Ethics, Rules of Conduct and Professionalism Flashcards
What is the main documentation around ethics ?
RICS: Rules of Conduct - Effective from Feb 2022
What are the new rules of Conduct?
Effective Feb 2022
Honest
- Rule 1: Members and Firms must be honest, act with integrity and comply with their professional obligations, including obligations to the RICS
Example behaviour: Identify actual and potential conflicts of interest throughout a professional assignment and don’t provide advice or service where there is a Conflict of Interest or risk of one arising unless done in accordance with the Conflict of Interest 1st Edition 2017
Professional Competence
- Rule 2: Members and Firms must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise
Example behaviour: Only undertake work where they have the knowledge, skills and resources to carry out competently
Quality
- Rule 3: Members and Firms must provide good quality and diligent service
Example behaviour: Agree with clients the scope of service to be provided and its limitations and timescale of work
Respect
- Rule 4: Members and Firms must treat others with respect and encourage diversity and inclusion
Example behaviour: Respect the rights of others and treat others with courtesy
Public
- Rule 5: Members and Firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession
Example behaviour: Respond to complaints made against them promptly, openly and professionally
Did you know there is an Appendix?
- Yes
- Appendix A
- Sets out core obligations for members and firms
Give examples from Appendix A?
- Members
must comply with CPD requirements set by RICS (20hrs for chartered and 48hrs formal each year for graduate) - Firms
must publish a Complaints Handling Procedure, which includes an alternative dispute resolution provider approved by the RICS and maintain a complaints log - Both must cooperate with the RICS
- Firms must display logo
What is a complaints handling procedure?
A procedure to allow clients to raise complaints. This may include ADR and relevant timescales for the process
What is your firms CHP?
- Stage 1: The local office which the complaint relates to has an opportunity to investigate and respond. Acknowledgement of complaint within 7 days and if not able to give full response an update within 28 days
- Stage 2: If not satisfied next stage is to review independently and consider in full. Client asked to put complaint in writing and this is acknowledged in 7 days and update given within 28 days. The senior partner reviews complaints at this stage.
- Stage 3: If unable to agree how to resolve, the client can take to an independent redress provider as approved by the RICS Regulatory Board
- G&S use: Centre of Effective Dispute Resolution (for clients)
and RICS Dispute Resolution Services (for business)
What are ethics?
Moral principles that govern an individuals behaviour
What is the RICS Ethical Decision Tree?
- For surveyors to review a potentially unethical scenarios
- Encourages to consider legality of actions and be consistent with Rules of Conduct and seek advice if needed
- Ultimate test is if member would be content with their actions/decisions being made public
What does it mean to act ethically as a Chartered Surveyor?
- Acting ethically means complying with standards and ensuring that you are acting on behalf of your clients best interests
What are the CPD requirements?
- Qualified/MRICS member – 20 hrs per year, min 10 hours formal
- Graduate - 48 hrs per year (Min 24 formal)
What is the difference between formal and informal training ?
- Formal has a learning objectives and a defined learning outcome
- The CPD decision tree allows for guidance
Tell me about 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 but not company name
Changes made in Feb 2022 by New Rules of Conduct
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 is a contact officer and Responsible Principal?
(Alison Rae is both)
- Contact Officer:
The designated person to liaise between company and the RICS
- Responsible Principal:
Ensures RICS standards and compliance are up held in regulated firms
Can you name three professional statements?
- Counter Bribery and Corruption, Money Laundering and Terrorist Financing 1st Edition 2019
- RICS UK Commercial Real Estate Agency 1st Edition 2016
- RICS Property Measurement 2nd Edition 2018
- Comparable Evidence in Real Estate Valuation 1st Edition 2019
- RICS Client Money Handling 1st Edition 2019
Can you name some RICS Guidance Notes?
- Surveying Safely 2nd Edition 2018
- Valuation of Development Property 1st Edition 2020
- RICS Code of Measuring Practice 6th Edition 2015
- Use of Social Media: Guidance for RICS Members 1st Edition 2021
What is a Bye Law?
