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APC Final Assessment > Ethics, Rules of Conduct and Professionalism > Flashcards

Ethics, Rules of Conduct and Professionalism Flashcards

1
Q

What advice does the RICS publish for handling client’s money, and when updated?

A
  • RICS Professional Standard updated in Oct 2022.
  • ‘Mandatory’ and ‘Best Practise’ guidance.
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2
Q

What are the RICS’ mandatory requirements for handling client’s money?

A
  • Separate client account - either a ‘General’ or multiple ‘Discreet’ accounts.
  • Accounts named with word ‘Client’ and their name or unique identifier.
  • Client must have immediate access to funds.
  • Accounts do not contain any other funds including ‘office’ money.
  • Clients are invoiced or notified in writing before money is withdrawn.
  • Firm’s publish procedures for handling client’s money on their website.
  • Firms ensure compliance with other regulations e.g. Bribery Act and Anti-Money Laundering and Terrorist Financing Legislation.
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3
Q

What is Client’s Money Used For?

A
  • Payment of Rent
  • Payment of Service Charges
  • Payments to Contractors
  • Arbitration Fees
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4
Q

Who Handles Client’s Money?

A
  • RICS’ Regulated Firms
  • A Principal Person within a firm or an appropriately qualified person.
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5
Q

What is the RICS’ Client’s Money Protection Scheme?

A

Operated by the RICS. It provides Insurance for the public to be reinbursed for any loss of funds when using a RICS Regulated Firm.

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6
Q

What is Rule #1 of the New Rules of Conduct?

A
  • Honesty
  • Integrity
  • Professional Obligations
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7
Q

What ‘Behaviours’ are associated with Rule #1?

A
  • Ethical Behaviour - not to mislead or be complicit in misleading actions of others.
  • Gifts and Hospitality - not allowing themselves to be improperly by others.
  • Bribery Act 2010
  • Professional Statement on Conflicts of Interest - identifying actual or potential conflicts of interest.
  • Conflict Checks
  • Professional Advice
  • Openess and Transparancy
  • Integrity
  • No unfair advantage
  • Client’s Money and Misuse - they keep it safe and appropriate controls.
  • Money Laundering Regs 2017
  • Tax evasion - VAT reverse charge
  • Confidential Information
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8
Q

What is Rule #2 of the New Rules of Conduct?

A
  • M+F mustmaintain professional competence and ensure that services are delivered by competent individuals with the necessary expertise.
  • Competence
  • Competent Service
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9
Q

What behaviours are associated with Rule #2 of the New Rules of Conduct?

A

Only carry out works they have the Knowledge, skills and resources to carry out competently.
Management and supervision.
Training of Staff.
Due diligence with subcontractors and suppliers - checking they have the knowledge, skills and resources to complete tasks competently.
PII and responsibility of delegation of works.
Client Care.
Continuous improvement.
Complaints Monitoring.
Develop and Maintain knowledge throughout their career. Identify development needs, plan and undertake CPD inc recording of CPD and provision of opporunity.
Responsible Principal knowing where staff in a firm are at

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10
Q

What is Rule #3 of the New Rules of Conduct?

A
  • Good Quality
  • Diligent Service
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11
Q

What behaviours are associated with Rule #3 of the New Rules of Conduct?

A

Understand Client needs before acceting any professional work.
Agree with client Scope of Services, Limitations and Timescales.
Communicating with clients clearly and in a way that they can understand.
Referalls are made in the best interest of client and any benefit the member of firm gets as a result is disclosed.
Skills.
Competence.
Training of Staff.
Regulation / Registration of Firms.
Inform clients they are regulated by RICS and may need to disclose records to RICS for regulatory purposes.
Client Confidentiality.
Inform client’s promptly if any T of E change or estimated fees change and seek agreement.
New Sustainability Link - encourage solutions that are sustainable and deliver balanced beneifits environmental social and economic.
GDPR Regulations 2018.
Bribery Act 2010.

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12
Q

What is Rule #4 of the New Rules of Conduct?

A
  • Respect
  • Diversity
  • Inclusion
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13
Q

What behaviours are associated with Rule #4 of the New Rules of Conduct?

A
  • Treating others with Respect and courtesy and due regard for their rights
  • Morals
  • Do not discriminate on anyone on improper grounds - Equality Act 2010 - protected characteristics
  • HR policies - members and firms do not bully, victimise or harass anyone.
  • Anti-bullying and reporting or abusive labout practises.
  • Firms check supply chains do not involve modern-slavery or other abuses.
  • Health and Safety @ Work Act 1974
  • Covid
  • Develop an inclusive culture in their workplace, support equal access and opportunity for all.
  • Inclusive Environments
  • Unconscious Bias
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14
Q

What is Rule #5 of the New Rules of Conduct?

A
  • M+F must act in the public interest, take responsibility for their actions, act to prevent harm and maintain public confidence in the profession.
  • Public Interest
  • Responsibility
  • Confidence
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15
Q

What behaviours are associated with Rule #5 of the New Rules of Conduct?

