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APC - Autumn 2024 > Ethics: Part 1 (RICS Requirements) > Flashcards

Ethics: Part 1 (RICS Requirements) Flashcards

1
Q

When was RICS founded?

A

1868

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2
Q

When was the RICS granted Royal Charter?

A

1881

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3
Q

What are the 4 levels of membership?

A
  1. FRICS
  2. MRICS
  3. AssocRICS
  4. Trainee / Student
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4
Q

Who is the RICS currently governed by?

A

Under the terms of its Royal Charter, by various internal councils, and boards.

The Governing Council currently has over 20 members and runs the RICS, providing management and strategic direction.

There are 17 specialist professional groups covering property, land and construction.

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5
Q

Current CEO & President of RICS?

A

Justin Young (CEO) & Tina Paillet FRICS (President)

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6
Q

What is the Role of the RICS?

A

‘The Royal Institution of Chartered Surveyors promotes and enforces the highest professional qualifications and standards in the development and management of land, real estate, construction and infrastructure.’ (RICS, 2020)

It is accountable to both members and the public.

It is involved in policy influence and political engagement.

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7
Q

The 3 main roles of the RICS?

A

S - To maintain the highest Standards of education and training

P - To Protect consumers through strict regulation of professional standards.

I - To be the leading source of information and independent advice on land, property, construction and associated environmental issues (RICS, 2015).

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8
Q

What do the RICS standard documents lay out?

A

The ethical conduct and competence-related standards for the profession.

By working to the standards, professional members and RICS regulated firms deliver confidence and transparency.

RICS ensure these standards are upheld by the profession through our system of independently led regulation.

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9
Q

What did the RICS commission Lord Bichard to review?

A

‘To clarify the purpose of RICS, including: its responsibility to act for the public advantage;
make recommendations on its governing structure to deliver that purpose;
and provide proposals for the incoming leadership and governing body on the future culture and strategy of the Institution.’

Purpose, Responsibility for Public, Structure, Future Culture

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10
Q

What was the aim of the Birchard Review?

A

To deliver a member-led public interest focussed RICS with 5 key themes:

G - Governance
S - strategy
P - people
C - culture
V - values and member Service

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11
Q

What are the recommendations of the Birchard Review (June 2022)? 7 key areas

A

P - A renewed and increased focus on the PUBLIC interest remit of RICS (includes Royal Charter and public interest panel to advise Governing Council)
I - Maintaining self-regulation through greater INDEPENDENCE for regulatory functions
D - Increased focus on DIVERSITY and Inclusion
S - Empowering and enabling members through greater SUPPORT for members, focussing on younger members
S - New simplified, clear & accountable STRUCTURE
LS- Greater LEADERSHIP on issues that matter to SOCIETY, such as sustainability / climate

PIDSSLS

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12
Q

5 Future Foundations (Nov 2023) from Birchard Review?

A

Vision - Sustainable, resilient & inclusive built environment
Mission - Inspire members, Advance knowledge, Uphold standards
Goals - D&I, Sustainability, Trust, Value, Member engagement
Values - Professional, Collaborative, Inclusive, Ambitious
Organisation - Efficient, effective and inspiring professional body

VMGVO

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13
Q

5 benefits of being a RICS member?

A
  1. Status
  2. Recognition
  3. Market Advantage
  4. Knowledge
  5. Network

SRMKN (RICS, 2015)

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14
Q

What are the ‘Rules for the regulation of firms’ (2022)?

A

50% of Principals (Partners) of a UK firm are RICS members then regulated

At least 25% to apply to be regulated

Each firm to nominate a ‘Responsible Principal’ - obliged to ensure all reasonable steps are taken for compliance

Strict rules on use of the RICS logo

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15
Q

What must firms do to provide surveying services?

A

Register for regulation ensuring benchmarking

Provide a ‘Gold Standard’ of quality control for clients

Practice is to be a corporate body, partnership, LLP or a sole practitioner practice

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16
Q

What Information required by the RICS for Registration?

