Ethics, rules of conduct and professionalism L1 Flashcards
Why do you want to become a member of RICS?
1 - Status; - gives client confidence
2 - Recognition - promotion of your professional excellence to governments and markets
3 - Market advantage - gives me a competitive edge
4 - Knowledge - International practice standards and knowledge sharing
5 - Network - Access to 125,000 professionals worldwide
What is the role of RICS?
The Royal Institution of Chartered Surveyors promotes and enforces the highest professional qualifications and standards in the development and management of land, real estate, construction and infrastructure.
To protect consumers thorough strict regulation of professional standards
To be the leading source of of information and independent advice on land, property, construction and associated environmental issues.
What are the key functions of RICS?
1) Advancing the highest ethical and technical standards for professionals in land, property and the built environment
2) Protecting and providing benefits to consumers by enforcing standards and codes of best practice
3) Providing expert impartial advice to governments, business and the public
4) Equipping RICS members with leading edge advice, market insight and professional training
4) Promoting RICS status and standards in key worldwide markets as the mark of property professionalism.
What is a Royal Charter
A royal charter is a document issued by the monarch that gives independent legal standing to an organisation and defines its objectives, constitution and powers to govern its own affairs.
Who is the current RICS president?
RICS President Ann Gray FRICS
What do you understand by the term self-regulation?
RICS self-regulates, meaning that it operates within it’s own published regulatory framework, rather than being legislated by Government.
Can you tell me what you understand by the principles of better
regulation?
Proportionality - Regulators should intervene only when necessary; remedies should be appropriate to the risk posed, and costs identified and minimised
Accountability - Regulators should be able to justify decisions and be subject to public scrutiny
Consistency - Government rules and standards must be joined up and implemented fairly
Transparency - Regulators should be open and keep regulations simple and user-friendly
Targeting - Regulation should be focussed on the problem and minimise side effects.
What is a Byelaw?
Byelaws are effectively local laws to deal with local issues. They are made by a body, such as a RICS, using powers granted by an Act of Parliament, and so are a form of delegated legislation.
Give an example of one of the RICS Byelaws.
The RICS Rules of Conduct (bye-law 5.1)
To be eligible for admission as a Chartered member, a person shall demonstrate the attainment of the appropriate professional competence
Explain to me the new RICS Rules of Conduct - what do they replace?
The new RICS Rules of Conduct, effective from 2nd February 2022 replaces the previous publication from 2007. In the new version, 5 rules of conduct are set out which apply to all RICS members and firms around the world.
When do the new RICS Rules of Conduct take effect
2nd February 2022
Who do the new Rules of Conduct relate to?
The Rules of Conduct apply to all members (as defined in Bye-Law 5.1) and firms regulated by RICS.
What are the 6 ethical principles that the Rules of Conduct are based on?
Honesty
Integrity Competence
Service
Respect Responsibility
What are the 5 Rules of Conduct
1) To act with integrity
2) To maintain and ensure services are provided by competent individuals
3) To provide a high quality and diligent service
4) To respect others and advocate for diversity and inclusion
5) To maintain public confidence in the profession
Give an example behaviour for Rule 1 of the RICS Rules of Conduct
To act with integrity - I noticed a consultant had incorrectly invoiced my client, resulting in a lower than agreed fee for the scope of services agreed with my client. I advised the consultant of their error and requested they reissue a rectified invoice.
Give an example behaviour for Rule 2 of the RICS Rules of Conduct
When undertaking a desktop study of the Motspur Park Gas Holders site, I advised my client that issues of contamination lay outside my area of expertise, and suggest a contamination study be instructed with a geotechnical consultant to clarify the level of risk.
Give an example behaviour for Rule 3 of the RICS Rules of Conduct
To provide a high quality and diligent service - prior to any instruction, I ensure I engage with my client to understand their needs and objectives before undertaking the work, I also ensure timescales for the scope of service are agreed.
Give an example behaviour for Rule 4 of the RICS Rules of Conduct
To treat others with respect and support diversity and inclusion - If I hear or see discriminatory behaviour in the workplace I know to challenge this and report the incident to my line manager or relevant senior.
Give an example behaviour for Rule 5 of the RICS Rules of Conduct
To maintain public interest in the profession:
Members and firms cooperate with investigations into complaints or concerns, and provide information where it is reasonably requested and they can do so lawfully
What are the mandatory professional obligations of firms and members to RICS?
