Ethics, Rules of conduct and professionalism Level One Flashcards
How do RICS ensure that standards and quality are maintained in terms of both the conduct and advise provided by chartered surveyor
RICS has 5 rules of conducts for setting the professional standard.
What is the purpose of RICS having the rules of conduct
Consistency of service, maintaining professional standard, governance and regulation. The rules are set as a robust framework to deliver a professional ethic. The public and RICS expect an MRICS to behave in line with the objectives of the charter and provide clients with the most appropriate advice for their circumstances.
RICS Professional Standards
Professional Statements - Mandatory Requirement.
Guidance Notes - Best practices
Assessment of Professional Competence (APC)
Requirements and guidelines relating to entry into the profession.
Data Standards
These ensure software programmes and technology can adopt RICS standards into their offering.
Why do we have guidance notes, do you have to follow them ?
Best practices , up to date information and help in a negligence case.
RICS Black Book
Black Book is a suite of guidance that defines good technical standards for quantity surveying and construction professionals.
What is the status of the professional statement. What sanctions may RICS take if you fail to apply it ?
The document provides members with mandatory requirements or a rule that a member or firm is expected to adhere to.
It will say that a member must do something to signify that it is mandatory. If you do not comply, you can be given a written as caution if the case is severe, you can be expelled from RICS membership.
What are the 5 ethical standards
1) Act with integrity
2) Always provide a high standard of service
3) Act in way that promotes trust in the profession
4) Treat others with respect
5) Take responsibility
How do you act with integrity
1) Being trustworthy in all what I do
2) Being open and transparent in the way I work.
3) Respecting confidential information.
4) Not taking advantage
5) Not allowing bias, conflict on interest or the undue influence of others to override my decisions.
6) Not offering or acceptance gifts, hospitality, or services, which might suggest an improper obligation.
Can you explain how to take responsibility?
1) Be accountable for all my actions
2) Always act with skills, care and diligence.
3) Ensure an appropiate complaint handling procedure is in place in the event somebody makes a complaint about me.
4) If I think something is not right, I am prepared to respectfully challenge and raise the matter with colleagues.
Why must you act with your professional capabilities ?
To ensure I do not advise my clients incorrectly which could lead to a complaint or claim of negligence.
Can you explain how you treat others with respect?
I treat everyone with courtesy, politeness, and respect.
I always polite and considerate to client, potential clients and everyone else.
I never discriminate against anyone for any reason.
Can you explain how provide a high standard of service ?
1) I always ensure my client, or others to whom you have a professional responsibility, receive the best possible advise, support, or performance, of the term of engagement I have agreed to.
2) Acting with my scope of competence
3) Be transparent about fees and any other costs or payments such as referral fees or commissions.
4) Communicate with my client in a way that will allow them to make informed decisions.
Explain what an individual should do to maintain a high ethical standard in their profession
1) Keep their own actions under review, in side and outside of work.
2) Maintain a level of knowledge and training appropriate to their area of work. (laws, regulations, money laundering for example)
3) Maintain CPD.
4) Follow advice given by professionals bodies on ethical behaviour.
5) Help their own organisations to develop ethical ways of working.
6) Noting any unethical behaviour by others and address where appropriate.
What should employers do to create an ethical environment?
1) Establish confidential procedures
2) Include ethical evaluations
3) Include ethical standards into employee hiring, employment contracts and training
4) Become chartered with RICS
5) Promote CPD in the relevant areas
What tools are available to help members make ethical decisions ?
Decision Tree
Why is it important to act with integrity ?
Representing both myself and the profession and want others to view me in the best possible light.
Acting with integrity is also one of the 5 ethical standards.
What is the difference between ethics and integrity ?
1) Ethics are moral principles that govern a person’s behaviour or the conducting of an activity.
2) Integrity is the quality of being honest and having strong moral principles
3) Ethics looks at the big moral picture while integrity focused on personal characteristics.
What are the key areas where ethics are important ?
1) Gifts, bribes, hospitality and inducements.
2) Equal opportunity, discrimination and sexual harassment
3) Conflicts of Interest
4) Insider Dealing , money laundry , disclosure of confidential information, financial transactions and fair competition.
5) Whistle blowing in case of anyone rise an unethical issue.
6) Copyright and ownership of files.
7)
What is the RICS Charity
Why do you want to become a member of RICS?
Who chaired the Independent Review of RICS in September 2021?
RICS Structure?
What is the role of RICS?
What are the key functions of RICS?
What is a Royal Charter?
Who is the current RICS president?
What do you understand by the term self-regulation?
Can you tell me what you understand by the principles of better regulation?
What is a Bye-Law?
Give an example of one of the RICS Bye-Laws.
Explain to me the new RICS Rules of Conduct - what do they replace?, When do they take effect?
What are the 6 ethical principles that the Rules of Conduct are based on?
What are the 5 Rules? Give an example behaviour for each.
What are the core professional obligations of firms and members to RICS?
What disciplinary procedures can the RICS impose? In what circumstances can these be imposed?
When did RICS last update their disciplinary panel rules?
What are the different levels of action within these procedures?
What do you understand by the term professional practice?
What money laundering regulations or legislation are you aware of?
What is a red flag of money laundering?
What bribery legislation are you aware of?
What is a bribe?
What are the penalties for accepting a bribe?
What are the penalties for being involved in money laundering?
What constitutes an offence under the Bribery Act 2010?
What constitutes an offence under the current money laundering regulations?
What is Professional Indemnity Insurance (PII)?
Can you tell me about the RICS requirements in relation to PII?
What is a PII aggregation clause?
What does ‘claims made’ mean in terms of PII?
Is a PII excess usually paid for per claim?
In a negligence claim, what would help to show that you acted with consideration and due process?
Can good record keeping help to provide a defence in a PII claim?