- Rule or law established by an organisation to regulate itself as allowed by a higher authority
- The RICS has 10
What are the RICS Bye Law’s
MDCG
- Application and Definition
- Membership and Registration
- Designations
- Contributions to funds
5.Conduct - Governing Council, Officers and Staff
- Subordinate boards, committees and groups
- Procedure for general meetings
- Accounts and Audit
- General
Give an example from the RICS Bye Law’s?
- Members must conduct themselves in a manner befitting membership of the RICS
What is Money Laundering?
- Concealing the source of proceeds of criminal activity to disguise their illegal origin
What UK legislation for Money Laundering are you aware of?
- The Money Laundering, Terrorist Financing and Transfer of Funds (Info on the payer) Regulations 2017 as amended 2022
What are the Key Principles from the Money Laundering, Terrorist Financing and Transfer of Funds (info on the payer) Regs 2017 amended 2022
- Cash Limit of £10,000
- Enhanced Due Diligence
- Evidence of Funds
- Check Purchaser and Vendor
- Maintain record for 5+ years
- All firms must have a AML officer
What is an offence under the Money Laundering Regulations 2017 amended 2022
- Not carrying out due diligence
- Tipping off
- assisting
- failing to report
What is the RICS Professional Statement relating to Money Laundering and Bribery?
- Countering Bribery and Corruption, Money Laundering and Terrorist Financing 1st Edition September 2019
What are the requirements within Countering bribery, corruption, money laundering and terrorist financing 1st Edition 2019?
(3 requirements for members and 7 for firms)
- Members:
- Do not offer or accept directly or indirectly anything that constitutes a bribe
- Report any breaches you are aware of to relevant authority (as specified in local designation) can be Senior Manager if none or Serious Fraud Office
- Ensure that they have adequate knowledge of bribery and corruption to be able to comply with the requirements of this professional statement
- Firms:
- Do not offer or accept directly or indirectly anything that constitutes a bribe
- Report any breaches you are aware of to relevant authority (as specified in local designation) can be Senior Manager if none or Serious Fraud Office
- Have plans in place to comply with applicable laws governing bribery and corruption, and ensure that these are followed
- Act with due diligence to perform periodic written evaluations of the risks that face the firm
- Retain information detailing how the firm has met the requirements of this professional statement
Can you name any Money Laundering Red Flags?
- Cash Only buyers
- Funds provided by unknown 3rd Party
- An unusual sale price (too high, too low)
What is tipping off?
The process of alerting the suspect party of a potential forthcoming investigation following the reporting of a potential red flag.
Penalties for Money Laundering?
- 14 years in prison/unlimited fine
- 5 years for tipping off someone under investigation
What is Customer Due Diligence?
- Series of checks to help verify your client and potential risks
- Part of AML
- ID Checks, Part of Address, Directors info and Fund Arrangements
What are the 3 types of Due Diligence?
SEN
- Simplified: when determined that there is low risk
- Enhanced: High risk customers PEP etc
- New Customer: checks to ensure your client is who they say they are
How do you carry out AML Checks?
- Risk Assessment
- ID check (2 types)
- Proof of Address )utility bill within 3 months)
- Smart Search
- Signed off by AML officer and saved in secured file
What UK Bribery Legislation are you aware of?
The Bribery Act 2010
- Bribery is defined as an offer, promise, giving, demanding or accepting of an advantage that is illegal, unethical or a breach of trust
What are the 6 Principles of the Bribery Act 2010?
PTRDCM
There are 6 Principles:
- Proportionality
- Top Level Commitment
- Risk Assessment
- Due Diligence
- Communication
- Monitoring and Review
What are the four offences under the Bribery Act?
- Offering, promising or giving a bribe to another person
- Requesting, agreeing to receive or accepting a bribe from another person
- Bribing a foreign public official
- The corporate offence of failing to prevent bribery
Penalties for accepting a bribe?
- Up to 10 years imprisonment
- Unlimited fine
- Face confiscation of criminal under investigation
What’s does the Bribery act 2010 say about hospitality/gifts ?