Members must:
- Comply with the CPD requirements set by RICS
- Cooperate with RICS
- Promptly provide all information reasonably requested by the standards and regulation board, or those exercising delegated authority on its behalf
RICS-regulated firms must:
- Publish a complaints handling procedure approved by RICS
- Ensure that all previous and current work is covered by adequate and appropriate professional indemnity insurance
- If having a sole principal, make appropriate arrangements for their professional work to continue to event of their incapacity, death, absence or inability to work
- Cooperate with RICS
- Promptly provide all information reasonably requested by the standards and regulation board, or those exercising delegated authority on its behalf
Display on their business literature, in accordance with RICS published policy on designations, a designation to denote that they are regulated by RICS - Report to RICS any matter that they are required to report under the Rules for the Registration of Firms
What disciplinary procedures can the RICS impose?
Regulatory compliance order
Reprimand
Fine
Impose an unlimited amount of fine per breach but it must be proportionate to offence
Impose conditions upon future continued RICS registration
Expulsion from membership or remove the firm
Require publication of the results of the hearing in the RICS modus magazine , on the RICS website and in the local newspaper where the firm is based
In what circumstances can disciplinary procedures be imposed?
An Interim Measure is considered by the Regulatory Tribunal (sitting as a Disciplinary Panel), and can be imposed where it is:
- necessary for the protection of the public and/or
- otherwise in the public interest and/or
- in the interests of the Regulated Member
When did RICS last update their disciplinary panel rules?
The Version 2 of the RICS Regulatory Tribunal Rules came into force on 2 February 2022. In accordance with RICS Bye-Law B5.
What are the different levels of action within the RICS disciplinary panel?
Action by head of regulation - first step is a formal investigation by the Head of Regulation who can initiate one of four actions upon completion of the investigation:
1) Serve a fixed penalty notice
2) Make a Regulatory Compliance Order
3) Refer the matter to a single member of the Regulatory tribunal for consideration
4) Refer the matter directly to the Disciplinary Panel
Disciplinary panel (drawn from the independent regulatory tribunal)
Appeal panel:
Appeal panels can consider a member’s or firm’s appeal against review of a decision relating to the above levels of disciplinary procedure
They will review the decision having made regard to the evidence previously presented and any new representations. The appeal panel can allow the appeal and vary the penalty imposed
What do you understand by the term professional practice?
Professional practice is a term which usually refers to the conduct as well as the work of someone from a specific profession. Professions are defined as occupations that need a extended period of tutoring and training.
What money laundering regulations or legislation are you aware of?
Terrorist Financing and Transfer of Funds (Information on Payer) Regulations 2017 (amended in 2022)
- money laundering is when the proceeds of criminal activities are disguised or converted and then realised as legitimate assets
- the regulations cover estate agency work and ‘relevant financial work’ inside and outside the UK by a firm
Key provisions:
- required to have a written money laundering and terrorist financing risk assessment
- Implement systems, policies and controls to address money laundering and terrorist financing risks
-adopt internal training
What is a red flag of money laundering?
1) Inability or unwillingness of parties to provide identity documents
2) Changes to parties involved in the transaction
3) Unusual transaction features, such as unexpected urgency, loss-making transaction, or unusual transaction
4)Payment of fees, purchase of monies in unusual currencies
What bribery legislation are you aware of?
The Bribery Act 2010
6 principles:
Proportionality
Top level commitment
Risk Assessment
Due Diligence
Communication
Monitoring and review
What is a bribe?
The giving, offering, promising or receiving of an advantage, often in the form of a gift or payment, in exchange for an action which is illegal or a breach of trust
What are the penalties for accepting a bribe?
The bribery act is policed by the Serious Fraud Office. The penalties included 10 years in prison as a maximum sentence and an unlimited fine
What are the penalties for being involved in money laundering?
Maximum 14 years and/or unlimited fine for assisting in money laundering
Maximum 5 years for tipping off someone that they are under investigation for money laundering, or for failing to report them
What constitutes an offence under the Bribery Act 2010?
