Ethics, Rules of Conduct and Professionalism - Part 1 Flashcards
Who is the current President-Elect?
Ann Gray FRICS
What do the Specialist Professional Groups do?
They cover different areas of property, land and construction
Each professional group has an elected board and is responsible for outlining standards of competence and practice
What is Rule 4 of ROC?
Members are firms must treat others with respect and encourage diversity and inclusion
What information is required for firm registration in an annual return:
- Type of business and staffing details
- Statutory regulated activities - such as for financial services
- Nature of clients
- Complaints handling procedure details and records
- Professional indemnity insurance details
- Whether the firm holds clients’ money
Explain Step 1 of dealing with a COI?
CONFLICT AVOIDANCE
Request full facts
Consider whether your impartiality is compromised
Can it be properly managed whilst maintaining transparency and openness
Decide if you want to accept or decline the instruction
What RICS Regulation is there on Social Media?
Use of Social Media: Guidance for RICS members (2021)
What is included in the CHP Guidance Note?
- Firms written CHP must be approved by RICS
- Always notify PII insurers as soon as there is a complaint as this could lead to a negligence claim
- Details of CHP should be issued to a client as the same time as Terms of Business
- A complaints log must be maintained to show the details, progress and out of any complaints
- Firms must include RICS approved Alternative Dispute Resolution (ADR) mechanism in the CHP
What is Dual Agency?
Where an agent has a contractual agency relationship with both the buyer and the seller at the same time
When was the RICS founded?
1868
What are Fixed Penalties?
Procedure used for breaches of the Rules relating only to the supply of information to the RICS by firms and members
These may consist of a fine and/or caution
Why does the RICS regulate the surveying profession?
- Protect the public
- Uphold the public confidence in the profession
- Uphold professional standards
How will the RICS deal with failure to follow RICS guidance?
The RICS will examine the behaviour of the member and the firm
In some circumstances a member or firm may be asked to justify the steps they took which will be considered
What is an example of conflict management
Information / ethical barrier
Who is the current RICS President?
Clement Lau FRICS
Where is the the disciplinary process set out?
RICS Regulatory Tribunal Rules (2020)
Three Step Process for TOE
- Check professionally competent
- No conflicts of interest or personal interests
- Confirm terms of engagement in writing and get written approval from the client before starting work on the instruction
What should firms avoid with regards to Fee Negotiations?
Price fixing
Healthy competition is encourage but aggressive fee cutting is not allowed
Collusion with competitors
Undercutting another firm
What does the Consumer Rights Act 2015 allow?
Allows a cooling off period of 14 days from the date of the agreement
What types of firms can be regulated?
Corporate body
Partnership
LLP
Sole practitioner practice
It would be appropriate to decline an instruction based on:
- Lack of competence
- Insufficient facts
- Proposed client will not sign TOE / complete AML checks
- COI / Personal interest
- PII cap cannot be agreed
- Advice is on a personal basis which PII will not cover
- Potential client is included in UK Governments sanction list
- Would you be content for your actions to be made public?u
How is the RICS governed?
By various internal council, boards and associations
Would the RICS consider investigating posts made in a personal capacity by members
Yes - if extreme or highly offensive views are expressed which may cause reputational damage to the profession
As a surveyor you receive a confidential email with information regarding a different party who is not your client - what do you do?
I am aware this cannot be used for my own purposes
I would advise the client and sender of the error
This matter should be recorded in a note to the firms compliance officer
Any confidential material received in error should be disposed securely
What was the rational for developing the new Rules of Conduct
- Simpler Structure
- Clear examples
- Focus on respect, diversity and inclusion
- Understanding evolving technology
- Tackling global challenges - including sustainable development and tackling climate change
Explain Step 3 of dealing with a COI
CONFLICT MANAGEMENT
Once you have written consent and the proposal for the management of the conflict
Set up info barrier in accordance with provisions agreed with both clients
What is the three step process for when a conflict arises?
- Conflict Avoidance
- Written Advice to both parties
- Conflict Management
Are you aware of any recent disciplinary hearings?
Mr Adams and Grindlay Taylor Real Estate (Weybridge) Limited - February 2022
When can informed consent be given?
