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LP APC Revision > Ethics, Rules of Conduct and Professionalism > Flashcards

Ethics, Rules of Conduct and Professionalism Flashcards

1
Q

What are the five rules of conduct?

A

1) Members and firms must be honest, act with integrity and comply with their personal obligations to RICS.

2) Members and firms must maintain their professional competency and ensure that services are provided by competent individuals who have the necessary expertise.

3) Members and firms must provide good quality and diligent service.

4) Members and firms must treat others with respect and encourage diversity and inclusion.

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 their profession.

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2
Q

Money laundering Act?

A

Anti-Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017

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3
Q

When were the 5 rules of conduct implemented?

A

October 2021

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4
Q

What is a bribe?

A

Money or tribute to influence the judgment or conduct of a person in a position of trust

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5
Q

What are the 3 types of conflict of interest?

A

Party conflict
Own interest conflict
Confidential information conflict

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6
Q

What defines prior engagement?

A

Any engagement within the previous 2 years

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7
Q

How did you carry out a COI check?

A

I submitted checks on the property and the client on my firm’s internal database, sent a companywide email

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8
Q
  • What AML procedures would you follow if you were dealing with a Special Interest Person?
A

enhanced DD, further scrutiny on accounts, can try get references for the client, try and do business face to face, monitor closely, greater understanding of source of funds and transaction history.

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9
Q
  • Are there any repercussions for suspecting money laundering and failing to report it?
A

Not reporting bribery is part of the act and you should fill out a suspicious Activity Report (or your compliance officer), pretty sure you can get max 5 years in prison and a fine dependant on the situation

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10
Q

How do you become FRICS?

A

5+ years at MRICS
Leadership role
Professional/Technical Achievement
Raised profile of RICS

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11
Q

Role of RICS?

A
  1. Maintain the highest standards of education and training
  2. Protect consumers through strict regulation of professional standards
  3. Be the leading source of information and independent advice on land, property, construction and associated environmental issues
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12
Q

Current structure of RICS?

A

Governing Council - 25 members
Standards and Regulations Board / Management Board and other committees
17 specialist professional groups across land, property, construction

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13
Q

What was Levitt Review?

A

2021 - Independent review to see if Treasury audit was repressed and dismissed. Alison Levitt called for full independent review of ‘purpose, governance and strategy’ of the RICS

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14
Q

Bichard Review 2022?

A

36 recommendations, 7 key areas.
1. Renewed focus on public interest remit of RICS
2. Greater self regulation through independence for regulatory functions
3. Increased focus on D&I in profession and in RICS
4. Increased focus on regionals and youth
5. Undertaking review of RICS governance and effectiveness every 5 years
6. New simplified governance structure
7. greater leadership on sustainability and climate change

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15
Q

4 benefits of being member of RICS?

A

Status/recognition, market advantage, knowledge, network

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16
Q

3 main benefits of being RICS regulated firm?

A

Confidence, professionalism, security. CPS

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17
Q

What are some examples of the RICS Bye-Laws?

A
  • Bye Law 1 – Applications and definitions
  • Bye Law 2 – Membership and registration
  • Bye Law 3 – Designations
  • Bye Law 4 – Contribution to funds i.e. fees
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18
Q

What are the FIVE principles of RICS Regulation for Members and Firms and what are their purpose?

A
  • Provide a framework for members and firms to ensure they meet the requirements of the Rules of Conduct.
    1) PROPORTIONALITY – making penalty proportional to the breach
    2) ACCOUNTABILTIY – to all members and the public (to promote fairness)
    3) CONSISTENCY – treating all members the same
    4) TARGETING – serious breaches
    5) TRANSPARENCY – to all members, clients and the public
    P – A – C – T – T
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19
Q

What is included in an annual return?

A
  1. Type of business
  2. Statutory regulated activities which the firm carries out
  3. Nature of clients
  4. Complaints handling procedures and records
  5. PII details
  6. Whether firm holds client money
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20
Q

What does RICS Rules of Conduct 2021 replace?