1) Bribing
2) Receiving the bribe
3) Bribing a foreign public official
4) Failing to prevent bribery
What constitutes an offence under the current money laundering regulations? (Proceeds of Crime Act 2002)
1) Concealing criminal property
2) Arrangements - if you enter into an arrangement which you know or suspect facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person
3) Acquisition use and possession - if you acquire, possess or use criminal property
How long should you keep anti money laundering records for? (The Money Laundering Regulations - Terrorist Financing and Transfer of Funds Regulations 2017 (amended in 2022)
5 years - requirement of regulation
What is Professional Indemnity Insurance (PII)?
Professional Indemnity Insurance protects clients, surveyors and third parties against negligence claims when there is a duty of care breached and a claim for damages arises
Can you tell me about the RICS requirements in relation to PII?
All members must ensure that an adequate and appropriate level of insurance is in place for each instruction having considered potential liabilities which may exist.
Minimum RICS requirements are:
Firms preceding turnover:
£100,000 or less - £250,000 PII cover
£100,001 - £200,000 - £500,000 PII cover
£200,001 and more - £1,000,000
What is a PII aggregation clause?
PI policies almost invariably contain an aggregation clause that allows or requires a number of, usually, similar or linked claims to be treated as a single claim
What does ‘claims made’ mean in terms of PII?
PII policies work on a ‘claims made’ basis - i.e. the policies cover claims that are made during the period of insurance regardless of when the negligent act occurred
Is a PII excess usually paid for per claim?
Yes - CHECK
In a negligence claim, what would help to show that you acted with consideration and due process?
1) Clearly understand the clients objectives and confirm precise instructions in writing on the terms of engagement
2) Ensure you are competent to undertake the instruction
3) Undertake the work in accordance with the relevant Professional Standards and Practice Information
4) Make detailed file notes and take photographs
5) Keep up to date with market knowledge and legislation and undertake and record your
6) Cap the professional liability excess on your policy in the Terms of Engagement
Can good record keeping help to provide a defence in a PII claim?
Yes - detailed file notes can help to show that you acted appropriately.
Avoidance of negligence?
1) Clearly understand the clients objectives and confirm precise instructions in writing on the terms of engagement
2) Ensure you are competent to undertake the instruction
3) Undertake the work in accordance with the relevant Professional Standards and Practice Information
4) Make detailed file notes and take photographs
5) Keep up to date with market knowledge and legislation and undertake and record your
6) Cap the professional liability excess on your policy in the Terms of Engagement
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?
Check it covers the work, or speak to your PII insurer or broker to extend cover if you need to
What is run off cover?
Run-off cover is insurance for claims made against a firm after it has stopped doing business.
What RICS requirements are there relating to run off cover?
For consumer claims - a minimum of £1m of aggregate cover over a period of 6 years
For commercial claims - firms must consider what is adequate and appropriate for a minimum of 6 years
Firms that are unable to obtain run-off cover from their insurer or on the open market will be able to apply for coverage to the RICS run-off pool.
What changes did RICS recently make to the Minimum Approved PII Wording?
The RICS minimum policy wording is broadly unchanged for 2023.
RICS has made some amendments to ensure clarity of drafting but none of these are material and there will be no impact on the breadth of cover available to RICS regulated firms in the UK.
What precedent has caselaw set in terms of keeping adequate site notes (and therefore providing a defence in a PII claim)?
Ryb v Conway Chartered Surveyors & Ors
The Claimant commissioned the Defendants to undertake a full building survey of a north London ground floor flat with gardens which he intended to purchase for £1.275m. The Claimant was visually impaired and the surveyors knew that he would rely on their evaluation.
The survey report was produced in September 2014, which expressed the surveyor’s opinion “…I have no hesitation in recommending it as a worthwhile investment…”
The Claimant proceeded to purchase the flat. The next summer his gardener found what he thought might be knotweed in the garden. An inspection in July 2015 by Environet UK Ltd identified 3 stands of the plant and stated that that it had been growing for more than 3 years.
Environet excavated the knotweed at a cost of £10,260 (incl. VAT) in November 2015, which inevitably caused damage and disturbance to the garden.
After the knotweed re-appeared in 2017 the Claimant pursued a claim against the surveyors for the cost of the remediation works and for the reduction in value of the flat.
Applying the dicta in Network Rail Infrastructure Ltd v Williams & Anor [2018] EWCA Civ 1514, the judge awarded £50,000 in damages, representing the diminution in value
Explain PII requirements relating to fire safety cover and cyber cover.
