Ethics, Rules of Conduct and Professionalism Flashcards
What are the rules of conduct for members?
ESSICCC
- Ethical Behaviour
- Service
- Solvency
- Information (to RICS)
- Competence
- CPD
- Co-operation (with RICS)
What are the rules of conduct for firms?
USPAPASICCCCC
- Use of designations
- Solvency
- Professional indemnity insurance
- Advertising
- Professional behaviour
- Arrangements for sole practitioner (incapacity / death)
- Service
- Information (to RICS)
- Competence
- CPD
- Co-operation (with RICS)
- Complaints handling
- Clients’ money
What are the 5 ethical standards?
- Treat others with Respect
- Act in a way that promotes Trust in the profession
- Take Responsibility
- Act with Integrity
- Always provide a high standard of Service
What’s the difference between Professional Statements and Guidance Notes?
Professional Statements: Mandatory requirements and details of regulatory intervention if requirements are not met.
Guidance Notes: Not mandatory but recommendations of best practice.
Why does the RICS have rules of conduct?
- Consistency of service / approach
- Consistency of rules / regulation
- Helps members act in a professional capacity
- Public advantage / expectation
What does acting with Integrity mean?
- Being trustworthy
- Open and transparent
- Respecting confidentiality
- Not taking advantage
- Not offering or accepting gifts
- Not allowing bias / conflict of interest to influence decisions and actions
Explain how you can take Responsibility?
- Being accountable for actions
- Acting with skill, care and diligence
- Respectfully challenging
- Don’t leave for others to do
Explain how you can treat others with Respect?
- Treat everyone with courtesy, politeness and respect
- Never discriminate
Explain how you provide a high standard of Service?
- Act within competence
- Transparent about fees
- Effective communication
- Ensure best possible advice, support and performance
- Understand scope of service
Explain how you promote Trust in the profession?
- Understand how actions affect others / environment
- Fulfil obligations
- Act in a trustworthy manner in professional / private life
What are the some key ethical topics in surveying?
- Gifts and bribes
- Equal opportunity and discrimination
- Conflicts of interest
- Money laundering
- Whistle blowing
What are the preconditions for an RICS Regulated firm?
> 25% principals who are qualified RICS professionals
Agree to Rules of Conduct for Firms
What are insurance requirements for RICS regulated firms?
- Professional Indemnity
- Public liability (claims from the public - personal injuries, loss/damage to property, death)
- Employers liability (claims from an employee who becomes ill or injured performing company duties)
What would you consider in assessing the appropriateness of a Gift?
- Value
- Timing of offer
- Proportionate
- Effect ability to be impartial
- In line with RICS ethical standards
What is a conflict of interest?
- Anything that impedes an individual’s or firm’s ability to act impartially and in the best interests of a client
- RICS Professional Statement 2017
What are the types of conflict of interest outlined in the RICS Professional Statement 2017?
- Party interest
- Own interest
- Confidential information
What is informed consent?
- Informed all parties of conflict of interest
- Parties give consent to proceed
- Must be in interests of all affected
- Not prohibited by law
What are the four main bribery offences covered in the Bribery Act 2010?
- Bribing
- Accepting a bribe
- Bribing a foreign public official
- Corporate offence of failing to prevent a bribe
What are the 6 principles of the Bribery Act 2010?
PTR DCM
- Proportionality
- Top level commitment
- Risk assessment
- Due diligence
- Communication (inc. training)
- Monitoring and review
What are the punishments under the Bribery Act 2010?
- Maximum penalty of 10 years imprisonment and/or unlimited fine for individuals
- Unlimited fine for Corporations
What is money laundering?
The illegal process of making money generated from an illegal source appear to have come from a legitimate source
A client gives you a large amount of money to make a payment, what would you do?
- Not accept the cash
- Encourage the client to pay the money into a bank account
- Report to National Crime Agency if concerns over source of money
What regulations are associated with money laundering?