Consider timings, reasonable, cultural differences
Tell me about the guidance for dealing with Conflict of Interest?
- RICS Conflict of Interest 1st Edition Global Professional Statement 2017
- RICS UK Professional Statement- Conflicts of Interest- UK Commercial Property Market Investment Agency 1st Edition (2017)
How do you undertake a conflict of interest check?
We have a system (AIMS) that checks appointments based on information such as address, name and partied involved, in addition to verbal conversations between the surveyors.
What is the difference between conflict avoidance and management?
- Conflict avoidance:
is a person’s method of reacting to conflict, which attempts to avoid directly confronting the issue at hand
- Conflict management:
is the process of limiting the negative aspects of conflict while increasing the positive aspects of conflict
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 is PII?
- Professional Indemnity Insurance
- Its mandatory insurance that protects clients, surveyors and 3rd Parties from negligence
- Must be underwritten by RICS approved insurer
How do you determine the level
of PI cover?
This depends of the firms annual turnover
- If turnover is £100k or less = £250k
- If turnover is £100 - £200k = £500k
- If turnover is above £200k = £1m
- Updated 1st April 2022
Max uninsured excess
- £10m or less= Greater the sum of 2.5% of sum of insured £10,000
- £10m or more turnover= unlimited
How many years after an instruction has been completed can a Professional Indemnity claim be made?
15 years (Limitations Act)
What type of cover would you need to cover a claim brought after a firm or member ceases to trade and how long should it cover?
Run off cover
- Run off cover must also be held for a minimum of 6 years for a limit of £1million.
- But can be 12 years if executed as a deed
What is run off cover?
Ensures, firms, members and their clients are not exposed to financial detriment after a frim ceases to trade
What steps must you take for the handling of clients money?
- Clients must always have access to funds
- Client money must be kept separate and clearly identifiable
- Include ‘Client’ In account name
- Interest on the account must be agreed with the client
- Maintain client ledger or running balance of any transactions
- Agree the terms and advise client on bank details
- Must not be overdrawn
Would you accept a Gift or offer of Hospitality from someone in a work capacity?
Yes, gifts and hospitability is acceptable and considered part of doing business.
- However can be linked with the Bribery Act (2010)
- I ensure gifts etc are reasonable and proportionate eg) The Rugby, a meal etc
- I take into account the timing, who it is from and the value
- If any gift is over £100 I discuss with senior manager and update the gifts and hospitability register and contact
What benefits does PI provide for professionals?
- The professional is protected from financial loss
- Does not have to meet the claim from their own assets and resources
Do you know any case law relating to run off cover?
- Merrett vs Babb (2001)
- Babb had done a valuation as an employee of a company for a house purchased by
Merrett - Valuation later found to be negligent
- The original company no longer existed
- Court ruled Merrett could pursue the individual – Babb – for the losses
How can you try and avoid PI Claims?
- Keep full and detailed records of meetings, conversations etc
- Record recommendations and advice given
- Use proper letters of engagement, scope of services and terms of engagement
- Don’t advise on a specialism outside your field of experience
- Use RICS guidelines
- Avoid poor management and excessive workloads
How do you keep up to date with current affairs and topical
issues on the industry?
- I am on the emailing list of several CPD providers (brodies etc)
- Modus (look at most up to date)
- My employer sends monthly digests
- Chatting with collueges
-RICS website and journals
What are the general requirements regarding PII set by the RICS from the 2022 update?
- Policy cover must be made on each and every claim basis
- RICS set minimum levels of indemnity
- Policy must be fully retroactive
- RICS sets maximum levels of of uninsured excess
- Run off cover must be in place
- Policy should cover past, present employees, directors and partners
What is The RICS Rule of Conduct Rule 1?
Member and Firms must be honest, act with integrity and comply with their professional obligations, including their obligations to the RICS.
What is Rule 2?
Members and Firms must maintain professional competence and ensure that services are provided by competent individuals, who have the right level of expertise.
What is Rule 3?