If you were providing services outside of your usual scope to a client, what might you need to do in relation to your PII cover?
What is run off cover?
What RICS requirements are there relating to run off cover?
What changes did RICS recently make to the Minimum Approved PII Wording?
What precedent has caselaw set in terms of keeping adequate site notes (and therefore providing a defence in a PII claim)?
Would a dictated report avoid the need to have any written site notes?
Explain PII requirements relating to fire safety cover and cyber cover.
How long can a PII claim arise after the work is undertaken?
What is the Assigned Risks Pool (ARP)?
Who might need to access the ARP?
Explain your understanding of the RICS Guidance Note Risk, Liability and Insurance (1st Edition).
Explain when you might agree a liability cap.
How would set out third party reliance in Terms of Engagement?
What are the three key terms that should be considered from a risk perspective in the context of every instruction you undertake?
What are the three key terms that should be considered from a risk perspective in the context of every instruction you undertake?
What is an annual return?
Tell me what you understand about Complaints Handling Procedures (CHP).
When and how can the RICS be involved in a complaint about a firm or member?
Can you tell me about the CPD requirements for members of RICS?
Why is CPD important?
Tell me about the RICS’ guidance on dealing with Conflicts of Interest.
What is double dipping (dual agency)?
Why is double dipping (dual agency) an unacceptable practice?
How would you close down a regulated firm?
What can you tell me about RICS guidance relating to bribery, corruption or money laundering?
What status does it hold?
What are some of the key principles of this guidance?
What must/should firms/members do to comply with the guidance?
What are the current RICS rules for registration of firms?
When did these last change?
What were the key changes?
Who is a ‘qualified member’ of RICS?
What is a phoenix firm?
When must a firm register for regulation?
What are the registration eligibility criteria?
Who is a Responsible Principal?
What happens if a firm cannot comply with the eligibility criteria?
What are the rules around use of the RICS logo and ‘Regulated by RICS’ designation?
When did these rules last change?
What changes were made?
Tell me about the restrictions to the use of the designation ‘Chartered Surveyors’ by firms.
What must be included in ToE relating to firm regulation?
What is a locum and who might need one?
How could a sole trader set up their CHP using a locum?
What RICS guidance relates to handling client money?
When was this last updated?
When was this last updated?
What do the RICS Rules of Conduct say about client money?
Explain your understanding of the RICS Scheme Rules relating to client money protection. What are the main schemes available to firms?
When were these last updated?
What is the current compensation limit?
What does the annual regulatory review fee relate to?
What might client money include?
How does this differ to office money?
What are some of the key principles of the RICS Professional Statement relating to client money protection?
Explain the key themes from the RICS Futures 2020 Report.
Explain the potential implications of the Hart v Large case.
Explain your understanding of precedent set in Burgess v Lejonvarn.
What is the new maxim of RICS in relation to compliance?
What do RICS set out as good practice for the use of social media in their Regulation document (June 201)?
Explain your understanding of the RICS Levitt review.
What is whistleblowing?
What does good governance mean to you?
What are the key values of the interim Governing Council statement relating to ethics, behavior and culture?
Explain what the Pandora Papers are and the ethical issues raised within them.
Explain what you understand by the RICS Bichard Review.
Explain some of the recommendations of the Bichard Review.
How will these recommendations be implemented by RICS?
How do professional integrity and professional ethics differ?
What is modern slavery and how would you identify red flags of it?
Explain the implications of the Sanctions and Anti-Money Laundering Act 2018?
What is the Sanctions List and why should you be aware of it?
What are the six RICS values published as a result of the Levitt review?
Explain the impact of the Economic Crime (Transparency and Enforcement) At 2022
What are the rules of conduct?
Set core expectations for professional practice by members and firms.
Who do the rules of conduct apply to?
All members and firms regulated by the RICS (ByeLaw 5.1)
When are they effective from?
2nd February 2022
What are the five rules?
Rule 1 - Members and firms (M’s & F’s) must be honest, act with integrity and comply with their professional obligations, including obligations to the RICS.
Rule 2 - M’s & F’s must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise.
Rule 3 - M’s & F’s must provide good quality and diligent service.
Rule 4 - M’s & F’s must treat others with respect and encourage diversity and inclusion.
Rule 5 - M’s & F’s must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence the profession.
Rule 1 Example? - Honest, act with integrity and comply with their professional obligations
I identify conflicts of interest prior to undertaking an instruction
Rule 2 Example? - maintain their professional competence and ensure that services are provided by competent individuals
I was asked if we would be interested in tendering for project management work and advised them that we could not do this as outside knowledge, skills and resources.
I develop my knowledge and skills via CPD, keeping up with legislation and codes of practice such as the new RICS guidance note on Japanese Knotweed.
Rule 3 Example? Provide good quality and diligent service.
I contact applicants on a Level 2 Home Survey Standard to understand their needs and objectives and to explain scope of service we are offering. I’ll agree a time scale for the return of the report.
What is a royal charter?
Oldest form of sovereign incorporation (creation of legal entity). Today new charters are usually conferred on bodies such as professional institutions and charities working in the public interest, which are able to demonstrate financial stability and permanence, and pre-eminence in their field.
What is a bye law?
A by-law is a rule or law established by an organization or community to regulate itself, as allowed or provided for by some higher authority.
What is the role of the RICS?
Advancing the highest ethical and technical standards for professionals in land, property and the built environment. Protecting and providing benefits to consumers by enforcing standards and codes of best practice. Providing expert impartial advice to governments, business and the public.
Who is the current RICS president?
Clement Lau FRICS
Give one example of an RICS bye law?
Members must conduct themselves in a manner befitting membership of the RICS
What is self regulation?
RICS self-regulates, meaning that it operates within it’s own published regulatory framework, rather than being legislated by Government.
What do the new rules of conduct replace?
