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APC Commercial Competencies > Ethics, Rules of Conduct and Professionalism > Flashcards

Ethics, Rules of Conduct and Professionalism Flashcards

1
Q

What are the ‘Rules of Conduct’ based on?

A

Ethical principles of honesty, integrity, competence, service, respect and responsibility

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2
Q

What are the aims of the ‘Rules of Conduct’?

A

To support positive change in the built and natural environments, through promoting and enforcing the highest ethical standards in valuation, the development and management of land, real estate, construction and infrastructure

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3
Q

Which Bye-Law informs that the Rules of Conduct apply to all members?

A

Bye-Law 5.1

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4
Q

Is personal conduct relevant to the RICS?

A

Yes, where it may damage public confidence in the profession

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5
Q

How can minor breaches to the Rules of Conduct be dealt with?

A

Through self-correction or firms’ processes

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6
Q

How are serious breaches to the Rules of Conduct to be dealt with?

A

Disciplinary action

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7
Q

When are the Rules of Conduct effective from?

A

2 February 2022

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8
Q

What is Rule 1 of the Rules of Conduct?

A

Members and Firms must be honest, act with integrity and comply with their professional obligations, including obligations to the RICS

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9
Q

What is Rule 2 of the Rules of Conduct?

A

Members and firms must maintain their professional competence and ensure that these services are provided by competent individuals who have the necessary expertise

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10
Q

What is Rule 3 of the Rules of Conduct?

A

Members and firms must provide good-quality and diligent service

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11
Q

What is Rule 4 of the Rules of Conduct?

A

Members and firms must treat others with respect and encourage diversity and inclusion

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12
Q

What is Rule 5 of the Rules of Conduct?

A

Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession

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13
Q

Which professional obligations to RICS are mandatory for RICS members?

A
  1. Members must comply with the CPD requirements set out by RICS
  2. Members must cooperate with RICS
  3. Members must promptly provide all information reasonably requested by the Standards and Regulation board, or those exercising delegated authority on its behalf
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14
Q

What are the mandatory obligations for RICS-regulated firms?

A
  1. Firms must establish a complaints-handling procedure, which includes an alternative dispute resolution provider approved by the RICS, and maintains a complaints log.
  2. Firms must ensure that all previous and current professional work is covered by adequate and appropriate professional indemnity cover that meets the standards approved by RICS.
  3. Firms with a sole principal must make appropriate arrangements for their professional work to continue in the event of their incapacity, death, absence from or inability to work.
  4. Firms must cooperate with RICS.
  5. Firms must promptly provide all information reasonably requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf.
  6. Firms must display on their business literature, in accordance with RICS’ published policy on designations, a designation to denote that they are regulated by RICS.
  7. Firms must report to RICS any matter that they are required to report under the Rules for the Registration of Firms.
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15
Q

What are the 5 principles of better regulation?

A

a Proportionality
b Accountability
c Consistency
d Targeting
e Transparency.

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16
Q

What is the role of the RICS?

A
  1. Maintain highest standards of education and training.
  2. Protect consumers through strict regulation and professional standards.
  3. To be leading source of information and independent advice on land, property and associated environmental issues.
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17
Q

Which four fellowship characteristics must you demonstrate to become FRICS?

A
  1. Five or more years at MRICS.
  2. Leadership role.
  3. Professional/ technical achievement.
  4. Academic achievement or raising profile of RICS.
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18
Q

What were the values highlighted in the values statement issued in response to the Levitt Review?

A

Integrity

Transparency

Inclusion

Collaboration

Advocacy

Passion

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19
Q

Who led an independent review into RICS purpose, governance and strategy?

A

Lord Bichard

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20
Q

What did the ‘Statement of Ethical Principles and Rules of Conduct (1st edition) do?

A

Combine and simplify Rules of Conduct for Members and Firms and Global Professional and Ethical Standards into one document

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21
Q

If in doubt with an ethical issue, who should you contact?