Fire - Insurers are not permitted without specific dispensation to exclude fire safety claims on a property four storeys or less and fire safety coverage must be provided, as a minimum, on an aggregate, defence cost inclusive basis.
Cyber - The minimum terms now exclude claims relating to the use of, or inability to use, a computer system arising from the receipt or transmission of malware, or from so-called ‘cyber acts’ including damage to or destruction of programs, software or stored data.
How long can a PII claim arise after the work is undertaken?
Limitation Act 1980
Contract: - 6 years from the date of the negligent act, breach of contract or omission
Section 14A - provides an alternative limitation period of 3 years from the date of knowledge of the damage, subject to the 15 years longstop from the negligent act or omission
Tort - 6 years from the date the claimant suffered the loss
What is the Assigned Risks Pool (ARP)?
RICS Assigned Risks Pool is available at a cost for members who cannot arrange cover. It provides emergency cover for a period of up to two years so that firms can continue to practise.
Who might need to access the ARP?
where a firm may be unable to obtain PI
insurance and therefore render(s) it unable to comply with the RICS insurance requirements. This may be as a result of a poor claims record, the type of business being carried out or other risk factors, and may occur through no direct fault of the firm
Explain your understanding of the RICS Guidance Note Risk, Liability and Insurance (1st Edition).
This guidance note is intended to assist both members and their clients in understanding the main risks and liabilities associated with surveying. It guides members in the negotiation of equitable contracts with clients and the avoidance of major risks and pitfalls.
RICs recommends the use of liability caps to manage risks associated with professional work.
Be aware of third-party reliance and make it clear that advice can only be relied upon by the client named in their terms of engagement
Explain when you might agree a liability cap.
Within the Terms of Engagement prior to instruction
How would set out third party reliance in Terms of Engagement?
Regulated firms need to be aware of third-party reliance and make clear in their engagement terms that their advice may only be relied upon by the named client, so as to ensure that they are aware of and have control over future requests for third party reliance.
What are the three key terms that should be considered from a risk perspective in the context of every instruction you undertake?
1 - The scope of work
2 - The basis on which the fee will be calculated
3 - The liability cap
What is an annual return?
The annual return is a mandatory process that chartered surveyors and firms registered with RICS must complete each year.
The annual return typically includes information about a surveyor’s or firm’s activities, such as the types of work they have undertaken, the number of clients served, and details about any complaints, disciplinary actions, or professional indemnity insurance coverage. It is used by RICS to monitor and regulate the conduct and performance of its members and firms, as well as to maintain the integrity and reputation of the profession.
Tell me what you understand about Complaints Handling Procedures (CHP).
Complaints handling means the process of attending to and resolving complaints including ongoing interaction with complainants.
The Rules of Conduct specify that it is mandatory for all RICS-regulated firms to publish a complaints-handling procedure, which includes an Alternative Dispute Resolution (ADR) mechanism, and they must maintain a complaints log.
When and how can the RICS be involved in a complaint about a firm or member?
RICS regulated firm- must have a CHP which is approved by RICS.
The RICS will only become involved if a member fails to respond to the complainant or prevents the party gaining access to an independent redress mechanism.
RICS Guidance note on Complaints Handling (2016)
Can you tell me about the CPD requirements for members of RICS?
4 requirements:
1) Members shall undertake 20 hours of CPD in a calendar year
2) At least 10 of these hours must be formal, the remainder can be informal
3) All members must maintain a relevant and current understanding of the RICS Rules of Conduct during a rolling 3-year period
4) All members must record their CPD activity using the RICS CPD management system by 31st January each year
Why is CPD important?
CPD is important as it ensures members meet the Rules of Conduct requirement to remain competent. CPD is important as RICS is a standard based organisation and its members operate in a constantly changing environment e.g. new legislation.
Tell me about the RICS’ guidance on dealing with Conflicts of Interest.
RICS Global Professional Statement on Conflicts of Interest (2017) - mandatory statement that came into effect January 2018
- Members must not advise or represent a client where doing so would involve a conflict of interest or a significant risk of a conflict of interest, other than where all those who are or may be affected have provided their informed consent
- Informed consent may only be sought where the RICS member or regulated firm is satisfied that proceeding despite a conflict of interest is in the interests of all of those who are or may be affected and is not prohibited by law