- The Money Laundering and Terrorist Financing Regulations 2019
Give some examples of modern slavery
- Forced labour
- Debt bondage
- Human trafficking
- Child slavery
- Forced / early marriage
What is Professional Indemnity insurance?
- Insurance for professional firms and people which covers them in the event of errors made during their business
- Covers professional negligence, errors / omissions, breach of professional duty and civil liberties
What is the purpose of Professional Indemnity insurance?
- Protects a firm against financial loss that it cannot meet from its own resources
- Protects the insured member or firm against the consequences of its liability to pay damages to third parties for breaches of professional duty that it commits through its professional activities
- Ensures that a firm’s clients do not suffer financial loss, which the firm cannot meet
What happened in Merret v Babb (2011)?
- Babb did valuation as an employee of a company for house purchased by Merret
- Valuation later found to be negligent
- Original company no longer existed / PI cancelled
- Court ruled Merret could pursue Babb directly for losses
What are the minimum limits of professional indemnity required?
Depends on firm’s turnover from previous year:
£200K = £1M
What is the maximum level of uninsured excess in a professional indemnity policy?
Depends on limit of indemnity:
<=£500K = greater of 2.5% of sum insured or £10K
>£500K = 2.5% of sum insured
How can a firm try to avoid PII claims?
1) Have a Quality Management System
2) Maintain good management structures
3) Follow the RICS rules of conduct / follow RICS guidance and professional statements
4) Have a Document Management System and keep good records
5) Use proper letters of engagement and do not advise outside your specialism
What is PI ‘run off’ cover, and how long should it be in place for?
- Covers for historic liabilities of a business after it ceases to trade
- RICS expects cover for a minimum period of 6 years
- Keep filed for up to 15 years (recommended)
What does the Royal Charter mean to you?
- Global recognition / status
- Network
- Professional guidance, information and support
- Technical resources
- Benefit to clients
- Promote best practice
If you are a sole trader, what do you need to have in place should you be unable to perform your duties, say due to ill health, death or some other way you are incapacitated?
Appropriate arrangements in place
A locum is another professional who can ‘stand in’
Can you provide an example of how you would deal with an error contained within your weekly timesheets submitted for the various projects you work on?
- Take responsibility for the error
- I would write to the client straight away informing of the error, and the action that will be taken to correct
- I would ensure that it got corrected in the following period
What particular rule would you be following in this instance (dealing with an error on timesheet)?
Ethical behaviour
Which Ethical standard does this tie in with (dealing with error on timesheet)?
Act with Integrity
Act in a way that promotes Trust in the profession
What conflict checks are carried out when you are acting as expert witness on contract disputes?
Whether you or your firm has an existing or historic commercial arrangement with either of the firms in dispute
Provide an example of how you have provided credible advice to a client in relation to the ethical standards in your day to day practices.
A client asked me for advice in setting the level of liquidated damages within a contract. I advised that this wasn’t my area of competency, and that the level should be based on ascertained costs.
Promote trust in the profession.
If you were a member and set up as a sole trader and were asked to tender for work competitively and your client who received this tender contacts you to say they would prefer to work with you but your tender is 20% too high and to get the project work you should reduce your tender sum to match this. What is your response?
Explain how the fee was calculated to meet their requirements
Suggest a review of scope of service to understand where services may be reduced to provide a reduced fee
What is the maximum amount you can accept in cash? (Money laundering regulations)
10,000 Euro (~£8,500)
What are the RICS’ 5 principles of better regulation?
PACTT
- Proportionality
- Accountability
- Consistency
- Transparency
- Targeting
How is the RICS structured?
- The Privy Council grants and awards the Royal Charter
- The Governing Council sets strategy, direction and manages the royal charter obligations
- Standards & Regulation Board
- Management Board
- Audit Committee
- Regulatory Tribunal
- Nominations Committee
- Presidential Nominations Committee
What is the RICS?