A

RICS Regulation Confidential Hotline

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22
Q

What test is suggested in the ‘Professional and Ethical Standards Decision Tree’?

A

Test: would you want decision to be made public?

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23
Q

What does the ‘Professional and Ethical Standards Decision Tree’ provide?

A

Questions to go through when you are asked to act in a potential manner or situation.

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24
Q

What does the ‘Professional and Ethical Standards Decision Tree’ encourage members to do?

A

Consider the legalities of actions and their consistency with RICS Global and Ethical Standards.

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25
Q

What are the levels of disciplinary action?

A
  1. Action by Head of Regulation
  2. Regulatory Tribunal
  3. Appeal Panel
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26
Q

What is the most common nature of breaches?

A

Ethical / professional behaviour, CPD, and client’s money.

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27
Q

What are the options for disciplinary action?

A

Fixed penalty notice

Regulatory compliance order

CPD Sanction

Refer matter to Regulatory Panel

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28
Q

What penalties are available to Regulatory Panel?

A

Compliance order

Unlimited fine per breach but proportionate

Conditions on future RICS registration

Expulsion of member/ firm

Require publication of hearing results- Modus, RICS website, etc

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29
Q

What is the RICS Hierarchy of Publications?

A
  1. Rules of Conduct (for Firms and Members)
  2. International Standards (Mandatory)
  3. Professional Statements (Mandatory)
  4. Practice Statement (Mandatory)
  5. Guidance Notes (Voluntary)
  6. Codes of Practice (Mandatory or Recommended Good Practice)
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30
Q

When was RICS founded?

A

1868

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31
Q

When was RICS granted Royal Charter?

A

1881

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32
Q

What followed the Levitt Report?

A

Criticism of RICS governance as a result of poor financial controls.

Reputational damage.

Apologies for wrongful dismissal of 4 non-executives who raised concerns.

Review of internal governance, advised to increase board of members.

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33
Q

What did Lord Bichard lead an independent review into RICS concerning…

A

Purpose, governance and strategy.

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34
Q

What are the advantages of being a RICS member?

A

Status
Recognition
Knowledge
Network
Market advantage

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35
Q

What is ‘PACTT’?

A

Proportionality
Accountability
Consistency
Targeting
Transparency

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36
Q

What is the purpose of the ‘Statement of Ethical Principles and Rules of Conduct (1st Edition)’?

A

Combines and simplifies Rules of Conduct for Members and Firms and Global Professional and Ethical Standards into one document.

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37
Q

What type of information does RICS requirement for the registration process?

A
  1. Type of business and staffing
  2. Statutory regulated activities - such as for financial services
  3. Nature of clients
  4. Complaint’s handling
  5. PII
  6. Whether firm holds client money
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38
Q

What are the benefits for Regulation for Firms?

A
  1. Confidence - monitored by RICS
  2. Professionalism - firms provide clear, impartial, expert advice
  3. Security - complaints procedure, access to free independent redress and PII cover
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39
Q

If over 50% of principals in company are MRICS then it ___ to be regulated.

A

HAS

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40
Q

If at least 25% of principals are MRICS, it _____ to be regulated

A

HAS THE OPTION

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41
Q

Terms of Engagement

A
  1. Check if professionally competent
  2. No conflicts of interest/ personal interest
  3. Confirm Terms of Engagement agreement in writing
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42
Q

What does the Consumer Rights Act 2015 provide of relevance to Terms of Engagement?

A

A 14 day cooling off period

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43
Q

Why would you decline work?

A

Not competent

Insufficient funds

Proposed client will not sign TOE

Conflict of interest

PII cap cannot be agreed

Advice on a pro bono basis (charity) and PII will not cover

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44
Q

Conditions of fee negotiations

A

Must avoid price fixing, aggressive fee cutting and collusion with competitors

Fees must be market based, agreed on ad-hoc basis with client, must make clients aware if receiving referral fees and state in TOE

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45
Q

What factors may make a Conflict of Interest arise?