A
  1. Type of Business and staffing details
  2. Name of the Responsible Principal
  3. Statutory regulated activities - such as for financial services
  4. Nature of Clients
  5. Complaints handling procedure details and records
  6. Professional indemnity insurance details
  7. Whether the firm holds clients’ money

Business, Principal, Regulation, Clients, Complaints Handling, Insurance, Money
BPRCCIM

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17
Q

When were the Rules of Conduct created and who do they apply to?

A

Published in October 2021 and became effective from February 2022.

Single set of rules applying to members and firms - provides a simple structure with clear example behaviours

New guidance on Rule 4 in March 2024 for D,E&I

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18
Q

What are the FIVE Rules of Conduct?

A

Rule 1: Members and firms must be honest, act with integrity and comply with their personal 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

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19
Q

What are the FIVE Rules of Conduct? (Shorthand)

A

Rule 1: Honest & Integrity

Rule 2: Maintain Professional Competence

Rule 3: Good-Quality Service

Rule 4: Respect, Diversity and Inclusion

Rule 5: Responsibility and Maintain Public Confidence

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20
Q

What must RICS Members do? (Professional Obligations)

A
  1. Comply with the CPD Requirements
  2. Cooperate with RICS
  3. Promptly provide all information reasonably requested by the Standards and Regulation Board
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21
Q

What must RICS-regulated firms do? (Professional Obligations)

A
  1. Publish a complaints-handling procedure
  2. Ensure all previous and current work is met with standards approved by the RICS
  3. With a Sole Principal, make appropriate arrangements for their work in the case of incapacity, absence or death
  4. Cooperate with RICS
  5. Promptly provide all information reasonable requested by the Standards and Regulation Board
  6. Display on their business literature a designation to denote that they are regulated by the RICS
  7. Report to RICS any matter that they are required to report under the Rules for the Registration of Firms
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22
Q

What is the purpose of the RICS Ethics Decision Tree? What does it provide and encourage?

A

Provides a framework of questions which members should ask themselves when faced with a potentially unethical situation.

Is it legal?

Most importantly – Would you be content if your action was made public?

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23
Q

What are the THREE levels of disciplinary action?

A
  1. Action by Head of Regulation - serve a fixed penalty notice, make a consent order, refer matter to a disciplinary panel
  2. Disciplinary Panel - more serious breaches, Lay members on panel. Undertaken by the Standards and Regulation Board.
  3. Appeal Panel - regard to new evidence previously presented and any new representations –Lay members
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24
Q

What does the RICS regulate when it comes to disciplinary procedures?

A

Protect the public, uphold the public confidence in the profession & uphold professional standards

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25
Q

RICS Regulatory Decision Making (2022)?

A

Provides an outline of the regulatory approach by RICS of regulated members, non-members and firms

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26
Q

Initial Investigation step of disciplinary action?

A

Formal investigation by the Head of Regulation at RICS followed by :

  1. Serve a Fixed Penalty Notice
  2. Make a Regulatory Compliance Order
  3. Refer the matter to a single member of the Regulatory Tribunal for consideration
  4. Refer the matter directly to a Disciplinary Panel
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27
Q

What are Regulatory Compliance Orders?

A

For low level breaches

It is a written document which states the terms upon which the member or firm must take or desist from certain actions

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28
Q

What is the process (Action) for a Disciplinary Panel?

A

Head of Regulation can be considered and the membership of a Disciplinary Panel includes lay members. Procedure used for more serious breaches of conduct

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29
Q

What are the penalties available to a Regulatory Tribunal Disciplinary Panel?

A
  1. Issue a Regulatory Compliance Order
  2. Reprimand
  3. Fine
  4. Impose conditions upon future continued RICS registration
  5. Expulsion from RICS
  6. Publish results of the hearing
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30
Q

What is a RICS Professional Standard?

A

Set of requirements or expectations for RICS members and regulated firms

use the word ‘must’ and recommend best practice using the word ‘should’

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31
Q

What are RICS Practice Alerts?

A

August 2023 - key tools for warning or alerting the profession to emerging areas of risk over which the RICS has concerns

32
Q

What do you include in your standard Terms of Engagement?

A
  • Proposed fee basis
  • Scope of work
  • Copy of the complaints handling procedure
  • PII cover
    Needs to be signed and returned before undertaking any work
33
Q

Why can you decline an instruction ?