3 documents: Rules for firms, Rules for members, and Global ethical principles. In effect from Feb 2022.
What disciplinary actions can RICS take/impose?
For less serious offences a Regulatory Compliance Order to ensure future compliance. Can include fines, caution or conditions of membership. Serious offences may mean facing a disciplinary panel and can levy sanctions incl expulsion and costs.
What money laundering and bribery legislation are you aware of?
Bribery Act 2010; Proceeds of Crime Act 2002; The Money Laundering, Terrorist Financing and Transfer of
Funds (Information on the Payer) Regulations 2017.
What is the RICS requirements for PII, including run-off cover and levels of cover?
RICS require regulated firms have adequate PII cover including a min of 6 years run-off cover with £1m aggregate cover on a claims made basis with availabiity also through Assigned risk pool. Min levels required = £250,000 for £100,000 income or less, £500,000 for £101,000 - £200,000 income and £1m for £201,000 +
What are the professional Obligations of Members?
CPD Requirements of 20 hours, minimum 10 Formal
Cooperate with RICS
Provide all information reasonable and requested by RICS.
What are the professional Obligations for Firms?
Publish a complaint-handling procedure including ADR resolution and maintain a complaints log. Work to be covered by adequate PII. Those with sole principal must have adequate arrangements for their work to continue in the event of incapacity. Co-operate with RICS Display that they are regulated by RICS on literature. Report to RICS any matter that are required to under the rules of Registration of Firms.
Why do RICS have rules of conduct?
Framework can all work to so that any clients know they are getting a set level of service
Tool for institution and professional guide.
What steps would you need to take when setting up in Practice?
Inform RICS that you are registering as a regulated practice
Appoint a contact officer
Register for Regulation with RICS
Arrange PII
Set up Client Account for Handling Client money
Set up a complaints handling procedure
Set up arrangements for CPD and Staff training
What requirements for handling Clients Money are there?
Clients must always have access to funds
Must be kept separately and clearly identifiable
Interest on account must be agreed with client
Maintain clear ledger/running balance of any transactions
agree terms and advise clients on the bank details
must never be overdrawn
What are the 5 principles of better regulation?
Proportionality
Accountability
Consistency
Targeting
Transparency
What sort of information do registered firms have to provide RICS with annually?
Annual Return (on-line) -
Types of business and staffing.
Nature of clients
Training Provisions
Complaints procedure & log
PI insurance details
Details on whether any client moneys are held
What are the components for a complaints handling procedure?
RICS provides a model form….
Redress mechanism
Provided in terms of business
Clear, quick, transparent, impartial and free of charge
Name & contact info of nominated investigator
Complaint to be investigated in 28 days
All complaints, progress and outcomes to be recorded
Advise PI of complaints
2 Stages: Complaint considered by internal senior member of firm, if not resolved then referred to independent 3rd party with the authority to award redress
What is the central purpose 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 advice on land, property, construction and associated environmental issues
How does the RICS ensure members abide by the Rules of Conduct for Members, 2007 (as amended 2013)?
Head of Regulation at the RICS investigates claims of misconduct. They have the power to:
1. Serve a Fixed Penalty notice
2. Make a Regulatory Compliance Order
3. CPD sanctions
4. Refer to a Disciplinary Panel
Member has right to appeal decision made at a Disciplinary Panel by going to an Appeal Panel
How does the RICS ensure firms abide by the Rules of Conduct for Firms, 2007 (as amended 2017)?
RICS ensures firms comply by conducting audits
Firms have to provide information when registering with the RICS and in an annual return
Why must a Chartered Surveyor do CPD?
It is one of the Rules of Conduct for Members, 2007 (as amended 2013)
Ensures you remain up to date with relevant legislation and any changes in the industry
Why must a Chartered Surveyor main solvent?
It is one of the Rules of Conduct for Members, 2007 (as amended 2013)
May impair your decision making and mean that you’re more likely to take bribes and not act in the best interest of the client. If you’re unable to manage your own finances, it does not reflect well on you being able to manage your client’s finances
Give me an example of when you have acted with integrity in your work.
When I valued an office building in Croydon for loan security purposes, I ensured that I undertook sufficient due diligence
Give me an example of when you have provided a high standard of service.
When I valued an office building in Croydon for loan security purposes, I spoke to agents to verify information when collecting comparables, to ensure that I provided the most accurate opinion of value
Give me an example of when you have acted in a way that promotes trust in the profession.
When I valued an office building in Croydon for loan security purposes, I undertook a conflict of interest check to ensure that I was not conflicted when undertaking the instruction
Give me an example of when you have treated others with respect.
When I valued an office building in Croydon for loan security purposes, I ensured that I notified the tenant prior to conducting an inspection
Give me an example of when you have taken responsibility.
When I valued an office building in Croydon for loan security purposes, I took responsibility for ensuring that the client received the report within the agreed time scales
What would you do if you were asked to do something unethical?
I would speak to someone more senior, such as a supervisor or line manager
I would whistleblow if required e.g. I would report suspected Money Laundering to the MLRO
What has the RICS produced to help surveyors make ethical decisions?
The RICS has created the Ethics Decision Tree, which members can refer to if they are asked to do something they are unsure about
When you taken on a new client, what checks do you make?
Will need to undertake Customer Due Diligence (CDD) to identify the client and verify their identity If the client is a politically exposed person (PEP), a PEP family member/business associate or from a high-risk third country then you should undertake Enhanced Due Diligence (EDD)
How do you undertake a conflict of interest check?
I use my firm’s internal system, which is a Microsoft Dynamics database to check the client name and the address of the property again all known jobs.
How would you approach a conflict of interest?