A

Financial interest

Personal interest

Commercial relationship

Acting on both sides of a transaction

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46
Q

What is the best way to avoid a Conflict of Interest if one appears?

A

Do not accept instruction

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47
Q

How would you manage a Conflict of Interest if one appears?

A

Accept instruction, but written steps are agreed with all parties, and conflict is managed with information / ethical barrier

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48
Q

When did the ‘RICS Global Professional Statement on Conflicts of Interest 2017’ become mandatory from?

A

January 2018

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49
Q

What are the three types of Conflict?

A
  1. ‘Party Conflict’
  2. ‘Own Interest Conflict’
  3. ‘Confidential Information Conflict’
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50
Q

What is stated in the RICS ‘Global Professional Statement on Conflicts of Interest 2017’?

A

Members must not advise client were conflict exists unless informed consent of all parties affected

Informed consent only allowed when proceeding is considered is in interest of all who may or are affected and is not prohibited by law

All firms must have effective systems to ensure compliance with statement

All firms must keep records to show compliance

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51
Q

Guidance on Informed Consent

A

Only in writing. Person explaining must be transparent and sure party affected understands what they are doing.

Surveyors should only seek informed consent if satisfied all parties are best served by doing so.

52
Q

Stages of managing a Conflict of Interest

A
  1. Do you accept or avoid?
  2. Written advice to both parties
  3. Conflict Management - set up a procedure agreed in informed consent (information barrier)
53
Q

If giving ‘written advice to both properties’ in regards to a conflict of interest, what must you do?

A

a. Disclose nature of conflict and set our firm wishes to deal with conflict (information barrier)

b. Be clear - ensure parties make own decisions (suggest independent advice)

c. Request written informed consent to act in accordance with procedure proposed

54
Q

What is required of an ‘information barrier’?

A

Robust to ensure no information is passed

‘Reasonable steps’ taken to operate effective barrier

Separate surveyor on both sides, physically separate (different building or floor)

Information should be securely stored

Clear audit trail- firm’s compliance officer must oversee actions

55
Q

What do the arics Bye Laes state in regard to client confidentiality?

A

Must be maintained at all times

56
Q

What should you do with confidential material received in error?

A

Advise sender and record matter with firm’s compliance officer

Securely dispose of it

57
Q

Can a surveyor make use of confidential material sent to them in error (eg an email)?

A

No

58
Q

Can a third party gain access to client information?

A

Yes (with conditions)

Requires consent from client

UNLESS third party is a statutory authority - eg HMRC or Police investigation

59
Q

How long must old files be held for?

A

6 year minimum

60
Q

Does client confidentiality include historic information provided by client before instruction?

A

Yes

61
Q

Relevant case law for ‘Negligence’

A

Burgess v Lejonvarn (2020)

62
Q

What was found in the case of Burgess v Lejonvarn (2020)?

A

Professionals providing professional services pro bono and without contract owe a duty of care in tort to act with reasonable care and skill.

Court of Appeal also determined they are under no duty to advise / give warnings, and nor are they liable for work they do not do.

63
Q

When can a client claim potential damages re negligence?

A

When duty of care to clients and third parties, ie use of ‘reasonable care and skill’ is breached

64
Q

What is the limitation period for negligence claims made through a contract?

A

6 years from the date of negligent act, contract or omission.

3 years from date of knowledge of damage.

Subject to 15 year long stop from the negligent act or ommission.

65
Q

What is the limitation period for negligence claims made through tort?

A

6 years from the date the claimant suffered the loss.

66
Q

When did the ‘Limitation Act’ come into force?

A

1 May 1981

67
Q

How to avoid negligence?

A

Clear and precise TOE

Ensure competent to undertake work

Undertake work in accordance with RICS Standards and Guidance Notes

Make detailed notes and take photos

Be aware of market knowledge and legislation - undertake and record CPD

Cap the professional liability excess in your PII policy in the TOE

68
Q

Where are the details of the complaints handling procedure set out?