A
  1. Not competent to undertake the work
  2. Insufficient facts
  3. Will not sign ToE or complete AML checks
  4. CoI
  5. Insurance liability cap not agreed
  6. Pro bono basis and professional indemnity insurance will not cover the work
  7. UK Government sanctions
  8. Would you want your actions made public?

RICS Ethics Decision Tree

34
Q

Fee Negotiations process?

A

Avoid price fixing & collusion - agreed on a market basis
Healthy competition is encouraged / aggressive fee cutting is not allowed
Consider the time taken and resources required
Provide a high level of service for the fee negotiated
Not to undercut another firm
Remain transparent
Considered in the context of the Bribery Act 2010 and the RICS Rules of Conduct 2021

35
Q

What do you do in the instance of a conflict?

A

I would check if impartiality is threatened due to the existence of conflict between two clients.

i.e.
Financial Interest
Personal Interest
Commercial Relationship
Acting on both sides of the transaction

I would seek to either use Conflict Avoidance is when you do not accept the instruction
or
Conflict Management is when the instruction is accepted, and steps are taken and put in place to manage the conflict

36
Q

What is in the RICS Global Professional Standard: Conflicts of Interest, 2017?

A

It came into effect on 1st Jan 2018

States that ‘a Member must not advise or represent a client where doing so would involve a conflict of interest or a significant risk of a conflict of interest, other than where all those who are, or may be affected have provided their informed consent’

Informed consent sought where the RICS member or regulated firm is satisfied despite a CoI is in the interests of all those affected.

37
Q

How would you establish a conflict of interest?

A

I would undertake a search on my firms internal software. I would also send out an email to all relevant departments to establish if there are any conflicts.

If there was an active agency instruction, I would decline the instruction for the valuation.

If there was a previous involvement i.e. a letting then I would inform the client and obtain informed consent that they are happy to proceed and also include this within the TOE document.

38
Q

Outline Three types of conflict of interest

A

A ‘Party Conflict’ - Working on the same instruction with 2 separate parties
A ‘Own Interest Conflict’ - Relating to a personal interest
A ‘Confidential Information Conflict’ - Relating to work between two parties that is confidential

39
Q

What must firms do to effectively conform with CoI Professional Standard?

A

Have in place effective systems and controls and firms must keep records to show their compliance

40
Q

Three step process to handle a CoI?

A

Following receipt of the full facts, if impartiality is compromised then CONFLICT AVOIDANCE –> if wishing to accept the instruction, WRITTEN ADVICE TO BOTH PARTIES, (disclosing the nature of the conflict, being clear and with written confirmation). Once received set up an information/ethical barrier for CONFLICT MANAGEMENT.

41
Q

What forms of barrier do you use for conflict management?

A

I would use information & ethical barriers.

Barriers that are robust , taking reasonable steps to operate an effective barrier, surveyors must be physically separated with a virtual IT barrier and information must be securely stored

Keep an Audit trail

42
Q

Apart from RICS Professional Standard on Conflicts of Interest (2017). What other documents did you have regard to?

A

RICS Professional Statement - Conflicts of Interest – UK Commercial Property Market Investment Agency 2017

43
Q

What is in the RICS Professional Statement - Conflicts of Interest – UK Commercial Property Market Investment Agency 2017? What does it deal with?

A

Relates to UK commercial investment agency work

Deals with :

  1. Dual Agency
    ‘this practice must not be undertaken in any circumstances’
  2. Multiple Introductions -
    Agent with competing contractual relationships. When ToE is agreed, agent must be clear on an exclusive or non-exclusive basis. Other clients must then be informed.
  3. Incremental Advice
    Can only provide if consent is given and an information barrier is put in place before providing any incremental advice to the prospective buyer
  4. Personal Interest / Own interest Conflict
    Must not let this interfere with or influence your professional judgement. Transparency required.
    Declare facts promptly
    Section 21 of Estate Agents Act 1979 required for agency work
44
Q

What does competence mean to you?

A

Competence to me means the ability to do something successfully and efficiently. It is a key skill required

45
Q

What does client confidentiality include?