Follow the guidance set out in the RICS Global Professional Statement on Conflicts of Interest, 2017:
1. Conflict avoidance - decide whether the conflict is manageable and whether proceeding is in the best interest of all parties
2. Written advice to both parties - disclose the nature of the conflict, explain how you will manage it and request written confirmation of informed consent
3. Conflict management - set up an information in accordance with provisions agreed with the clients
What is money laundering?
Money laundering is legitimising the proceeds of crime.
Why does you firm have Terms of Engagement? What should be included in Terms of Engagement?
Creates a contract with the client
Sets out the proposed fee basis, payment of expenses and that a copy of of the firm’s complaints handling procedure is available upon request
How would you close down a practice?
Inform the RICS
Inform clients and arrange for them to be handed over to a new firm
Return any clients’ money
Set-up professional indemnity run-off cover for a minimum of 6 years
Retain a copy of client files and record for a minimum of 6 years
What is the structure of the RICS?
Governing Council (33 members) runs the RICS
Regulatory Board, Management Board and various committees report to the Governing Council
17 specialist professional groups covering property, land and construction
What changes have been made to the Royal Charter and Bye-Laws?
Reduced size of Governing Council to a minimum of 25 seats, with 15 geographical seats
A new Chair of the Governing Council will act for up to 6 years
President will focus on ambassadorial duties and continue to be elected on an annual basis
Why would you like to be a Chartered Surveyor?
- Status - professional credentials provide client confidence
- Recognition - promotion of your professional excellence
- Market advantage - RICS status gives you a competitive advantage
- Knowledge - International practice standards and professional guidance
- Network - access to over 130,000 members worldwide
What are the THREE benefits of regulation for firms?
CPS:
- Confidence - for client as regulated firms are monitored by RICS regulation
- Professionalism - firms have to provide clear, impartial and expert advice
- Security - firms have to have recognised CHP, access to ADR and PII cover
How many hours of CPD do you have to undertake? What are the rules?
Minimum of 20 hours of CPD per year, of which at least 10 hours must be formal
Member must maintain an understanding of RICS Professional and Ethical standards every 3 years
Members must record their CPD using the RICS CPD Management System on the RICS website by the 31st December
What are the Rules of Conduct for Members, 2007 (as amended 2013)?
ECS CPD SIC:
Ethical behaviour
Competence
Service
Continuing Professional Development (CPD)
Solvency
Information to the RICS
Co-operation
What are the Part II - Conduct of Business Rules of Conduct for Firms, 2007 (as amended 2017)?
PCS CPD CCI:
Professional behaviour
Competence
Service
Continuing Professional Development (CPD)
Complaints handling
Clients’ money
Indemnity insurance
What information is required by the RICS for registration and in the annual return?
- Type of business and staffing details
- Statutory regulated activities - such as for financial services
- Nature of clients
- Complaints handling procedure and records
- Professional indemnity insurance certificate
- Whether the firm hold clients’ money
Can you rely on due diligence checks undertaken by a solicitor?
Can only rely on information provided by a third party where there is an appropriate level of confidence in the quality of the information provided by that party
Guidance contained within RICS Countering bribery, corruption, money laundering and terrorist financing, 2019
If your agency team sold a property, could you still value it?
Cannot value the property if you have had “previous involvement” which is usually defined as being within the past two years
If you are conflicted, can you still undertake an instruction if you’ve got informed consent?
Depends whether you would be able to act impartially, whether you believe that you undertaking the instruction would be in the best interest of all those who are or may be affected and whether its prohibited by law
What forms of conflict of interest are there?
Party Conflict - acting on both sides of a transaction
Own Interest Conflict - relating to a personal interest
Confidential Information Conflict - relating to work between two parties which is confidential
What would you do if you had a personal conflict of interest and how would you manage this?
Ensure that all parties were aware and provided informed consent
Would refer the instruction instruction internally and ensure that the appropriate information barriers were setup
What information barriers does your firm have in place?
Restricted access to files
Clear desk policy
Private meeting rooms
Physical barriers e.g. restricted floor access
What would you have to do if you were required to hold clients’ money?
RICS has issued a Professional Statement on Client Money Handling, 2019:
* Client account must be kept separate and clearly identifiable
* Word client is on the bank account and cheque book
* A client must be able to have their monies on demand
* Payment of interest is agreed with a client and accounts must be kept in credit
* Regular bank reconciliation
* Accurate records are kept with a running balance available
* Annual audit and reporting obligations by certified accountant employed by RICS
* If cash receipts are used to settle transactions, make sure records show all cash transactions
* Signatories must be agreed with authorised staff and two signatories should be required
* A discrete account is for a single named client account only
* RICS Regulatory Review Visits can be undertaken by RICS usually on a routine 3 yearly basis
* Firms handling client money need to display their procedure on their website
How many Principals in a firm have to be RICS members for a firm to be regulated?
Until April 2020: a regulated firm is a practice that has 50% or more principals who are RICS members
From April 2020: if a practice provides surveying services and 50% of principals are RICS members, then it has to be regulated. If firms want to apply to be registered then they must now have more than 25% of Principals as RICS members (previously they only required one Principal to be an RICS member)
Why are the RICS requiring 25% of Principal to be members in order for firms to apply to be regulated?
Concerned that as the RICS profession and brand grows, having a single RICS qualified Principal does not provide sufficient assurance that RICS professional standards have adequate influence within the senior management of firms
Would you ever receive a gift from a client?
Would be inappropriate if you were doing a job for that client
Would consult the Ethics Decision Tree and my firms anti-bribery procedure
Would consider RICS Professional Statement Countering bribery, corruption, money laundering and terrorist financing, 2019
If you thought it was appropriate to accept a gift from a client, how would you proceed?
Record it on my firm’s Gifts and Hospitality Register
What is the law associated with gift giving and receiving?
Bribery Act 2010 and Proceeds of Crime Act 2002
What are the SIX principles of the Bribery Act 2010?