A

Rules of Conduct and Global Professional and Ethical Standards

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21
Q

What is the process prior to accepting an instruction

A

Competence
Independence
Terms of Engagement

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22
Q

Taking the above into account, some other reasons why you might decline work would be:

A
  • Failing or refusal to take part in AML or CDD process
  • Not content for actions to be made public (RICS Ethics Tree)
  • PII liability cap not agreed, or PII does not apply
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23
Q

RICS Global Professional Statement on Conflicts of Interest (2017)

A

members must not advise/represent a client if a (risk of) conflict of interest unless those involved have provided their informed consent’

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24
Q

How would you deal with a conflict?

A
  1. Conflict avoidance – after full receipt of facts, consider if it is manageable or is unresolvable
  2. Written advice to both parties: 1) disclose nature of conflict and propose how to deal with it, 2) clear messaging to ensure parties can make an informed decision, 3) request written confirmation of their informed consent
  3. Conflict management – once written consent is received, an information barrier can be put in place in accordance with what has been agreed
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25
Q

Complaints Handling Procedures – RICS Guidance Note on Complaints Handling, 2016

A
  • As part of being an RICS-regulated firm, the CHP must be approved by the RICS
  • PII insurers should be notified when a complaint is made as there could be a negligence claim
  • CHP should be detailed in TOEs
  • Complaint log must be maintained – details, progress and outcome needed
  • CHP must also contain and RICS-approved ADR mechanism
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26
Q

What are 2 stages for CHP?

A
  1. In house
  2. ADR
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27
Q

WHat are PII limitations?

A

Firm’s turnover in the preceding year Minimum level of indemnity required for each claim
£0-£100,000 £250,000
£100,001-£200,000 £500,000
£200,001+ £1,000,000

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28
Q

Negligence?

A
  • Duty of care to clients and third parties – when breached and there is a loss, a claim for damages can arise.
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29
Q

How can you avoid negligence

A
  • Understand the client’s objectives and clearly state the instructions in writing in TOEs
  • Ensure you are competent
  • Follow RICS Guidance Notes and Professional Statements * Keep detailed notes and audit trails
  • Keep up to date with current market knowledge and new legislation
  • Ensure that the professional liability excess on your PII policy is capped in your TOE
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30
Q

What is the RICS statement to handling client money?

A

RICS Professional Statement - Client Money Handling 2019

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31
Q

What does the RICS Professional Statement - Client Money Handling set out?

A
  • Client accounts must be kept separate and clearly identified
  • Clients must be able to have their monies on demand
  • Accurate records are kept with a running balance * Annual audit and reporting obligations are handled by qualified accountants
  • All firms handling client money need to display their procedures document on their website
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32
Q

What is RICS compliance for starting a new firm?

A
  1. Firm Detail Form – inform RICS of your new practice
  2. Appoint a Responsible Principle – RICS liaison
  3. Arrange PII and send details to RICS 4. Client Money Handling procedure in place
  4. Install CHP, seek RICS approval and appoint a CHO
  5. Ensure completion of Annual Return
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33
Q

What is statutory compliance for starting a new firm?

A
  1. Equality Act 2010 – ensure disability discrimination compliance
  2. Bribery Act 2010 compliance
  3. Appoint a Money Laundering Reporting Officer
  4. Appoint a Health and Safety officer – (Health and Safety at Work etc Act, 1974)
  5. Fire Safety compliance
  6. Register for data protection (GDPR (2016) and DPA (2018))
34
Q

What is RICS compliance for closing a firm?

A
  1. Inform RICS
  2. Ensure clients are informed
  3. Return any monies
  4. Inform insurers and procure PII run-off cover for minimum of 6 years from date of expiry of policy
  5. Retain client files for at least 6 years
35
Q

What is a bribe?

A

Giving, offering, promising or receiving an advantage such as payment, gift or service which is illegal or a breach of trust.

36
Q

What are 6 main principles of the bribery act?

A
  1. Proportionality
  2. Top level commitment
  3. Risk Assessment
  4. Due diligence
  5. Communication
  6. Monitoring and review
37
Q

What are the penalties, and who polices the bribery act?