- World’s leading professional status in land, real estate, infrastructure, and construction
- Offers advice on property, construction, project management, dispute resolution and environmental issues
What is the role of the RICS?
PRAM
- Protect clients through a strict code of ethics and professional standards
- Regulate and promote the profession
- Provide impartial, advice, analysis and guidance
- Maintain the highest educational and professional standards
Give examples of when you’ve me the ethical standards?
1) Integrity: Ensuing confidentiality agreement upheld with contractor/sub-contractor
2) Promoted Trust: Advised client on reduced scope for a feasibility study
3) Service: Making myself available for client calls on the weekend
4) Treat others with respect: Respecting working arrangements for team members who have childcare, etc.
5) Responsibility: Took responsibility for setting up an informal APC group in my team
Who is the RICS president?
Clement Lau
What information do you need to provide the RICS with if you own a firm?
- Type of business and staffing details
- Statutory related
- Nature of clients
- Complaints handling process; details and records
- PI details
- Whether firm holds client money
- Completion of RICS annual return
What would you do if you were going to wind up a RICS regulated firm?
- Run off cover in place
- Ensure clients are informed
- Retain copy of client records for 6 years minimum
What factors does the RICS Decision Tree consider?
Sufficient facts Legality Ethical standards Consultation of appropriate people Clear reasoning Impact if actions made public
Describe a conflict of interest you have experienced and how it was resolved
- Managing tendering process for surveys
- Ridge was tendering for one of the surveys
- Sought client approval for arrangement
- Received informed consent from all affected parties
- Implemented an information barrier
- Wasn’t involved in evaluation of Ridge tender
What does having the Professional Indemnity Insurance 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)
- Claims under civil tort
In a Professional Indemnity Insurance policy, explain the term ‘claims made basis’
The policy at the time the claim is made will respond, not the policy in place at the time of the negligence.
Insurer will only pay out if the policy was within the period of the insurance, not after, unless there is run off cover.
What should a Professional Indemnity Insurance policy contain?
- Claims made basis
- Each and every claim basis
- Full civil liability basis
- Underwritten by a listed insurer
- Covers past and present employees
- Run-off cover
- Minimum level of indemnity cover required by RICS
What is the RICS Assigned Risk Pool?
- Insurance facility for regulated firms that find themselves unable to obtain PII in the normal market
- Firms can remain in the ARP for a maximum of 3 years, where they will be audited and guided in how to amend their business procedures/practices ready to obtain market PII again
What complaints will the RICS investigate?
A firm/person if they believe the service they are providing falls short of the standards outlined in the Global Professional Ethical Standards and the Rules of Conduct
What is the difference between act and regulations?
Acts: Pieces of statutory legislation that have been passed by Parliament, which means that they are laws. Breaching of an act creates liability enforceable in court.
Regulations: Supplementary to acts. They link to existing acts and they are designed to aid a person to apply the principles of the primary act. Essentially, they are formal guidelines, and breaching them is not necessarily enforceable in courts.
If you were to open your own RICS regulated firm, what would you need to put in place?
- At least 25% of the principals would need to be RICS professional members
- A money handling procedure
- A complaints handling procedure
- PI insurance
What must a complaint handling procedure look like? What form of redress?
- All complaints recorded
- Evaluate the complaint
- Check PI policy for notification of a complaint
- Develop an initial response
- Complete additional investigation if required
- Refer or escalate to ADR
- Keep good records
- Lessons learnt and training
How would you decide on the appropriate level of PI insurance for your company?
- Depends on turnover, plus complexity of projects
- If a new practice, I would forecast the projects I have in the pipeline, and likely turnover and type of project and obtain PI accordingly
RICS puts certain requirements on PI insurance?