A

Confidentiality includes historic information and information provided by a client prior to instruction

46
Q

What do you do to maintain client confidentiality?

A

You must get client’s approval to release files (unless subject to statutory requirement).

All old files to be held for minimum 6 years

Overhearing information must not be used for other purposes

Any confidential material received in error should be disposed of securely

47
Q

What is and why does a firm use a Complaints Handling Procedure?

A

Meets RICS Rules of Conduct (2021) and made clear to client that it is in operation

Notify PII insurers asap if there is a complaint

CHP issued in ToB

Complaints log must be maintained

Firms must include an RICS Approved ADR mechanism

48
Q

Why should you be careful with social media?

A

RICS will investigate concerns over posts, where they involve:
* Discrimination
* Dishonesty
* Bullying, Abusive or Threatening behaviour

RICS will not investigate, where they involve:
Professional and respectful language and critical views

49
Q

What is the complaints handling procedure?

A

Acknowledge in 7 days, investigated within 28 days
Issue details to CHO - This procedure must be quick and clear.

If the complainant is not happy - must be referred to
* Third party resolution – RICS dispute resolution service

CHP should be in ToE
* PII cover should be notified.
Complaint log must be maintained with complaint outcomes.

50
Q

Why is CPD important?

A

It is in the rules of conduct for firms and member.

It ensures that members are up to date with information in an everchanging market

51
Q

What are the 4 requirements for CPD?

A
  1. Minimum of 20 hours per year
  2. 10 of these hours must be Formal
  3. Maintain a current understanding of RICS Rules of Conduct over a 3-year period
  4. Record their CPD activity every year (31st Jan)
52
Q

Who is the Knight Frank Complaints Handling Officer

A

Philip Gardner

53
Q

How do you avoid being negligent?

A

1 - Understanding the clients objectives
2 - Ensure that I am competent enough to undertake the work
3 - Follow the relevant professional standards
4 - Keep up to date with market knowledge and legislation
5 - Cap PII excess on the ToE

54
Q

Explain your understanding of precedent set in Burgess v Lejonvarn.

A

Burgess v Lejonvarn (2020).
* Providing a professional service pro bono and without a contract you still owe a duty of care in tort to act with reasonable care and skill

55
Q

Explain your understanding of precedent set in Hope Capital Ltd v Alexander Reece Thompson LLP.

A

Hope Capital Ltd v Alexander Reece Thompson LLP (2023)
* Purpose of a valuation is central to the extent of the valuer’s duty when considering a negligence claim

56
Q

Explain your understanding of the Limitation Act 1980?

A

Contract - 6 years from the date of the negligent act, breach of contract or omission.
Tort - 6 years from the date the claimant suffered the loss.

57
Q

What is double dipping (dual agency)? Why is it banned?

A

Double dipping is where an agent acts for both the seller and buyer. It is banned because it is evident conflict of interest.

58
Q

What is the PII Minimum cover thresholds?

A

If Turnover is…

£100,000 or less = £250,000
£100,001 - £200,000 = £500,000
£200,001 and above = £1,000,000

Knight Frank is minimum £1m (I am not allowed to disclose amount)

If it is a new practice, you are required to estimate the turnover for the year. Then update PII provider with details

59
Q

Why do you have PII?

A

To protect clients, surveyors and third parties against negligence claims and damages arises

Set out in the RICS ‘Professional Indemnity Insurance Requirements’ (April 2022)

Underwritten by an RICS approved Insurer

60
Q

What is the Uninsured Excess for Firms?

A

Firms Turnover in Previous Year - Max uninsured Excess

Up to £10,000,000 - Greater of 2.5% of the sum insured or £10k

Over £10,000,000 - No set limit

61
Q

What is the run-off cover for PII?

A

“Adequate and Appropriate” Run-off following cessation of trading

For consumer: a minimum of £1,000,000 over 6 years
For commercial: What is A&A for minimum of 6 years

62
Q

Is PII cover needed for ‘pro-bono’ work?

A

Yes

63
Q

How does the RICS assist with PII?

A

A RICS Assigned Risk Pool - available at a cost for members who cannot arrange cover

Members Support Service (MSS) for members facing claims for work carried out by an employer who has defaulted

64
Q

What advice does RICS Practice Information - Risk, Liability and Insurance, 2021 give?