- Proportionality
- Top level commitment
- Risk assessment
- Due diligence
- Communication
- Monitoring and review
What are the FOUR offences under the Bribery Act 2010?
- Bribing
- Receiving a bribe
- Bribing a foreign public official
- Failing to prevent bribery
How would you define a bribe?
Bribe can be the giving, offering, promising or receiving of an advantage such as a payment, gift or a service for an action which is illegal or a breach of trust
What identification do you require on a client to do Customer Due Diligence?
Private: identify client and their identity based on a reliable independent source (e.g. passport or driving licence). Proof of address (e.g. bank statement, council tax statement) not more than 3 months old
Company: certificate of incorporation, full name, company number and address of registered office (names of directors and beneficial owners as anyone who has a shareholding of 25% or more)
PLC: London Stock Exchange listing
Publicly accountable body: proof of government ownership/control
What would you do if you were suspicious of a client?
Wouldn’t make them aware as that could be ‘tipping off’ which is an offence
Would report and escalate internally to a compliance manager
What does the Ethics Decision Tree include?
Framework of questions members should ask themselves
Encouraged members to consider the legality of their action and the consistency with the RICS Global and Professional Ethical Standards
Ultimate question is whether members would be content to have their decisions or actions made public
RICS Regulation Confidential Hotline offers further assistance to members with any ethical issue
What is considered an appropriate margin of error?
When valuing it depends on the availability of comparable evidence and the complexity of the valuation, as to what would be an acceptable margin of error
±10% is usually considered to be a reasonable margin of error but more likely ±5% for residential property
Case of Dunfermline Building Society and CBRE (2017) assumed an acceptable margin of error of ±15%
What is the background to the RICS?
Founded in 1868
RICS has a Royal Charter, granted by Privy Council in 1881
RICS Regulations and Bye-laws set out the governance of the institution
What are the FOUR levels of membership for the RICS?
- FRICS
- MRICS
- AssocRICS
- Trainee/Student
What must you do to achieve FRICS status?
Provide evidence of achievement to the Fellowship assessor of FOUR Fellowship characteristics. They are grouped into the following categories:
- Champion
- Expert
- Influencer
- Role model
A personal statement on current role, practices and ambitions.
What is the UK Structure of the RICS?
4 National Associations
10 Regional Boards
Local Associations
Who is the current CEO of the RICS?
Dr Sean Thompkins
Who is the current President and President-Elect for the RICS?
Tim Neale (President elected from November 2019)
Kath Fontana (President-Elect)
What are the FIVE Principles of RICS Regulation for Members and Firms?
PACTT:
- Proportionality: making the penalty proportional to the breach
- Accountability: to all members and the public
- Consistency: treating all members the same
- Targeting: serious breaches
- Transparency: to all members, clients and the public
What are the International Ethics Standards, 2016?
Ethical framework for the global property market
Published by the International Ethics Standards Coalition
What relevance do the International Ethics Standards, 2016 have for the RICS?
- Did not originate from the RICS but are promoted by the RICS
- RICS are currently reviewing the Global Professional and Ethical Standards, 2015 and may extend them to reflect the International Ethics Standards more closely
What are the Rules of Conduct, 2007 and how are they changing?
- Two short documents setting out the standards of professional conduct and practice expected of members and firms
- RICS announced in November 2019 that there would be a full review of the Rules of Conduct in 2020
In what circumstance will the RICS disciplinary procedure be triggered?
Someone complaining to the RICS
Allegation by a client or third party
Information received or established by the RICS
What are the THREE levels of disciplinary action?
- Action by Head of Regulation
- Disciplinary panel
- Appeal panel
What are the THREE most common breaches of the Rule of Conduct for Firms, 2007 (as amended 2017)?
- Professional behaviour
- CPD
- Protecting client’s money
What FOUR actions can the Head of Regulation of the RICS impose?
- Fixed Penalty notice
- Compliance Order
- CPD Sanctions
- Refer to disciplinary panel
When would the Head of Regulation issue a Fixed Penalty notice?
Only used for breaches relating to the supply of information to the RICS by firms and members
What is a Compliance Order?
Written document which states the actions which the member or firm must take or desist from taking for a specified period of time
Used for minor breaches which can be easily corrected
When would the Head of Regulation refer the matter to a Disciplinary Panel?
Used for more serious breaches of conduct
Who forms the Disciplinary and Appeal Panels?
50% are lay members (non RICS members)
What are the FIVE penalties available to the Disciplinary Panel?
- Compliance Order
- Unlimited fine per breach
- Conditions upon future continued RICS registration
- Expulsion from membership or remove a firm
- Publication of results (Modus, RICS website, local newspaper)
What does the Appeal Panel do in disciplinary proceeding?
Consider a member’s or firm’s appeal to the outcome of a disciplinary procedure
Will review the evidence previously presented and any new representations
Can allow the appeal and vary the penalty previously imposed
What is an RICS International standard?
High-level, principle-based mandatory standard developed in collaboration with other relevant organisations e.g. RICS Valuation - Global Standards, 2019
Give an example of 3 pieces of RICS Core material that you have had reference to in your work?
Conflicts of Interest, 2017
UK Commercial Real Estate Agency, 2016
Property Measurement, 2018
What is an RICS Practice Statement?
Document that provides members with mandatory requirements e.g. Surveyors Acting as Expert Witnesses, 2014
What is an RICS Guidance Note?
Document provided by RICS to promote good practice. RICS strongly recommend that you have regard to the contents of any relevant guidance note e.g. Comparable Evidence in Real Estate Valuation, 2019
What is an RICS Code of Practice?
Document produced with other professional bodies and stakeholders to provide up-to-date research and advice to practitioners e.g. Rating Consultancy Code of Practice, 2017
Have the same status as a professional statement or a guidance note (mandatory or recommended good practice)
What should you consider during fee negotiations?