A

RICS Guidance Note on Complaints Handling 2016

69
Q

What is the VOA complaints handling procedure?

A

Tier 1 - Complaint investigated within the business stream

Tier 2 - Complaints handling team (in the VOA)

If complainant is unsatisfied, they can seek referral to Parliamentary and Health Service Ombudsman via their MP’s office

70
Q

What does the VOA code of Practice state about response times to complaints?

A

We will confirm receipt of complaint within 3 working days.

We will provide a response within 20 working days.

71
Q

How much CPD must a RICS member undertake per annum?

A

20 hours

71
Q

How much CPD must a RICS member undertake per annum?

A

20 hours

72
Q

What are the conditions of the CPD RICS members must undertake each year?

A

At least 10 hours must be formal CPD

Must maintain a relevant and current understanding of RICS Professional and Ethical Standards on 3 year rolling period

Must record in RICS CPD Management System

73
Q

How often must RICS Members undertake CPD in regards to RICS Professional and Ethical Standards?

A

On a 3 year rolling period.

74
Q

What is ‘PII’ ?

A

Professional Indemnity Insurance

75
Q

Why must you have PII?

A

To protect clients, surveyors, and third parties against negligence claims where a duty of care breached and a claim for damages arises.

76
Q

Is PII needed for pro bono work?

A

Yes

77
Q

What are the requirements of PII?

A

Provided by an RICS approved insurer.

Provides adequate insurance for every instruction.

78
Q

How does a new business calculate their PII?

A

Estimate turnover and adjust accordingly.

79
Q

What is ‘RICS Assigned Risk Pool’?

A

Insurance available at cost for members who can’t arrange cover.

80
Q

When is Insurance cover to be sent to RICS?

A

Annually as part of Annual Return.

81
Q

What is the minimum level of indemnity required for a firm which turns over £100,000 or less?

A

£250,000

82
Q

What is the minimum level of indemnity required for a firm which turns over £100,001 - £200,000?

A

£500,000

83
Q

What is the minimum level of indemnity for a firm that turns over £200,001 and over?

A

£1,000,000

84
Q

What is ‘indemnity’?

A

Security or protection against a loss or other financial burden.

85
Q

What is the maximum level of uninsured excess required by RICS for a liability of up to £500,000?

A

The greater of 2.5% of the sum insured or £10,000.

86
Q

What is the maximum level of uninsured excess required by RICS for a liability of over £500,000?

A

2.5% of the sum insured.

87
Q

What is ‘uninsured excess’?

A

The positive difference, if any, obtained by subtracting the Insurance Limit from the Eligible Receivables Balance.

88
Q

What is ‘run off-cover’?

A

Insurance for claims made against a firm after it has stopped doing business.

89
Q

What must ‘run off-cover’ be?

A

‘Adequate and appropriate’ following cessation of trading.

90
Q

What can firms do if they are unable to obtain run-off cover?

A

Apply to RCS for RICS Run-off Pool

91
Q

What does ‘structured CPD’ mean?

A

Structured learning with clear objectives.

92
Q

What are the requirements for ‘consumer claims’ in run-off cover?

A

Minimum cover of £1,000,000 over minimum of 6 years.

93
Q

What are the requirements for ‘commercial claims’ in run-off cover?

A

Firms must decide cover, minimum of 6 years.

94
Q

What does RICS recommend use of to manage risks of professional work?

A

Liability caps.

95
Q

What is a ‘liability cap’ ?

A

A contractual clause or agreement that limits the amount of damages a client can claim from a professional services firm, in the event of negligence or a breach of contract.

96
Q

When was the 1st Edition RICS Guidance Note on ‘Risk, Liability, and Insurance’ published?

A

2021

97
Q

Where are is the guidance on ‘handling client’s money’ stated?

A

RICS Rules of Conduct for Firms 2007 - rule 8 - client’s money.

98
Q

What is instructed in ‘RICS Rules of Conduct for Firms 2007 - rule 8 - client’s money’?

A

To preserve security of client’s money entrusted in the course of business.