Members & Firms must provide a good quality and diligent service.
What is Rule 4?
Members & Firms must treat others with respect and encourage diversity and inclusion.
What is Rule 5?
Members & Firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession.
What are the 3 rules of the RICS Disciplinary Procedure?
- Action by Head of Regulation
- Fixed Penalty
- CPD Sanctions
- Low level Breaches - Regulatory Tribunal
- Serious Breaches
- Fines per breach
- Explusion - Appeal Panel
What checks do you undertake when taking on a new client?
-Conflict of Interest checks through our internal system Aims
- AML checks
How often are you required to undertake an Ethics Test?
Every 3 years
Give an example when you acted with integrity?
- Client inquired about a planning application that i knew would not get consent
- Instead of taking the fee, i declined the job
What do new rules of conduct provide?
- Simpler structure
- Clear examples to help members judgements and how members and firms can comply
- Focus on diversity
Why does the RICS have rules?
- Clear rules give members guidance and promote confidence in the surveying profession
- Behaving ethically is at the heart of what it means to be a professional
When would you handle Clients money?
- Deposit
- Rent
- Service charge
How does your firm calculate fees?
- Planning we have a minimum fee of £1,500 then a daily rate after
- Agency 1-1.5% of achieved sale
- Letting 10% of achieved annual rent
Tell me about Terms of Engagement?
- Terms of Engagement are a written agreement of the clients acceptance of proposed fee, payment of expenses and that CHP are available
What are the 3 steps for Terms of Engagement?
CIT
- Check Professional Competence
- No Conflict of Interest or personal interests
- Confirm Terms of Engagement in writing and get written approval from client before work
What is included within your Terms of Engagement?
- Client entity
- Fee Basis
- Subject Property
- Scope of Work
Can you explain your firms AML procedure?
- Requirement to undertake checks on all parties in buying or selling transactions
- Requirement to check all parties in letting transactions if rent exceeds £100,000
- Key checks: 2 pieces of ID and Utility bill with address dated within last 3 months
- Fill in traffic light form which is a risk based approach for any high risk clients
- Carry out smart search
- Send info to AML officer
- AML records kept for 5 years
- Continual AML training for staff
Who is G+S’s AML officer?
- Fraser Lang
- Deputy is Maria Woods
What would you do if you are suspicious of Money Laundering?
- Report to AML officer or deputy
- Officer will decide to take to National Crime Agency
- Goes to relevant authority (police)
- Don not alert party of concern
What is your firms gifts/bribery policy?
- All entertainment expenses in relation to clients or prospective clients must be authorised by your respective Partner in advance
- All entertainment expenses in excess of £100 value to the client must be discussed in advance with Senior Managers
- Employees are required to record Corporate Entertainment received on a Gifts + Hospitality Received Log. If over £100
What is the RICS guidance for handling Clients money?
- RICS Professional Statement: Client Money Handling 1st Edition 2019
- Must have separate bank accounts
- RoC 1 :Firms keep client money safe
What would you do if a Client offered you a gift?
- Consider timing and reasonable
- if all fine accept the gift but if over the value of £100, discuss with senior manager and then I update the gifts and hospitability register
- If timing is off eg) when an offer has been submitted or a close date is coming up the decline gift
What is a Professional Limitation?
- I always seek guidance from senior colleague
- For measurement I try do so with a colleague to ensure nothing is missed
When would you have to turn down an instruction?
- Conflict of interest
- If I don’t have the competence
Give an example of how you have adhered to 1 of the Rules of Conduct?
- Morningside road
- Acting with integrity given the CoI that had occurred and turned the instruction down
Morningside Road
Why did you have to decline this instruction?
(Could be asked in Conflict)
- Confidentially
- Competing interests
So this was a Conflict of Interest
What are RICS Complaints Handling Standards timescale?
- Within 7 days acknowledgement
- Within 28 days for full written response
(procedure same as G&S)
If you were offered a cash bribe prior to a closing date what would you do?
- Inform my Bribery Officer (Alison Rae)
- She would then report to to National Crime Agency