In writing by the party
Only when the person explaining is transparent about material factors and that the party affected fully understands
What is the RICS guidance on complaints handling procedures
RICS Guidance Note on Complaints Handling (2016)
What are the 3 levels of disciplinary action?
- Action by Head of Regulation
- Regulatory Tribunal
- Appeal Panel
When would the RICS become involved in a complaint?
When a member fails to respond to a complainant
Prevents the party gaining access to an independent redress mechanism
Three MAIN roles of the RICS?
- To maintain the highest standards of education and training
- To protect consumers through strict regulation of professional standards
- To be the leading source of information and independent advise on land, property, construction and associated environmental issues (RICS 2015)
What is conflict management?
The instruction is accepted and steps are agreed to manage the conflict
Eg. information / ethical barrier
Written agreement from all parties
What is a Confidential Information Conflict
Relating to work between two parties that is confidential
What is the Members Support Service (MSS)
Ran by RICS
Helps members facing claims for work carried out by an employer who has gone into administration, offering help, advice and further support
Examples of COI between two parties
- Any financial interest
- A personal interest
- Commercial relationships
- Acting on both sides of a transaction
How many members are there in the Governing Council?
25 members
What do the PII regulations outline?
All members must ensure to have adequate and appropriate level of insurance in place for each instruction having considered the potential liabilities which may exist
All policies must be underwritten by an RICS approved insurer
What issues might a Regulatory Compliance Order cover?
Non compliance with RICS Rules
For low level breaches which could easily be corrected
For example - failure to undertake appropriate CPD. This could result in sanctions such as Fixed Penalty and Disciplinary Panel action resulting in expulsion.
What are the current minimum limit of indemnity based on the turnover of the firm:
£100,000 requires £250,000 minimum level of indemnity for each and every claim
£100,001 - £200,000 requires £500,000 minimum level of indemnity for each and every claim
£200,001 + requires £1,000,000 minimum level of indemnity for each and every claim
RICS is likely to investigate concerns about social media posts where they involve:
- Discrimination
- Dishonesty
- Abusive / Threatening behaviour
- Bullying / Harassment or victimizing a person or people
- Pattern of frequent concerning communications
- Ignoring previous warning about concerns
What is the purpose of The Levitt Review (2021)?
Reviewing RICS current governance arrangements
Is PII required for Pro bono work?
Yes
When should a complaint be acknowledged?
Within 7 days
What is the Governing Council?
The Governing Council runs the RICS through providing management and strategic direction
Fee negotiations case
Four Somerset estate agents
Colluded to set minimum commission rates
When did the Rules of Conduct become effective?
2 February 2022 on a global basis
How can a disciplinary procedure be triggered?
Someone complaining to the RICS
An allegation by a client or third party
Information received or established by the RICS
What does membership of a Disciplinary Panel include?
Lay members
What is Rule 5 of ROC?
Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in their profession
What is required for agency work?
Compliance with Section of Estate Agents Act 1979
Money laundering check (Money Laundering Regulations 2017)
How do new businesses know the appropriate levels of PII?
Estimate based on forecasting and turnover budgets which are then adjusted accordingly
What is Rule 1 of ROC?
Members and firms must be honest, act with integrity and comply with their personal obligations, including obligations to the RICS
What do the RICS say on COI?
Sets out high level principles for appropriate identification and management of conflicts
Members must not advise / represent a client where doing so would involve a COI or significant risk of COI
Other than when those affected have provided informed consent
Informed consent can be sought where the RICS member / firm are satisfied that proceeding despite a COI is in the interest of all those involved and is not prohibited by law
What must Terms of Engagement state?
In writing:
The clients agreement too the proposed fee basis
Payment of expenses (and how calculated)
Copy of the firms complaints handling procedure is available upon request
What must you ensure during fee negotiations?
That you are able to provide a high standard of service
Transparency
You can vary your proposed level of service when renegotiating your initial fee proposal be beware of still providing a high standard of service
What is the RICS guidance with regards to fire safety claims?
RICS Guidance Note - Risk, Liability and Insurance (1st Edition, 2021)
What is a Party Conflict?