- Appropriate cover in terms of any one claim or aggregate
- Full civil liability basis (where a policyholder may be held liable for a loss, without having being found to be negligent)
- Minimum cover based on previous year turnover
- Maximum levels of uninsured excess
- Fully retroactive
- Underwritten by an RICS listed insurer
- Covers past and present employees
- Run-off cover (fully retroactive)
- Run-off Pool (if unable to obtain run-off cover)
What if your company was to cease trading? How long cover for PI?
Minimum of 6 years. RICS recommend up to 15 years, the full extent on liability for claims.
On a claims-made basis and fully retroactive, so it covers all historic work carried out by the firm.
Consumer claims - minimum limit of £1,000,000.
Can you tell me what is in the Countering Bribery Professional Statement?
Split in to 3 parts:
1 - Effectively sets out what firms must and must not do, such as:
- have procedures in place to prevent such as doing identify/credit checks
- report suspicious activity
- retain records
- conduct reviews and risk assessments of activity
2- Sets out Guidance and Good Practice such as:
- Having a record of all hospitality
3- Offers further Guidance and a Glossary of terms
- Examples of suspicious purchases, e.g. an unknown young person buying a flat for millions in cash
Tell me about the Proceeds of Crime Act 2002
- Allows Government to recover proceeds of crime
Also established the following crimes:
- Using criminal property
- Knowingly entering in to an agreement where criminal property/proceeds are involved
Tell me about the Money Laundering and Terrorist Financing Regulations 2019
- Duty for companies to undertake risk assessment
- Perform DD on Clients
- Be aware of PEPs or PSC
- 10K Euro limit on Cash transactions
- Keep records and data for 5 years
- Be aware of the RICS Red Flag Indicators
- 14 years in Prison / Unlimited Fine
- 5 years in Prison / Unlimited Fine for Tipping Off
What are the RICS Disciplinary Procedures?
- CPD Sanctions and Fines for when members have not completed CPD or provided information when required. Usually a stepped process (i.e. first time is a warning)
- Regulatory Compliance Order - Agreement between Firm and RICS that something needs to be improved. Action plan to address.
- Disciplinary Panel Hearing - For serious cases or continued breaches.
Usually only gets involved when it finds something in audit, information isn’t provided, CPD isn’t done or complain/whistleblowing from another party
Tell me about the Modern Slavery Act 2015
Sets out the varying types of modern slavery including:
- Debt bonded labour
- Arranged/Child Marriage
- Human Trafficking
Require companies to:
- Produce S.54 statement stating what they have done in the past year to combat MS.
- Perform Due Diligence checks on Clients/Supply Chain as required.
- Report anything suspicious to the Home Office
Name the 6 Professional Groups of RICS
- Project Management
- Facilities Management
- Minerals and Waste
- Arts and Antiquities
- Quantity Surveying and Construction
- Dispute Resolution
Can you tell me about Client Money Handling?
CMH Professional Statement sets out what firms must do when managing client money. 3 key reasons:
1) Keep Client money safe
2) Ensure that robust processes are in place for managing money
3) Client Money accounts are used for appropriate purposes only
Key requirements:
- Must never go overdrawn
- Must have full audit trail and ledger
- Must have the word ‘Client’ and the full name in the account title
- Must be fully accessible and visible to the Client at all times
What is the Client Money Protection Scheme?
- Provides protection, as a last resort, in instances where an RICS Regulated firm is unable to repay a client’s money, up to the limits and exceptions set out in the scheme rules.
What are the RICS Standards of Conduct?
- Ethics
- Rules of Conduct for Members and Firms
- Client Money
- Conflict of Interest
- Bribery, Corruption, Money Laundering and Terrorist Financing
- Risk, Liability and Insurance
What would you do if a friend asked for some professional advice?
Best practice:
- Consider referring them to another firm to avoid conflict of interest
If you take on the work:
- Should act as you would for any other client
- Service and terms of engagement set out in writing and signed before work undertaken
- Provide service with reasonable skill and care
- Make sure expectations are effectively managed from the outset
What are CDP requirements for members?
20 hours a year, 10 formal
