Ethics, rules of conduct and professionalism

Question 1

Can you explain your understanding of Rule 1 of the Rules of Conduct?

Answer 1

You should not be allowed to allow yourself to be influenced improperly by accepting referrals, gifts, hospitality.

Identifying conflicts of interest and not provide services or advice where these occur.

For example, you have reduced impartiality due to an existing relationship, for example being friends with a Main Contractor who has subsequently been selected to submit a tender would form a conflict of interest.

Question 2

Can you explain your understanding of Rule 2 of the Rules of Conduct?

Answer 2

To ensure compliance with rule 2, members must only act for clients where they have the necessary knowledge, skills and resources to carry out the work competently.

Firms must supervise any employees or subcontractors undertaking work on their behalf. Any surveyor must be capable of carrying out the work at hand. For example, you would not carry out an instruction handed to you by your director if you were not capable of working on it. Issues are often created when Junior surveyors are appointed on instructions that they are not fully competent in which would create problems in achieving the rule.

Question 3

Could you give me some example behaviours of Rule 3 of the Rules of Conduct?

Answer 3

As a RICS member or regulated firm we must also be sure to understand the client’s project specific requirements before acting on their behalf.
The clients scope of services should be agreed along with any exclusions and timescales for achieving each of the deliverables before signing up to formal terms of engagement.

Question 4

Could you give me some example behaviours of Rule 4 of the Rules of Conduct?

Answer 4

The RICS expects its members to respect the rights of others and treat others with courtesy.

We need to ensure everyone is treated fairly and look to eliminate any instances of discrimination on the basis of age, disability, gender, pregnancy, race religion or sexual orientation.

Question 5

Could you give me some example behaviours of Rule 5 of the Rules of Conduct?

Answer 5

Members and firms are required to question practices and decisions that they suspect are not right and raise concerns with colleagues, senior management, clients or the RICS.
When making public statements, we need to ensure these do not undermine public confidence in the profession.
When receiving and processing complaints we need to ensure these are dealt with promptly, openly and professionally.

Sense check - I would ask myself if we would be comfortable standing behind our actions if these were brought to the media or a public forum?

Question 6

As per Conflicts of Interest 1st Edition 2017, how do you identify a conflict of interest?

Answer 6

As per Conflicts of Interest 1st Edition 2017, there are three types.

1) Party Conflict - A situation in which the duty to act in the interest of one client conflicts with a duty owed to another client in relation to the same or similar assignemnt.

(You are appointed by a developer to act as EA on a development however the site is not yet acquired. The vendor of the site is a previous client of yours and they wish for you to do a Vendor’s condition survey.

2) Own interest conflcit - Is where your personal interest conflicts with a client.

(Ie mother in law carrying out a loft conversion and is on good terms with the neighbour, they wish for you to carry out the party wall services)

3) Confidential Information Conflict - a conflict between the duty of a RICS member to provide material to one client, and the duty of that RICS member to another client to keep that same information confidential.

Applies to past, present and future clients.

Question 7

What is informed consent?

Question 8

Under what criteria is informed consent permissible?

Question 9

What are the minimum CPD requirements for a RICS Professional?

Question 10

Why did the new rules of conduct change?

Answer 10

Up until 2nd February 2022 there were the 5 Global Professional and Ethical Standards. These were in place since 2007.

Following research and consultation with members, firms and the public, the majority voted in favour for replacing the standards with a single document to provide clarity to RICS members.

There is a greater focus on clearer example behaviours, understanding evolving technology and tackling climate change

These were updated from the 2nd Feb 2022, where they were consolidated with the New Rules of Conduct 2022.

Question 11

Why did you decline the invitation to lunch and an after work party with the Contractor?

Answer 11

(Honesty & Integrity, 1)

By accepting hospitality from the Contractor whilst the works were ongoing, this could put me in the position where I could be influenced improperly by others, or give off the impression that I could be influenced by others.

This may lead the Client to losing confidence in me and my priorities.

Question 12

What is the RICS Motto?

Answer 12

Est Modus Rebus ‘ There is a proper measure in all things’.

Question 13

What is the RICS Mission Statement?

Answer 13

1. Quality and equip professionals to the highest level
2. Promote and enforce standards
3. To lead solutions to the major challenges facing the built environment through professional expertise

Question 14

What is the history behind the formation of RICS?