A
  • Questioning practises - raising concerns with colleagues, senior management or RICS.
  • Provide processes to support individuals in raising concerns e.g. whistleblowing
  • Respond to Complaint’s promptly, openly and professionally.
  • Not to dissuade complainants from seeking 3rd Party Redress e.g. RICS or other regulatory body
  • Conflict avoidance
  • Health and Safety / Risk Management
  • Bribery Act
  • Money Laundering Regulations
  • Whistle-blowing
  • Advertising
  • Press-releases / journal articles / Public Statements
  • Website/social media
  • Sole Practitioners
  • Locums and cover for absence
  • Solvency/finance/business development
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16
Q

Give me an example of when you have done something relevant to the RICS’ Rules of Conduct?

L2 question

A
  • Transparent Fee Proposals with clear Scope of Services and Terms of Engagement.
  • Conflict of Interest Checks.
  • Gifts and Hospitality Handling.
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17
Q

Give me an example of advice you have given to a client relevant to the RICS’ Rules of Conduct?

L3 question

A
  • Limitations - cannot carry out a measured survey - other firms better placed.
  • Conflict of Interest Checks
  • Extending a Tender Deadline and ensuring fairness
  • Handling of Gifts/Hospitality and advice in complying with Bribery Act requirements of ‘proportionality and reasonableness’.
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18
Q

What is the Structure of the RICS?

A
  • Royal Charter
  • Constitution:
  • Bye-Laws - Ratified by King’s Privy Council: PUBLIC FACING
  • RICS’ Regulations - Approved by the RICS’ Governing Council: RICS FACING
  • Regulations add detail/context to the Bye-laws.
  • New Rules of Conduct come from Bye-Law 5 and Regulation 5 concerning CONDUCT.
19
Q

Why did the previous Rules Change?

A
  • Old Rules=9 Rules for Members, 15 Rules for Firms, 5 Global Professional Ethical Standards.
  • Now - single doc tries to give greater clarity.
  • Public and RICS Members/Firms Consultation agreed change was needed.
  • New Rules incorporate Respect, Diversity, Inclusion, Evolving Technologies and Global Challenges.
20
Q

How does your company manage gifts, and counter bribery and corruption in general?

A
  • Gift/hospitality register
  • Identifies potential risks to business of bribery and corruption
  • staff training and guidance
  • transparency - all gifts/hospitality reported
  • Management kept informed
  • Contactable person within organisation
  • Due-diligence on 3rd party suppliers
21
Q

You’re invited to watch F1 at Silverstone by a contractor you’re working with -what would you do?

A
  • This could interpreted or classified as Bribery under the Bribery Act 2010 - consider compliance with LAW.
  • Assess proprotinality and reasonableness but in this case it would be interpreted as affecting your conduct during the project.
  • Openess and Transparency - Report to line manager.
  • Tax implications and Money Laundering
  • Respectfully decline.
  • Give gift to charity.
22
Q

What are the 6 principles of prevention under The Bribery Act 2010?

A
  • Proportionate procedures
  • Top Level Committment
  • Risk Assessments
  • Due Diligence
  • Communication
  • Monitoring and Review
23
Q

What are the 4 offences under the Bribery Act 2010?

A
  1. Making a Bribe
  2. Receiving a Bribe
  3. Bribery of a Foreign Public Official
  4. Failure to Prevent Bribery
24
Q

What are the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017?

A

Sets legal obiligations on private sector firms in areas of high money laundering risk
* RICS regulated firms must:
* Not faciliate or be complicit
* Have systems in place to deal with new customers - basic ID checks, enhanced due diligence
* Report suspicious activity to relevant authority

25
Q

What happens to Client’s Money if a firm goes insolvent?

A

Client Money should be kept in a discreet or general account that is labelled with ‘Client’.

26
Q

What do RICS auditors look for when visiting RICS regulated firms?

A
  • That client accounts are being correctly reconciled
  • That firm ‘Principals’ are involved in the reconciliation process
  • That client accounts are never overdrawn
  • That checks are carried out when client’s change details e.g. telephone checks.
  • Accounts are properly named
27
Q

Can you name some different types of Conflict of Interest?

A
  • A Party Conflict - duty to act for one client conflicts with duty to act for another.
  • An Own-Interest Conflict - a duty to act for a client conflicts with your own interests/firm’s interests.
  • A Confidential Information Conflict - a duty to provide information to one client with a duty to disclose that same information to another client.
28
Q

When can you proceed with an instruction, despite a conflict of interest?

A
  • If Informed Consent has been given - see RICS sample form for obtaining informed consent.
  • And only if you consider all parties interests will be served by you doing the work.
  • If any chance your actions could be perceived as lacking integrity, you MUST NOT proceed.
  • ‘Information Barrier’ within a firm may assist with a client decision to give ‘Informed Consent’.
29
Q

How does the RICS Conflict of Interest Global Professional Statement differ from the RICS Conflict of Interest UK Commercial Property Market Investment Agency Professional Statement?