Firms should avoid price fixing, aggressive fee cutting or collusion with competitors
Fees should be market-based and agreed on an ad-hoc basis with clients
Must consider the RICS Global Professional and Ethical Standards, 2015 and Rules of Conduct, 2007 as amended
What should you do if accepting or offering referral fees?
- Must be completely transparent with your clients and consumers, so they understand you are receiving or offering a referral fee
- State in you terms of engagement if applicable
- Consider your actions in context of the Bribery Act 2010 and the RICS Global Professional and Ethical Standards, 2015
What steps should you follow when you receive instructions from a client?
CCT:
- Competence
- Conflicts of interest check
- Terms of Engagement
What must your Terms of Engagement comply with if you’re undertaking agency work?
Section 18, Estate Agents Act 1979
Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017
What is the cooling off period following the establishment of Terms of Engagement?
Consumer Rights Act 2015 allows a cooling off period of 14 days from the date of the agreement
Why may it be appropriate to decline an instruction?
- You are not competent to undertake the work
- You do not have sufficient facts on the issue
- Proposed client will not sign the terms of engagement or complete the AML checks
- There is a conflict of interest
- Proposed client is on the UK Government’s sanctions lists
What would you do if a family member or friend asked you for some advice on a pro bono basis?
I would be unable to give them advice as my firm’s professional indemnity insurance would not cover work carried out on a personal basis
I would refer them to another surveyor who would be able to advise them appropriately
What is a conflict of interest?
Arises when a member or firm’s independence and impartiality is threatened due to the existence of a conflict between two parties
What does RICS Conflicts of Interest, 2017 require all firms to have?
Must have effective systems and controls in place appropriate to the size and complexity of their business, to ensure full compliance
Firms must keep records to show their compliance with the statement
How should your firm operate information barriers when Conflicts of Interest are being managed?
- “Reasonable steps” must be taken to operate an effective barrier to prevent information passing between the two parties
- Surveyors acting on the two sides must be different and be physically separated
*Information regarding the instruction should be securely stored
- Keep an audit trail of all actions taken. Firms Compliance Officer must oversee all actions
What guidance does the RICS provide on Conflicts of Interest for commercial investment agents?
RICS Conflicts of Interest – UK commercial property market investment agency, 2017
What guidance is contained within RICS Conflicts of Interest – UK commercial property market investment agency, 2017?
Dual agency – contractual relationships with the buyer and the seller must not be undertaken in any circumstances
Multiple introductions – where agent has competing contractual relationships simultaneously with several buyers, must make it clear whether they are acting on an exclusive or non-exclusive basis. If on a non-exclusive basis, the agent must obtain informed consent from all the parties they are advising
Incremental advice – where agent is approached to provide incremental advice on a transaction, they can only do so if they obtain informed consent and an ethical barrier is put in place e.g. if they are disposing of an asset and asked to provide valuation advice
What is a personal interest / own interest conflict?
Arises when acting for a family member, a close business associate or someone with whom you have a financial / personal interest / benefit (known as a ‘connected person’)
What should you do if a personal interest / own interest conflict arises?
Must not let it interfere with or influence your professional judgement. Full transparency is required. Facts must be declared in writing before the instruction is accepted
What legislation governs a personal interest / own interest conflict when undertaking agency work?
Section 21, Estate Agents Act 1979
Any personal interest with a “connected person” (i.e. someone who could benefit financially from the transaction) should be declared in writing
Have you seen an example of a conflict of interest in your firm?
- My firm was instructed to value an office building in the City for loan security purposes
- My firm had sold the property within the past 2 years
- In accordance with VPGA 2 of the “Red Book” my firm had to decline the instruction due to having had ‘previous involvement’ within the past 2 years
- This was an example of conflict avoidance
What is the aim of the Bribery Act 2010?
Reduce bribery in business in the UK and abroad
Who is responsible for an employees’ corrupt actions under the Bribery Act 2010?
Companies are responsible for an employees’ corrupt acts unless they can show that they had adequate policies and procedures in place to combat bribery
Is hospitality permitted under the Bribery Act 2010?
Offering clients reasonable and proportionate hospitality does not constitute an offence, as long as they are recorded in a gift/hospitality register
What steps must companies put in place to prevent bribery under the Bribery Act 2010?
Identification of potential risks, staff training, provision of clear policies and regular reviews
Who is the Bribery Act 2010 policed by?
Serious Fraud Office
What is the penalty for breaching the Bribery Act 2010?
Individuals: maximum of 10 years imprisonment and/or an unlimited fine
Companies: an unlimited fine
What are the details of your firms anti bribery procedure?
Gifts, hospitality and entertainment must be recorded on the Gifts Register
Receiving - gifts with a value of more than £50 should be declined, require approval for meals where the value is more than £125 per head or entertainment/hospitality with a value of more than £250 per head
Giving - require approval spend more £50 per gift per person (£100 in a 12 month period), more than £125 per head on meals (£250 in a 12 month period) or £250 per head on entertainment/hospitality (£500 in a 12 month period)
Who do the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017 cover?
Estate agency work and relevant financial business work inside and outside the UK by a firm
What are the key provisions of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017?
- Written money laundering and terrorist financing risk assessment for the firm
- Implement systems, policies and controls and procedures
- Provide staff training
- Comply with new customer due diligence (CDD), enhanced due diligence (EDD) and simplified due diligence requirements (SDD)
- Comply with the requirements relating to politically exposed persons (PEPs)
- Ensure appropriate record keeping, policies and procedures
- Vendor’s agent must undertake AML checks to confirm the identity of the proposed purchaser and verify their source of funds before contracts are exchanged
- Money Laundering Reporting Officer (MLRO) must be appointed to report any suspicions to the National Crime Agency using a Suspicious Activity Report (SAR)
What did the changes in 2020 to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations require letting agents to do?