A

Serious Fraud Office. Max fine of 10 years imprisonment and/or unlimited fine for individuals, unlimited fine for companies

38
Q

WHat is level of DD for a customer?

A
  • Customer due diligence checks
  • Identify the client and verify their identity e.g. passport, driving licence
  • Make reasonable endeavours to identify the beneficial owners of a client (and to verify the identity of the person responsible for managing it – look at Persons of Significant Control register at Companies House)
  • For a company, its name, company number and address of the registered office are required.
  • The names of directors are required unless the company is listed on a regular market e.g. London Stock Exchange
  • Obtain information on the purpose and intended nature of business relationship and proposed funding arrangements
39
Q

What is enhanced due diligence?

A

Additional procedure for any transaction/business relationship involving a Politically Exposed Person or PEP family member:
More thorough examination of background and purpose of transaciton, increased monitoring

40
Q

What are penalties for money laundering?

A

14 year sentence and/or unlimited fine for assistance with ML
5 year sentence and/or unlimited fine for tipping someone under suspicion of or failing to report ML

41
Q

What are the 3 main areas of offence for Proceeds of Crime Act 2022?

A

Concealing criminal property, involved in arrangements involving criminal property, acquisition, use and possession of criminal property

42
Q

Where could I find ‘professional obligations’ to be followed by members and regulated firms?

A

Appendix A of RoC

43
Q

What is the rationale for new RoC 2021?

A

Simpler structure
Clear examples
Focussing on respect, diversity, inclusion
Understanding evolving tech
tackling global challenges

44
Q

What are the 3 levels of disciplinary action>

A
  1. Action by head of regulation
  2. Disciplinary Panel
  3. Appeal Panel
45
Q

The first step (action by head of regulation) can trigger what four actions? Disciplinary procedures under the RICS

A

Fixed Penalty Notice - fine/caution
Regulatory Compliance Order -
Refer matter to single member of Regulatory Tribunal
Refer matter directly to Disciplinary Panel - more serious,

46
Q

Use of Social Media guidelines?

A

Guidance for RICS Members, 2021

47
Q

What does Guidance for RICS Members, 2021 set out?

A

RICS likely to investigate if posts involve:
Discrimination/dishonesty/abuse/bullying

RICS unlikely to investigate if posts are:
critical of an organisation rather than individuals
use professional and respectful language
removed if requested to do so

48
Q

What is professional statement surrounding conflict?

A

RICS Global Professional Statement on Conflicts of Interest (2017), effective Jan 2018

49
Q

What is Savills’s gift policy?

A

-Always mark gift on gift register.
-if gift over £50 inform compliance immeditately. Ask if you can give/go/accept.
-Never accept during instruction

50
Q

Talk me through the RICS guidance note on complaints handling?

A

Complaints Handling Procedures - RICS Guidance Note on Complaints Handing, 2016
- CHP approved by RICS
- PII notified
- Log maintained
-RICS approved ADR mechanism

51
Q

What is structure of RICS?

A

Governing Council
- Standards and Regulations Board
- Management Board
17 groups across land, property and construction

52
Q

What is a bribe?

A

Giving, offering, promising or receiving an advantage such as payment, gift or service which is illegal or a breach of trust.

53
Q

What are the penalties for money laundering?

A

-14 years sentence, unlimited fine (assistance)
-5 year sentence, unlimited fine (tip off)

54
Q

What does the Proceeds of Crime act (2002) protect against?

A

Concealing criminal property, arrangements, acquisition, use and possession (of a property)

Provides power to recover in criminal and civil proceedings

55
Q

What would you do if the bill came to £200?

A

I’d accept the client paying, and then express to my line manager that this has happened, and revert saying you’d do a less expensive lunch in return

56
Q

what would you do setting up a sole trading practice?

A

Contingency Plan

57
Q

You are acting for a tenant, and inspect premises, notice some illegal activity, what do you do?

A

inform the police immediately

58
Q

If your client wanted to take you out to lunch as a thank you, would you accept?