Relating to work on the same or related instruction for two different parties
When must firms register for regulation?
Firms providing surveying services to the public must register to ensure that there is a recognised quality benchmark for all firms
What information is covered under confidentiality?
Historic information and information provided by a client prior to instruction
What RICS Regulation applies to firms?
RICS ‘Rules for the regulation of firms’ 2019 (effective from 1 April 2020)
What RICS guidance is there on COI?
RICS Global Professional Statement on Conflicts of Interest (2017)
Mandatory - Effective from 1 Jan 2018
When did the rules of the use of the RICS logo come into affect?
April 2020
What happened in the disciplinary hearing of: Mr Adams and Grindlay Taylor Real Estate (Weybridge) Limited
Mr Adams acted dishonestly in that he knew the firm did not have Professional Indemnity Insurance in place
Despite this is the annual returns to the RICS he outlined that the firm did have PII
During this time he undertook valuation reports of around 65 a year
How will the Bichard Review be adopted?
A quick and phased approach to the adoption of clear responsibilities for governance by key individuals
Recruiting a new Management Board (including with external membership)
Holding elections for key RICS committees and groups
What is Rule 3 of ROC?
Members and firms must provide good quality and diligent services
What was Lord Bichard commissioned to review?
- Clarify the purpose of RICS - including its responsibilities to act for the public advantage
- Make recommendations on its governing structure to deliver that purpose
- Provide proposals for the incoming leadership and governing body on the future culture and strategy of the Institution
Can you explain what is means when an agent is acting on an exclusive basis?
Other prospective buyers with whom the agent was in contact with must be informed that the agent is no longer able to advise the
What were the ethical breaches of Mr Adams and Grindlay Taylor Real Estate (Weybridge) Limited
Acted without integrity
Acted dishonestly
Failure to provide appropriate PII
What is formal CPD?
Structured learning
Clear learning objectives and outcomes
Examples - online training / courses /seminars
Requirements of run-off cover?
- For consumer claim - minimum £1,000,000 of aggregate cover over a minimum of 6 years
- For commercial claim firms must consider what is adequate and appropriate for at least 6 years (RICS recommend longer cover as claims can be made up to 15 years after work is undertaken)
What are Regulatory Compliance Orders?
For low level breaches of the Rules which could be easily corrected
A written document which states the terms upon which the member or firm must take or desist from taking certain actions
Within a specified time period
Agreement to pay a fine
Who reports to the Governing Council?
The Regulatory Board, Management Board and various committees
Who is the Complaints Handling Officer for a sole practitioner?
A nominated surveyor in another firm
RICS Guidance Note - Risk, Liability and Insurance (1st Edition, 2021) - Key points
From May 2021
- Insurers must provide cover for fire safety claim on a property of 4 storeys or less
- RICS recommend a liability cap to manage risks associate with professional work
- Be aware of third party reliance and make it clear advice can only be relied upon by the client name in the TOE
The RICS has a Royal Charter, who was this granted by and when?
Granted by the Privy Council in 1881
What is the RICS Assigned Risk Pool
Available at a cost for members who cannot arrange PII cover
What Regulation deals with the regulatory approach by the RICS for regulated members, non-members and firms
Regulatory decision making guidance (Version 3 effective 2 Feb 2022)
What is the RICS currently governed under?
Under the terms of its Royal Charter
When were the new Rules of Conduct published?
October 2021 following a period of consultation
Who is the RICS accountable to?
Members and the Public
Who did the Bichard Review consult?
Members and external stakeholders
What is an Own Interest Conflict?
Relating to a personal interest
What is informal CPD?
Self managed learning relevant to your professional role
Where are disputes concerning the registration of a firm heard?
RICS Standards and Regulation Board
What is the RICS Run-off Pool
Firms who are unable to obtain run-off cover from their incumbent insurer or on the open market will be able to apply for coverage under this
What is highlighted in the Use of Social Media regulations?
The importance of social media networks to member and firms
Reminds members of the high standards of professional behaviour expect of RICS members
Rules of Conduct protect the interests of members and the profession as a whole
What sets out the governance of the RICS?