- Letting agents have to register with HMRC within 12 months of May 2020 if they let individual properties for more than the equivalent of €10,000 per month
- Where they undertake lettings of properties for more than €10,000 per month, they will have to undertake CDD check on landlords and tenants on any new letting or subletting
- EDD will have to be undertake when any red flags occur
When should you undertake Enhanced Due Diligence?
If the client is a politically exposed person (PEP), a PEP family member/business associate or from a high-risk third country
Is your firm able to accept cash payments?
My firm has a policy not accept cash payments, although the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017 allows for a maximum of €10,000 to be accepted in cash.
How long must a firm maintain records for under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017?
5 years
Who is responsible for policing the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017?
HMRC are responsible for policing the regulations for estate agents
What are the penalties for failing to comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017?
Assisting with money laundering: maximum 14 years prison sentence and/or unlimited fine
Tipping off a person or for failing to report suspicion: maximum 5 years prison sentence and/or unlimited fine
What is the Proceeds of Crime Act 2002?
Provides powers for enforcement authorities in the UK to recover in criminal and civil proceedings money and other assets which are deemed to be the proceeds of crime
Creates a set of criminal offences intended to combat money laundering
What are the THREE main areas of offence under the Proceeds of Crime Act 2002?
- Concealing criminal property: if a person conceals, disguises, converts or transfers criminal property
- Arrangements: if a person enters into or becomes concerned in an arrangement which they know or suspects facilities the acquisition, retention, use or control of criminal property by or on behalf of another person
- Acquisition use and possession: if a person acquires, uses or has possession of criminal property
What is the RICS guidance on bribery and corruption called?
RICS Countering bribery, corruption, money laundering and terrorist financing, 2019
What are the THREE parts of RICS Countering bribery, corruption, money laundering and terrorist financing, 2019?
- Mandatory requirements for anti-bribery and corruption and for anti-money laundering and terrorist financing
- Guidance setting out supporting good practice for the above
- Supplementary guidance on some of the concepts set out in Parts 1 and 2
What does RICS Countering bribery, corruption, money laundering and terrorist financing, 2019 say RICS regulated firms must do in relation to bribery and corruption (B&C)?
- Not offer or accept anything that could constitute a bribe
- Have procedures in place to comply with the law
- Report suspicion to the relevant authority
- Act with due diligence to perform periodic written evaluations of the risk the firm faces
- Retain records to show the firm has met the requirements of the Professional Statement
What does RICS Countering bribery, corruption, money laundering and terrorist financing, 2019 say RICS regulated firms must do in relation to money laundering and terrorist financing (ML & TF)?
- Not facilitate or be complicit in ML and TF
- Have systems in place to comply with the laws
- Report suspicion
- Evaluation and review the risks presented to the firm
- Use third party reliance for checks only where there is a level of confidence for the quality of information provided by the third party
- Take appropriate measures to understand the client and the purpose of the instruction
- Verify the client by undertaking basic ID checks
- Retain records to show how the firm has met the requirements of this Professional Statement
What practical guidance (Part 2) is contained within RICS Countering bribery, corruption, money laundering and terrorist financing, 2019?
- Have a written policy in place
- Publish a code of behaviour for staff
- Encourage transparency
- Set up a gifts register
- Provide staff training
- Senior management to take control of procedures
- Keep up to date with legislation
What supplementary guidance (Part 3) is contained within RICS Countering bribery, corruption, money laundering and terrorist financing, 2019?
*‘Risk-based approach’ – considering who you act for, what you are doing and why you are being asked to do something – when assessing risks to your business
- Dealing with politically-exposed persons (PEPs) – they are higher risk as they hold positions of influence and enhanced due diligence is required
*The need to identify the beneficial ownership of a company partnership or trust – such as by requesting a recent Certificate of Incorporation or Annual Return for a company
What is Formal CPD?
Includes structured learning that has clear learning objectives and outcomes e.g. seminars
What is Informal CPD?
Includes self-managed learning that is relevant or related to your professional role
How long should files be kept for?
A minimum of 6 years before disposing and destroying them securely (although can be sued for negligence for up to 15 years)
What should you do if a third parties requests access to your files?
Must get the client’s approval first unless you are subject to a statutory duty overriding the client’s confidentiality rights e.g. the police or HMRC investigation
What should a surveyor do if they find out a confidential piece of information in error about a party who is not their client?
- Cannot use the information for their own purposes
- Client and sender should be advised of the error
- Matter should be recorded in a note to the firm’s compliance officer
- Any confidential information received in error should be disposed of securely
What are the criteria for proving a negligence claim?
- Duty of care owed
- Breach of the duty of care
- Loss that was caused by that breach
What does the Limitation Act 1980 state are the limits on the period for negligence?
Contract: 6 years from the date of the negligent act, breach of contract or omission. (If later) up to 3 years from the date of knowledge of the damage. Claims for negligence are barred for any period longer than 15 years after the negligent act, breach of contract or omission
Tort: 6 years from the date the claimant suffered the loss
How can you avoid negligence claims?
- Understand client’s objectives and confirm precise instructions in writing in the Terms of Engagement
- Ensure you are competent to undertake the instruction
- Undertake the work in accordance with the relevant RICS Standards and Guidance Notes
- Make detailed file notes and take photographs
- Keep up to date with market knowledge and legislation and undertake and record your CPD
- Cap the professional liability excess on your PII policy in the Terms of Engagement
Who must Professional Indemnity Insurance policies be underwritten by? Provide some examples.
RICS approved insurer e.g. AIG, Allianz and AXA
What is the regulatory document issued by the RICS on Professional Indemnity Insurance called?
RICS Professional Indemnity Insurance Requirements, 2019
What level of Professional Indemnity Insurance cover should a new business obtain?
Estimate their turnover and adjust in due course
What level of run-off cover is required following the cessation of trading?
