repay a clients money
How do you start a new practice?
RICS Compliance
Fill in a firm detail form
Appoint a principle who will be used for all RICS communication
Register with RICS for regulation
Put together a CHP with ADR procedures approved by RICS
Appoint a Complaints Handling Officer
Start complaints handling log
Estimate annual global turnover and ensure have minimum Private Indemnity Insurance
If sole practitioner, make arrangements for work to continue in event of incapacitation or death
Rgister for Valuer Registration Scheme if undertaking red book valuation work
Ensure CPD is logged online and set up staff training plan
Ensure Completion of RICS annual return each year
Statutory Compliance
Disclose business name
appoint Money Laundering Report Officer (MLRO)
Comply with bribery act
Comply with H&S Act
Disability discrimination compliance
Ensure compliance with employment law
Fire Safety Compliance
Estate Agency Compliance
How would you close a practice?
Inform the RICS
Inform clients and hand over to a new firm
Inform insurers and ensure at least 6 years run off cover
Keep records for 6 years
Return clients money to their own accounts
What is Ethics?
Value based system on which we base our professional life and our personal life.
What is regulation?
Preset rules that we can work to, in the form of rules, regulations and laws. The RICS is self regulated.
Are RICS codes of practice mandatory?
They can be mandatory but also provide recommendations on good practice.
What is the maximum uninsured excess for a limit of indemnity over £500,000?
2.5% of the sum insured
Who chaired the independent review of the RICS in September 2021?
Alison Levitt QC
What is the key objective of the RICS
To promote usefulness of the profession for the public advantage.
Name some functions of the RICS
Consumer protection
Influence policy
Set standards
Accredit professionals
Quality assurance
What does the RICS insist is a requirement of PII
Minimum wording policy
Covers past and present employees
Minimum level of indemnity based on turnover
Underwritten by an approved insurer
Includes run off cover
Provides a maximum level of uninsured cover
Each and every claim basis/fully retroactive
What does the term fully retroactive/each and every claim basis mean?
Covers claims made during the insurance cover period irrespective of when the original act occurred
What should you do if you receive notification of a professional indemnity claim?
Inform manager
Inform insurer
Can you accept a proportionate gift?
Yes providing it does not compromise your impartiality/integrity
Name the 5 principles of better regulation?
- Transparent
- Proportionate
- Accountable
- Consistent
- Targeted
Would it be wise to accept a gift close to the award of a key decision/tender
No it could be perceived as a bribe.
Does the bribery act 2010 apply to non-UK businesses operating in the UK?
Yes
Name the penalties for breaching the Bribery Act 2010?
10 years imprisonment
Unlimited fine
Is it a corporate criminal offence to fail to prevent bribery?
Yes
Who should you report bribery to?
RICS
Serious Fraud Office
When did the RICS Conflict of Interest Professional Statement take effect?
1st January 2018
Can information barriers still be used under the new RICS conflict of interest guidance?
Yes
What is Money Laundering?
Money laundering is when the proceeds of criminal activities is disguised or converted then realised as legitimate assets.
What is in the Money Laundering, Terrorist Financing and Transfer of Funds regulations 2017?
- a requirement to have written money laundering and terrorist financing risk assessments
- Adopt internal controls
- Provide staff training
- Ensure appropriate record keeping
- Anti Money Laundering checks to confirm the identity of purchasers and their source of funds before exchanging contracts
What is customer due diligence in relation to money laundering?
Must carry out due diligence on both parties (leasing/letting and purchase and sale transaction) before entering a business relationship.
Name some offences under the proceeds of crime act 2002?
- Concealing, disguising, converting or transferring criminal property.
- Becoming involved in an arrangement relating to criminal property
- Acquisition, use or possession of criminal property
What are estate agents legal obligations to prevent money laundering?
- Customer due diligence checks on vendors, purchasers, landlords and tenants.
- Enhanced due diligence checks if red flags occur (e.g involving high risk countries)
- Firms must have policies to identify and scrutinise transactions that are complex, unusually large or without an apparent legal or economic purpose.
What are some key points on the Anti Money Laundering Sanctions Update 2022?
Reminder about sanctions and estate agents role in enforcing these. Includes:
understanding risk factors and red flags.
Checking higher risk clients against the HM Treasury’s consolidated list.
What to do if client is on the sanction list, including contacting the Office of Financial Sanctions Implementation.
What are the levels of due diligence checks?
- Customer Due Diligence
- Enhanced Due Diligence
What is required in a customer due diligence check
Identify the client and verify their identity based on a reliable independent source (e.g driving licence, passport)
Make reasonable endeavours to identify the beneficial owners of the client e.g Companies House information.
If its a company, its name, company number and registered office address is required.
Obtain information on the purpose and intended nature of the business relationship.
Why would you undertake enhanced due diligence?
Enhanced due diligence is required for any transaction or business relationship involving someone establish in a high risk third country or a politically exposed person or PEP family member/business associate
What is a PEP (politically exposed person)
A PEP is someone entrusted with a prominent public function. They may have higher risk of involvement in bribery or corruption by virtue of their position and influence.