RICS Regulations and Bye-laws
How long should old files be held for?
6 years
Before disposal and destroyed securely
What do the new Rules of Conduct provide?
A simpler structure with clear example behaviour for each rule
When do personal interest / own interest conflicts arise?
When acting for a family member / close business associate / someone with whom you have a financial or personal interest / benefit (known as a connected person)
You must not let personal interest interfere with our professional judgement - full transparency is required
Section 21 of Estate Agents Act 1979 declaration required for agency work
What is the maximum level of uninsured excess required by RICS?
Firm turnover of £10M or less - The greater of 2.5% of the sum insured or £10,000
Firm turnover of £10,000,001 + - No limit set
How should an Information / Ethical Barrier operate?
Should be robust - no information passing between parties
Reasonable steps to operate an effective barrier
Different surveyors on both sides - physically separated / different support teams
All info on the instruction should be securely stored
Keep a clear audit trail of COI check process and all wirtten /oral comms
Firms compliance officer must oversee all actions
What does regulation provide?
Regulation provides a gold standard of quality control for clients
Purpose of the Ethics Decision Tree?
The decision tree provides a framework of questions which members should ask themselves when asked to act in a potential unethical manner or situation.
Encourages considering the legality of one’s actions and their consistency with the Rules of Conduct
Ensures clear reasoning before making decisions
Are third parties allowed to access your files?
Only with clients approval
Unless a statutory duty overrides the clients confidentiality right - police / HMRC investigations
What are the steps in Stage 2 of a complaint?
- If the complaint is not happy with the review
- Involves independent redress scheme that the firm has chosen
- The name of the redress mechanism must be provided to the complainant
- Examples: The Centre for Dispute Resolution (CEDR), The Property Redress Scheme and the RICS Dispute Resolution Service
How many current qualified members are there?
134,000
What is the two step process for handling a complaint
- In House
- Third Party Resolution
Is Professional Indemnity Insurance mandatory?
Yes mandatory to all surveyors working in practice
What is the role of the RICS?
To promote and enforce the highest professional qualifications and standards in the development and management of land, real estate, construction and infrastructure (RICS 2020)
Can you enter into further fee negotiations?
Yes - after you have submitted your initial fee proposal
So long as you act in a professional manner
What are the benefits of being an RICS member?
- Status - your professional credentials provide unrivalled client confidence
- Recognition - promotion of your professional excellence to governments and markets
- Market advantage - RICS status and standards give you a competitive advantage
- Knowledge - International practice standards, professional guidance, CPD, knowledge sharing
- Network - Access to 125,000 professionals worldwide
Why is PII used?
To protect clients, surveyors and third parties against negligence claims when there is a duty of care breached and a claim for damages arise
Who is considered a Principal with regards to the regulation of firms?
Sole practitioners
Directors
Partners
Board Members
Or someone who can act autonomously/without supervision in a firm
Where do the RICS outline confidentiality and what do they state
RICS Bye Laws
Client confidentiality must be maintained for all client affairs
What is the first step in disciplinary action?
A formal investigation by the Head of Regulation of the RICS
What is a conflict of interest (between two clients)?
Arises when a member or firms independence and impartiality is threatened due to the existence of a conflict between two clients
Sanctions of Mr Adams and Grindlay Taylor Real Estate (Weybridge) Limited
Mr Adams benefited financially from his wrongdoing - undertaking valuation reports whilst uninsured
Caution / Reprimand - not sufficient
Fine - would not address the concerns regarding the risk of harm to the public and public trust and confidence in the profession
Conditions / Undertaking - The panel considered they did not believe Mr Adams would adhere to
Mr Adams was expelled from the RICS - due to his persistent dishonesty, and his repeated failure to cooperate with RICS as his regulator
Grindlay Taylor Real Estate (Weybridge) Limited was also expelled due to failing to ensure Mr Adam fulfilled his obligations on behalf of the firm
Who do the new Rules of Conduct apply to?
Members and firms
What do you have to do to become a Fellow?