A

I would assess the proportionality of the lunch to the service offered, and seek advice from my compliance team

59
Q

Who is responsible for carrying out CDD?

A
60
Q

When would you not carry out CDD?

A
61
Q

What would you do if your complaint could not be solved internally?

A

I would bring in an independent expert

62
Q

What are the different types of dispute resolution services?

A

Negotiation, Mediation or conciliation, adjudicative process

63
Q

What did the 5 Rules of Conduct Replace

A

The previous Rules of Conduct for Members and Firms, and the 5 Global Professional and Ethical Standards

64
Q

How many members on Governing Council?

A

25

65
Q

What is a Bye-Law?

A

Byelaws are local laws made by a local council under an enabling act. They are accompanied by some sanction or penalty for their non-observance.

66
Q

Give an example of one of the RICS Bye-Laws.

A

5.2.1 members are required to conduct themselves in a manner benefitting membership of the RICS

67
Q

Who is a ‘qualified member’?

A

Anyone who has MRICS or FRICS qualification. AssocRICS is the entry-level RICS qualification and offers the chance to progress to full chartered status

68
Q

Who is a Responsible Principal?

A

The responsible principal would normally be an RICS member who is a Director/Principal within the firm.

69
Q
  1. What are the rules around use of the RICS logo and ‘Regulated by RICS’ designation?
A

Only RICS members and registered firms can use the logo.

70
Q

What action is taken and penalties available by the Appeal Panel?

A

Review a member/firm’s appeal against review of a decision relating to the following 3 levels of disciplinary procedure:
o Fixed penalty notices
o Disciplinary Panel
o Registration Panel
o 50% of membership of this panel are lay members (not RICS)

71
Q

What are the penalties for accepting a bribe?

A
  • Policed by the Serious Fraud Office
  • Individuals - maximum penalty of 10 years imprisonment and/or an unlimited fine
  • Firms – unlimited fines
  • DEFENCE: if you can show that adequate procedures have been put in place to prevent bribery i.e. staff training
72
Q
  1. What are the key provisions of the Money Laundering legislation?
A
  • written money laundering and terrorist financing risk assessment
  • Implementing systems, policies to address money laundering and terrorist financing risks and meet the requirements under the legislation
  • Adopt appropriate internal controls
  • Provide staff training
  • Comply with new customer, enhanced and simplified due diligence requirements
  • Comply with the requirements relating to politically exposed persons (PEPs)
  • Ensure appropriate records
  • AML checks must be undertaken to confirm the identity of the proposed purchaser of a property and check the purchasers source of funds by the vendors agent before contracts are exchanged
  • To include additional high risk factors when assessing the need for enhanced due diligence
73
Q

Are you aware of any other legislation relating to criminal activities and money laundering in the UK?

A

-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.

74
Q

If a prospective purchaser offered you a financial incentive to accept their offer, explain how you dealt with this.

A

-I would not accept
-Report to compliance office
-Report to Serious Fraud Office as this could be a bribe

75
Q

What would you do if you became suspicious that an agency client was involved in money laundering?

A

-Report client to compliance officer
-Report to National Crime Agency

76
Q

What is the Limitation Act 1980?

A

Sets out limitation periods for negligence:
o Contract – 6 years from date of negligent act, breach of contract or omission
o Tort – 6 years from date claimant suffered loss

77
Q

How do you avoid being negligent?

A
  • Clearly understand client objectives and confirm precise instructions in writing in ToE
  • Ensure you are competent to undertake the work
  • Undertake work in accordance with RICS standards and guidance
  • Make detailed file notes and take photographs
  • Keep up to date with market knowledge and legislation
  • Cap the professional liability excess on PII in ToE
78
Q

What would you do if offered to go on a ski trip?

A
  • Bribery Act 2010
  • Proportionality
  • Gifts register
79
Q

Why would a firm or member receive a disciplinary procedure?

A

If they fail to…
1. Protect the public
2. Uphold the public confidence in the profession
3. Uphold professional standards

80
Q

When did the RICS logo come in?

A

2020

LP APC Revision (19 decks)

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