What is required for Enhanced Due Diligence
More detailed examination of the background and purpose of the transaction and increased monitoring.
What are the penalties for failing to comply with Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017?
Maximum 14 years prison sentence and/or unlimited fine for assisting with money laundering.
Maximum 5 years prison and/or unlimited fine for tipping off someone under suspicion of money laundering or failing to report suspicion.
What are your employers anti bribery procedures?
What are your employers rules on gifts?
What are some red flags associated with potential money laundering?
Inability or unwillingness to provide identity documents
Changes to parties involved during transactions.
Unusual transaction features, such as unexpected urgency to complete, potential loss making or unusual transaction for client
Payment of fees or monies in usual currencies.
What are the key points of the RICS Professional Statement Countering Bribery, Corruption, Money Laundering and Terrorist Financing 2019?
Divided into 3 parts.
1. Mandatory requirements, includes not taking bribes, reporting suspicions, retaining records and undertaking due diligence.
2. Guidance, practical guidance includes setting up gift register, providing training and having written policies in place.
3. Supplementary Guidance. Includes guidance on dealing with PEPs and establish a risk based approach (3 Ws Who, What, Why)
Is a professional statement mandatory to follow?
Yes
Are guidance notes and information papers mandatory to follow?
Not but they can provide a defence in a case of negligence.
What is Lionheart?
RICS benevolent fund.
Can an organisation be held liable under the Bribery Act 2010 if they didn’t know about the bribe?
Yes, strict liability applies.
When Was RICS Countering Bribery and Corruption, Money Laundering and Terrorist Financing effective from?
1st September 2019
When do the rules of conduct apply from?
2nd February 2022
What is Rule 1?
Members and firms must be HONEST, act with INTEGRITY, and comply with professional OBLIGATION including obligations to RICS
What is Rule 2?
Members and Firms must maintain their professional COMPETENCE and ensure services are provided by COMPETENT individuals who have the necessary EXPERTISE
What is Rule 3?
Members and Firms must provide a GOOD QUALITY and DILIGENT service.
What is Rule 4?
Members and Firms must treat each other with RESPECT and encourage DIVERSITY and INCLUSION
What is 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.
How would you check for a conflict of interest for a firm?
Depends on the size, complexity and number of businesses. However, can use database checks, advisory emails to staff to enquire about individual involvement and record searches.
How did you conduct an own conflict of interest check?
I conducted a compliance check, database check and sent a department wide email.
What information was recorded during your own conflict of interest check?
Client details
Property details
Transaction details
Details of potential conflict
Correspondence
Informed consent in required.
Why do you want to join the RICS?
I want to be part of a prestigious organisation and progress my career in an industry I am passionate about. It will also provide a level of recognition amongst my peers and allow for further work opportunities.
Name the 3 obligations for members
- Comply with CPD requirements
- Cooperate with the RICS
- Provide information when requested by the Standards and Regulation Board
Name the 7 obligations for firms (CPLCPDR)
- CHP with an ADR approved by RICS
- PII
- Lone principle - make arrangements for death or incapacitation
- Cooperate with RICS
- Provide information to standards and regulation board
- Designation compliance to show RICS regulation
- Report to RICS any matter they are required to report.
What are the regulations for new practices?
Comply with
Business Name Act
Bribery Act
Control of Asbestos regulations
Data Protection
Financial Services Act
Inform HMRC
Money Laundering Regulations
How many by-laws are there and can you name one?
There are 10 bylaws, one is contribution to funds with membership fees.
What is your company’s complaints handling procedure?
????
Can you provide an example of when you have advise your client around ethics
When inviting bids for tender, I was asked what the current highest bid was. I advised not to disclose it as the informal tender would not be fair and transparent and illegal from Estate Agents Act 1979. it also raised issues with data protection and sharing private information with other bidders.
Would you undercut another practice?
No - however you could reduce your fee if the level of service required is less than initially thought whilst still providing a high level of service.
Explain what you know around Countering Bribery, Corruption, Money Laundering and Terrorist Financing 2019?
It is a professional statement that details the need for proper due diligence including enhanced due diligence for PEPs
What would you do if you became suspicious that a client was involved in money laundering?
I would report this to my firms compliance officer.
Why did you keep offers confidential?
Offers are not revealed in an informal tender as the bids are sealed in compliance with the Estate Agents Act.
Name 3 examples of Clients Money
Tenant deposits
Rent
Service Charges
Fees taken in advance
Sale proceeds
Provide an example of behavior for rule 1
Identify actual and potential conflicts of interest
Provide an example of behavior for rule 2
Only undertake work that you have the knowledge, skills and resources to carry out competently
Provide an example of rule 3
Agree with the clients the scope of the service to be provided, limitations and timescales
Provide an example of rule 4
Respect the rights of others and treat others with courtesy
Provide an example of behavior for rule 5
Respond to complaints made promptly and professionally.
What is your firm’s gift policy?
Generally no acceptance of gifts unless it is a token amount, e.g pen at a conference.
Can attend hospitality events to represent the Council if unlikely to cause reputational damage.
Should register acceptance or refusal of gift in register.