You need to provide the following for the Fellowship assessor:
Evidence of achieving four fellowship characteristics: Five + years at MRICS, a leadership role, professional/technical achievement, academic achievement or raising the profile of the RICS
A portfolio of professional achievement to support the application is required to include your CPD record
RICS members must?
- Comply with the CPD requirements set by RICS
- Cooperate with RICS
- Promptly provide all information reasonably requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf
What is the RICS Regulation for PII?
Professional Indemnity Insurance Requirements - Version 9 (April 2022)
What do the rules regarding the RICS logo include?
- Restrictions on the use of the designation ‘Chartered Surveyors’ by firms to the trading name only
- Only RICS members and registered firms can use the logo
- Regulated firms must include a prescribed text in term of engagement to explain what being regulated by the RICS means
What is incremental advice?
Where an agent is approached by another party to provide advice (eg. valuation) which is related to a purchase or disposal that is related to an existing instruction
Example - Agent is acting for the seller in relation to a disposal but is approached by the buyer or its lender to provide a valuation
Who is the (interim) Chair of Governing Council?
Nick Maclean FRICS
What can the Head of Regulation initiated upon completion of their investigations?
One of the FOUR if they consider disciplinary action is required:
- Serve a Fixed Penalty Notice
- Make a Regulatory Compliance Order
- Refer the matter to a single member of the Regulatory Tribunal for consideration
- Refer the matter directly to a Disciplinary Panel
What does Appendix A to the Rules of Conduct set out?
Sets out professional obligations which are to be followed by members and regulated firms
Can you explain what is means when an agent is acting on an non-exclusive basis?
The agent must obtain informed consent from the client subject to the necessary information barriers being in place
What examples of social media activity may cause reputational damage to the profession?
Following the Euros 2020 I was aware that an employee of a large property company made racist social media posts
What are the 7 key recommendations of the Bichard Review?
- Renewed and increased focus on the public interest remit of RICS - including amending the Royal Charter and creating a public interest panel to advise the Governing Council
- Maintaining self-regulation through greater independence for regulatory functions
- Increased focus on diversity and inclusion across the profession and within RICS governance
- Empowering and enabling members through greater support for regional boards, alongside increased member engagement with renewed focus on younger members
- Undertaking an independent 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
What should fees be based on?
Market based
Agreed on an ad-hoc basis with clients
What is Rule 2 of ROC?
Members and firms must maintain their professional competency and ensure that services are provided by competent individuals who have the necessary expertise
What does - RICS Professional Statement: Conflicts of interest - UK commercial property market investment agency (2017) states?
Dual agency is prohibited
Multiple agency is allowed but the agent must make it clear whether it is on an exclusive or non exclusive basis
Incremental advice - allowed if consent is given and an information barrier is put in place
RICS Regulated Firms must? Under the ROC App A
- Publish a complaints-handling procedure - including an alternative dispute resolution provider approved by RICS and maintained a complaints log
- Ensure that all previous and current professional work is covered by adequate and appropriate professional indemnity cover that meets the standards approved by RICS
- If having a sole principal, make appropriate arrangements for their professional work to continue in the event of their incapability, death, absence from or inability to work
- Cooperate with RICS
- Promptly provide all information requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf
- Display on their business literature, in accordance with RICS’ published policy on designations, a designation to denote that they are regulated by RICS
- Report to RICS any matter that they are required to report under the Rules for the Registration of Firms
When can surveyors seek informed consent in a conflict of interest?
When they are satisfied that all relevant parties are best served by doing so
When did Bichard report the findings and how many key recommendations were there?
June 2022
Seven key recommendations
Have the RICS agreed to adopt all of the Bichard recommendations?
Yes
Who is the current (interim) Chief Executive Officer?
Richard Collins
Result of Four Somerset estate agents
Prosecuted and fined by the Competitions and Markets Authority due to illegal price fixing in March 2017
What is the process in Stage 1 of handling a complaint?
IN HOUSE
- Details of CHP should be issued whenever a complaint from a valid complainant to whom the firm owes a duty of care
- The procedure must be: quick, clear, transparent and impartially implemented
- Details of the nominated person who will investigate the complaint (The Complaints Handling Officer) must be stated as the person to be contacted in the first instance
- Complaint must be in writing
- Procedures and strict timescales for the investigation of the complaint should be recorded
How must referral fees be dealt with?