A

Liability caps to manage risks

Aware of third-party reliance and clearly in ToE

65
Q

What goes into the Terms of Business?

A

Terms of Business includes…
1. Client Engagement
2. Definitions
3. Fees, expenses
4. Client Obligations
5. Measurements
6. Confidentiality
7. Data Protection and Data Handling
8. Documents and Reliance
9. Service Quality
10. Conflicts of Interest
11. Liability and insurance
12. Termination

66
Q

Why do you want to be a chartered surveyor?

A

I want to be part of a prestigious organisation which allows me to progress my career in an industry I am passionate about. It will give me the recognition and status to work with clients on a greater level.

Market advantage – MA
Professional recognition – R
Knowledge – International Practice Standards – K
Status – S
Global network – N
(MA-R-K-S-N)

67
Q

Tell me about an instance of when you have handled client’s money

A

I personally have not directly held client’s money. However, if I did I would ensure that it was kept in a separate clients account, clearly identified with the name of the client. I would ensure that the client has access to the account at all times.

68
Q

What are the 6 areas of RICS Professional Standard: Client Money Handling, 2019?

A
  1. Holding client money
  2. Providing information to clients
  3. Receipts of client money
  4. Payments from clients accounts
  5. Accounting records and controls
  6. Compliance
69
Q

What do you need to follow when starting a new practice (Regulation)? (Statutory Compliance) (Legal)

A
  1. Business Names Act 1985
  2. Equality Act 2010
  3. Financial services Act 2012
  4. Bribery Act 2010
  5. Money Laundering Regulation 2007 – appoint MLRO
  6. Health & Safety Act 1974
  7. Control of Asbestos Regulations 2012
  8. Fire safety reform
  9. Data protection Act 1998
  10. Inform HMRC – VAT threshold = £85k
70
Q

What steps do you need to take when closing down your RICS regulated firm?

A
  1. Inform RICS
  2. Inform clients
  3. Return clients’ money
  4. PII – 6 years runoff – minimum £250k
  5. Retain clients’ files – 6 years
71
Q

What information do you need to provide the RICS every year? (Annual return)

A
  1. Type of business / staff details
  2. Statutory regulated activities
  3. Nature of clients
  4. Complaints handling procedure
  5. PII details
  6. Client money details
72
Q

What steps do you need to take to become RICS Compliant when starting a new practice? (RICS)

A
  1. Inform RICS
  2. Appoint a Responsible Principal
  3. Register with RICS for regulation
  4. Arrange PII
  5. Set up procedures for Client Money Handling
  6. Register with RICS for Red Book
  7. Complaints Handling Procedure
  8. Complaints Handling Officer
  9. RICS Logo Kit
  10. Plan for future business
  11. CPD
  12. Complete RICS Annual Return each year
73
Q

What is the RICS Motto?

A

There is measure in all things

74
Q

What are the Rules of Conduct for Members?

A

C - Comply with CPD
C - Cooperate with RICS
R - Provide information reasonably requested by Standards and Regulations Board.

75
Q

Do you owe a duty of care to the client?

A
  • Surveyors have a duty of care to clients and parties
  • Must use “reasonable care and skill”
  • Negligence = breach of this, where damages arise
  • Limitation Act 1980 = 6 years from date of negligent act / 3 years from date of knowledge / 15 years long stop date
  • Margin of Error can vary – KS Lincoln vs CBRE = 10% margin for commercial property
76
Q

What is run-off cover?

A

Run-off cover is an insurance policy that protects surveyors, after they stop practicing.

It covers any claims made against them for work done before they stopped practicing,

77
Q

What does the RICS Professional Statement - Conflicts of Interest – UK Commercial Property Market Investment Agency 2017 outline?

A
  • Dual agency prohibited (working on both sides of transaction) after 2018.
  • Multiple introductions allowed if on “non-exclusive basis” – informed consent given from all clients
  • Incremental advice allowed, information barrier must be in place
  • Personal interests must be declared (s21) of the Estate Agency Act 1979.

APC - Autumn 2024 (2 decks)

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