A
  • Related to concept of ‘Dual Agency’ - agent has contractual relationship with both seller and buyer of property.
  • This is not allowed by the latter statement but allowed as a last resort by the former…
30
Q

What must every RICS member (independent, within regulated or non-regulated firm) do in respect of Conflicst of Interests?

A
  • Identify and manage C of I’s
  • Keep records of decisions made in relation to whether to accept or continue assignments, obtaining informed consent and measures taken to avoid C of I’s.
31
Q

What should be included in Terms of Engagement?

A
  • Sets a customer’s reasonable expectations.
  • Sets scope and nature of services and limitations to these.
  • Define circumstances in which a complaint may be made and managed.
  • Some types of work (e.g. Valuation), have mandatory requirements for T of E.
  • Transparency about fees and timescales.
32
Q

Talk me through the RICS’ Ethical Decision Tree

A
  • Provides a decision-making framework to guide through difficult decision.
  • Do you have enough information?
  • Is it legal?
  • Is it in line with the RICS’ Rules of Conduct?
  • Have you consulted with appropriate people?
  • Do you have clear reasoning?
  • Is your decision informed?
  • Would you be content to have your actions made public?
33
Q

What 3 professional obligations are mandatory for RICS members?

A
  • Must comply with CPD requirements set by RICS
  • Must cooperate with RICS
  • Must promply provide all information reasonably requested by Standards and Regulation Board
34
Q

What 7 professional obligations are madatory for RICS regulated firms?

A
  • Must publish a Complaint’s Handling Procedure that includes an ADR provider approved by RICS and maintain complaints log.
  • Must ensure PI cover that meets RICS standards is in place for current and previous work, inc ‘run-off’ cover for possibly up to 15 years (Merrett Vs Babb 2001 for mortgage valuation given 7 years earlier).
  • Firms with Sole Principal must make arrangements for work to continue in event of their death, incapacity etc.
  • Must cooperate with RICS
  • Must provide all info to the Standards and Reg board
  • Must display designation logo on business literature.
  • Must report to RICS any matter required under Rules for Registration of Firms
35
Q

What are the Rules for the Registration of Firms?

A
  1. It’s a RICS Regulation - updated Feb 2022.
  2. Sets out which firms are required and which are eligible to be regulated.
  3. Required = Provides surveying services to the public in the UK and at least 50% of Principals (Directors) are RICS members (chartered or non-chartered).
  4. Eligible = PRovides surveying services to public and 25% of Principals are RICS members, or is implementing a plan to achieve this or is supported by a RICS regulated firm.
36
Q

What information is required for the Registration of a Firm by RICS?

A
  • Firm details
  • Nature of work (services to public)
  • Principal details
  • Employee details
  • STandards and Regulation requirements = Complaints Handling Procedure, PI Insurance, Sole Principal (locum arrangements), RICS logo.
37
Q

What are the Obligations of Registration of a Firm with RICS?

A
  • Comply with RICS Rules of Conduct
  • Act in accordance with Royal Charter and Bye-laws
  • Inform RICS of any disciplinary matter, insolvency, material change, dishonesty or fraud, professional misconduct, matter causing reputational damage.
38
Q

Who are the RICS Leadership Team?

A
  • New CEO for RICS from 5th July - Justin Young
  • Ann Gray - President
  • Tina Paillet - Senior Vice President
  • Chris Alder - Senior Exec Officer
39
Q

What are the 3 types of Due Diligence?

A
  • Simplified Due Diligence – Where you determine the business relationship is low risk of money laundering/terrorism
  • Enhanced Due Diligence – for high risk customers and transactions with greater threat to financial sector
  • New Customer Due Diligence – doing the checks to ensure your client is who they say they are.
40
Q

When would you want to use Enhanced Due Diligence?

A
  • When engaging higher-risk clients e.g. off-shore entities, or those based in countries with known links to organised crime or money-laundering e.g. Russia.
    *When clients are using a Special Purpose Vehicle (SPV) for a large purchase e.g. the name of the entity they are using for the purpose is not the same as the name of their firm.
41
Q

What is the Levitt Report?

A

*RICS had a large budget defecit due to innacruate cashflow forecasting - 2018.
* Levitt found inefficiencies due to Board Structure - Management vs Executive board.
* Levitt made recomendations - more oversight by governing council of exec board.
* No evidence of improper or illegal conduct

42
Q

What are the min levels of PI cover for RICS regulated firms?

A

*turnover less than £100k = £250k min cover
*turnover between £100-£200k = £500k min cover
* turnover Over £200k = £1m min cover

43
Q

What are other requirements for PI cover for reg firms?

A
  • RICS Professional Indemnity Insurance Requirements - RICS Regulation! Updated 2022.
  • must be retroactive - covers for all previous events from date insurance taken out.
  • must follow RICS wording.
  • past and present employees
  • from a RICS approved insurer.
  • run-off cover in place.
44
Q

What is the Bichard Review?

A

Commissioned by Rics governing council to review institutions purspose, governance and strategy.
Recommended activities are centred on public advatage and to hand decision making to members.
Also recommended clearer, more accountable governance structure, more leadership and influence on global issues like climate change.

APC Final Assessment (23 decks)

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