You must be transparent with your client or consumers so they are aware that you may be in receipt of or offering a referral fee
State so in the terms of engagement if applicable
Granting & acceptance of referral fees should be considered in the context of the Bribery Act 2010 and the RICS ROC
Key points for PII
- Policys are fully retroactive - so they will cover claims prior to the policy starting
- Certificates are sent to the RICS on an annual basis as part of the Firms annual return to RICS
- Early notification to firms insurers is required when a potential claim arises
- Adequate and appropriate run off cover is required following cessation of trading
- Most firms aim to cap their liability with clients for individual instructions
What is conflict avoidance?
When you do not accept the instruction due to a conflict
What are multiple introductions?
Where an agent has competing contractual relationships simultaneously with several buyers for commercial real estate investment opportunities
Results of The Levitt Review (2021)
Lack of clarity, structure and purpose of RICS governance arrangements
Levitt called for a full independent review of the ‘purpose, governance and strategy’ of the RICS
RICS approved this and a review by Lord Michael Bichard has been completed
What are the requirements for CPD?
- 20 hours per annum for members
- 10 hours must be formal
- RICS Rules of Conduct CPD on a rolling 3 year period
- CPD must be recorded using RICS CPD Management System on the RICS website
When should a complaint be investigated by?
Within 28 days
What is a Responsible Principal?
Each firm must nominate
They are obliged to ensure all reasonable steps are taken and systems are in place to ensure compliance with regulatory and RICS requirements including to report to RICS as required
What are the benefits for a firm registering with the RICS?
CPS!
- Confidence - for clients as regulated firms are monitored by RICS Regulation
- Professionalism - firms will have to provide clear, impartial and expert advice
- Security - firms have to have a recognised complaints procedure, access to free independent redress and PII cover
What is the current RICS UK Structure?
4 National Associations
10 Regional Boards
Local Associations
Key areas covered in COI PS?
- All conflicts must be managed in accordance with the Professional Statement
- Every RICS firm must have in place effective systems and controls in place - app to size and complexity of business to ensure full compliance
- All firms must keep records to show their compliance with the statement
What is a Regulatory Tribunal Disciplinary Panel
Panel used for more serious breaches of conduct
The Head of Regulation can consider that a hearing is required under the discipline rules
What RICS guidance is there for Investment Agency work?
RICS Professional Statement: Conflicts of interest - UK commercial property market investment agency (2017)
Can firms register if there are no RICS members?
No
What are the three types of COI
Party Conflict
Own Interest Conflict
Confidential Information Conflict
Explain Step 2 of dealing with a COI
WRITTEN ADVICE TO BOTH PARTIES
Set out in writing to both clients covering:
- Disclose the nature of the conflict - relevant facts / proposals to deal with the COI eg. info barrier
- Be as clear as poss - ensure both parties can make their own decisions (seek independent advice is req)
- Request written confirmation from both clients of their informed consent and that the firm can act in accordance withh the provisions of the procedure proposed
What does the Rules for the regulation of firms state?
- If 50% of Principals of a UK firm which provides surveying services are RICS members then it has to be regulated
- If 25% are RICS members the it can apply to be regulated
How many specialist professional groups are there?
Seventeen
What must RICS registered firms do annually?
Make a return to the RICS confirming their compliance with their obligations
What penalties are available to a Regulatory Tribunal Disciplinary Panel?
- Issue a Regulatory Compliance Order
- Impose an unlimited amount of fine per breach - has to be proportionate to the offence
- Impose conditions upon future continued RICS registration
- Expulsion from membership or remove firm
- Require publication of the results of the hearing in the RICS Modus magazine, RICS website and local newspaper
What did the new Rules of Conduct replace?
Rules of Conduct for Members and Firms and the 5 Global Professional and Ethical Standards
What are the different levels of membership within the RICS
- FRICS
- MRICS
- AssocRICS
- Trainee/Student
RICS will take disciplinary action regarding social media when:
It is felt that the post may damage public confidence or trust in the profession