99
Q

What does ‘client’s money’ include?

A

Rent
Service Charges
Holding deposits

100
Q

What does the ‘RICS Professional Statement Client Money Handling, 1st Edition 2019’ outline as 6 areas of ‘good practice’ in handling client money?

A
  1. Holding client money
  2. Providing information to clients
  3. Receipts of client money
  4. Payments from client accounts
  5. Accounting records and controls
  6. Compliance
101
Q

How must Client accounts be kept?

A

Separately, and clearly identifiable.

102
Q

What word must appear on a client account?

A

‘Client’

103
Q

Can clients have monies on demand?

A

Yes, but can only be withdrawn for proper uses.

104
Q

How should client money records be kept?

A

Accurately, with running balances available.

105
Q

What must all firms handling money do?

A

Display procedure online.

106
Q

How are RICS Regulatory Review Visits handled?

A

Usually every 3 years by an accountant employed by RICS.

107
Q

What is ‘RICS Client Money Protection Scheme’ for?

A

Claims where RICS regulated firm is unable to repay client’s money.

Scheme is split into two parts: surveying services, and residential activites.

108
Q

What must you do if you are closing a practice?

A

Inform RICS of closure

Inform clients and hand over arrangements to new firm are made

Return client money

Inform insurers and arrange run-off cover for a minimum of 6 eyars

Retain a copy of client files and records for a minimum of 6 years

109
Q

What is the relevant statutory compliance for ‘starting a new practice’?

A

Bribery Act 2010

Money Laundering Regulations 2017

Health and Safety Act 1974

Employment Law

Fire Safety Compliance

Data Protection Act 2018

110
Q

What is the aim of the ‘Bribery Act 2010?’

A

To reduce bribery in business in UK and abroad.

111
Q

What is a ‘bribe’?

A

Giving, offering, promising, or receiving a gift, payment, or service for an action which is illegal or a breach of trust.

112
Q

What must you do if you receive a ‘gift’ of ‘proportionate hospitality’?

A

Record it in the hospitality/ gifts register.

113
Q

What are the Four Offences (in relation to gifts, bribery, and corruption)?

A
  1. Bribing
  2. Receiving a bribe
  3. Bribing a foreign official
  4. Failing to prevent a bribery
114
Q

What are the 6 Principles of ‘gifts, bribery and corruption’?

A
  1. Proportionality
  2. Top level commitment
  3. Risk assessment
  4. Due diligence
  5. Communication
  6. Monitoring and review
115
Q

What is the maximum penalty for committing bribery offence?

A

10 years in prison and / or unlimited fine.

116
Q

What is ‘money laundering’?

A

Where proceeds of crime are disguised or converted and then realised as legitimate assets.

117
Q

What are the ‘Core Values’ in the Civil Service Code?

A

Integrity

Honesty

Objectivity

Impartiality

118
Q

Which documents did the Rules of Conduct replace?

A

The old Rules of Conduct for Members

The old Rules of Conduct for Firms

The Global Ethical and Professional Principles

119
Q

What are members and firms expected to do to achieve the outcome required by the Rules?

A

What is reasonably possible

120
Q

What concept does Rule 1 of the Rules of Conduct refer to?

A

Professional obligations

121
Q

What concept does Rule 2 of the Rules of Conduct refer to?

A

Professional competence and expertise

122
Q

What concept does Rule 3 of the Rules of Conduct refer to?

A

Good quality service

123
Q

What concept does Rule 4 of the Rules of Conduct refer to?

A

Respect and diversity

124
Q

What concept does Rule 5 of the new Rules of Conduct refer to?

A

Public confidence in profession

125
Q

Can you tell me about a complaints handling procedure?

A

Details set out in RICS Guidance Note on Complaints Handling 2016

Firms written complaint handling procedure must be approved by RICS

Notify insurer as soon as complaint is made
Log complaint

Stage 1 - in House

Stage 2 - ADR / Third Party Resolution

APC Commercial Competencies (8 decks)

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