Consumer claims: minimum of £1,000,000 of aggregate cover over a minimum of six years
Commercial claims: must consider what is an adequate level of cover for a minimum period of six years
RICS recommend more length cover as claims can be made up to 15 years after work is undertaken
Who can firms apply to if they are unable to obtain run-off Professional Indemnity Insurance cover?
RICS Run-off Pool
Who can retired/part-time members apply to for Professional Indemnity Insurance?
RICS Low Earners Scheme
Who can members apply to if they cannot arrange Professional Indemnity Insurance?
RICS Assigned Risk Pool
Who can members go to if they are facing personal negligence claims for work carried out by a former employer who they though had Professional Indemnity Insurance cover, but does not ?
RICS Member Support Service (MSS)
What guidance did the RICS publish on the Professional Indemnity Insurance and valuation?
RICS Guidance Note on PII, Risk, Uncertainty and Insurance in Valuation Work, 2018
Why would a firm of surveyors handle clients’ money?
Holding deposits, rent, service charge and retentions
What are the SIX main area of good practice set out in the RICS Professional Statement Client Money Handling, 2019?
- Holding client money
- Providing information to clients
- Receipt of client money
- Payments from client accounts
- Accounting records and controls
- Compliance
What scheme does the RICS run for instances where an RICS Regulated Firm is unable to repay a client’s money?
- RICS Clients’ Money Protection Scheme
- Scheme split into two parts covering money held by firms undertaking surveying activities and those undertaking residential agency activity
When starting a new practice, what RICS regulations do you have to comply with?
- Inform RICS of your new practice by completing a Firm Detail Form
*Appoint a Contact Officer for all RICS communication - Register with RICS for regulation of the firm by the Regulatory Board
- Arrange Professional Indemnity Insurance and send details to RICS
- Set up procedures for Members Accounts Regulations for handling clients’ money, including Client Money Protection Scheme details
- Register for the RICS Valuer Registration Scheme (VRS) if undertaking Red Book Global valuation work
- Obtain RICS approval for the Complaints Handling Procedure
- Set up a complaints log
- Appoint a Complaints Handling Officer
- Obtain a logo kit from the RICS to use to produce all practice material to ensure compliance with the designation ‘Regulated by RICS’
- Plan for succession/future running of the business if a sole practitioner
- Ensure CPD logged online on the RICS CPD Management System
- Set up staff training plan
- Ensure completion of an online RICS Annual Return at the end of each year
When starting a new practice, what statutory regulations do you have to comply with?
- Requirement to disclose business name
- Disability discrimination compliance (Equality Act 2010)
- Financial services compliance (Financial Services and Markets Act 2000 and Financial Services Act 2012)
- Bribery Act 2010 compliance
- Appoint a Money Laundering Reporting Office (Money Laundering Regulations, 2017)
- Health and Safety compliance (Health & Safety Act 1974, as amended)
- Asbestos register (Control of Asbestos Regulations, 2012)
- Fire Safety compliance (Regulatory Reform (Fire Safety) Order 2005)
- Register for data protection (General Data Protection Regulation, 2016 and Data Protection Act 2018)
- Set up estate agency compliance (Estate Agents Act 1979, Consumer Protection Regulations 2008, Misrepresentation Act 1967)
- Inform HMRC for VAT and Tax registration (VAT registration threshold is currently £85,000 per annum turnover)
- Ensure compliance with current employment law i.e. National Living Wage, working hours, stakeholder pensions, gender pay gap reporting etc.
- Ensure insurance compliance for employer and public liability
What does the RICS require you to do if you are closing a practice?
- Inform RICS of your retirement/closure
- Ensure that your clients are informed at the earliest opportunity and hand over arrangements made to the new firm
- Return any monies held by clients to their own accounts
- Inform your insurers and procure professional indemnity insurance run off cover for a minimum of 6 years in accordance with RICS requirements
- Retain a copy of the client files and records for a minimum of 6 years
What are some of the greatest challenges facing the RICS?
- Lack of diversity in the industry
- Keeping up with an ever-evolving industry
What do the new rules state about the use of the RICS logo and designation ?
- Use of the RICS logo has been restricted to members and regulated firms only
- The ‘regulated by RICS’ designation must be displayed clearly to ensure visibility
- Prescribed text that must be included in the terms of engagement
- Companies are only allowed to use ‘chartered surveyor(s)’ designation in trading name and not company name
What countries have been identified as high-risk third countries?
16 countries have been identified as high-risk third countries by the European Commission. These include: Afghanistan, Iraq, Syria, Iran and North Korea
Why must a regulated firm have professional indemnity insurance?
Rules of Conduct for Firms, 2007 (as amended 2017) require firms to have PII
Protect clients and your company from negligence claims
What are the Part III - Firm Administration Rules of Conduct for Firms, 2007 (as amended 2017)?
- Advertising
- Solvency
- Arrangements to cover the incapacity or death or a sole practitioner
- Use of designations
- Information to the RICS
- Co-operation
What are the FIVE RICS Global and Professional Ethical Standards, 2015?
- Act with integrity
- Always provide a high standard of service
- Act in a way that promotes trust in the profession
- Treat others with respect
- Take responsibility
What has the RICS Regulatory Board been renamed as?
RICS Standards and Regulatory Board
What changes did were introduced in the RICS Rules for the registration of firms, 2019?
- Responsible principal - firm must nominate a responsible principal who is obliged to ensure all steps are taken to ensure compliance with regulatory and RICS requirements, including reporting to the RICS
- Logo - restriction on the use of the logo to regulated firms and restriction of the designation ‘Chartered Surveyors’ to the trading name only
- Eligibility changes - firms can only be registered if 25% of their principals are chartered (increased from a single chartered surveyor before)
What document has the RICS issued on the handling of client money?
Client money handling, 2019