Answer 14

Founded in 1868 to approve the resolutions and elect the first Council. John Clutton elected as first president of the Institution of Surveyors.

The requirement was driven by the rapid development and expansion of the industrialised world.

RICS gained its Royal Charter in 1881.

Royal Charter is a mark of distinction showing pre-eminence within a certain field. They do not exist solely to advance the interests of its members but also the general public.

Question 15

What is the structure of RICS?

Answer 15

Governing Council
Sets out global strategy
Ensures RICS fulfils its royal charter obligations
Elected by the processes contained within the standing orders (Bye law 6)

Standards and Regulations Board
Responsibile for exercising RICS regulatory functions
For example - Regulationary Tribunal
Oversees the activities of RICS professional standards
Such as entry requirements and qualification
Includes their dispute resolution body

RICS Board
Direct RICS affairs under delegated authority
Members, non-members and RICS exectives
Chair: Martin Samworth
Interim Senior Independent Gov: Lord Bichard

Question 16

What are RICS Bye-Laws?

Answer 16

RICS Byelaws set out the rules of governance of the institution.

Question 17

(1) What is Rule 1 of the Rules of Conduct?

Answer 17

(Honesty & Integrity) Members and firms must be honest, act with integrity and comply with their professional obligations including obligations to RICS.

Question 18

(1) What is Rule 2 of the Rules of Conduct?

Answer 18

(Competence & Expertise) Members and firms must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise.

Question 19

(1) What is Rule 3 of the Rules of Conduct?

Answer 19

(Quality & Diligence) Members and firms must provide a good-quality and diligent service

Question 20

(1) What is Rule 4 of the Rules of Conduct?

Answer 20

(Respect, Diversity, Inclusion) Members and firms must treat others with respect and encourage diversity and inclusion

Question 21

(1) What is Rule 5 of the Rules of Conduct?

Answer 21

(public interest & responsibility) 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.

Question 22

What are the Professional Obligations of Firms?

Answer 22

1. Firms must publish a complaints-handling procedure which includes alternative dispute resolution provider approved by RICS, and maintain a complaints log.
2. Firms must ensure that all previous and current professional work is covered by adequate professional indemnity insurance that meets the standards approved by RICS.
3. Firms with a sole principal must take appropriate arrangement for their professional work t o continue in the event of their incapacity, death, absence or inability of work.
4. Firms must cooperate with RICS
5. Firms must promptly provide all information reasonably requested by the Standards and Regulation board.
6. Firms must display on their business literature, in accordance with the RICS published policy on designations, that they are regulated with RICS
7. Firms must report to RICS any matter that they are required to report under the Rules for the Registration of firms.

Question 23

What are the requirements regarding Professional Indemnity Insurance?

Answer 23

The policy cover must be made on an each and every claim basis. RICS sets out the minimum levels of indemnity based upon the company’s turnover.
The policy must be fully retroactive.
The RICS sets out the maximum levels of uninsured excess.
Run-off cover must be in place
The policy should cover the past and present employees, directors and partners.

Question 24

What is the relevance of Merrit vs Babb Case Law?

Answer 24

• 2001 – highlights the importance of having run-off cover in place
• Run-off cover = insurance for claims made against a law firm after it has stopped doing business.
• A surveyor was sued for negligence by a former client.
• The surveying firm was no longer in existence therefore the individual surveyor was pursued for damages successfully.
• This highlighted the need to ensure that run-off cover is in place for all previous employees.

Question 25

What are the professional obligations of members?

Answer 25

1. Members must comply with the CPD requirements set by RICS which requires 20 hours of CPD for each calendar year, 10 hours of which must be formal CPD
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 their behalf.

Question 26

What are the minimum levels of Professional Indemnity?

Answer 26

Firms Turnover = 100k or less = 250k
100k-200k - 500k
200k+ = £1m

Maximumuninsured excess = Turnover less than £10m = 2.5% or £10k, whichever is greater.

Question 27

What does professional indemnity insurance do?

Answer 27

Provides financial cover in the event a client suffers financial loss as a result of a breach of professional duty e.g. neglect, errors or omissions.

Question 28

How would you set up a practice?

Answer 28

1. Contact RICS for guidance and obtain a company start up pack
2. Inform RICS and register for regulation
3. Appoint a contact officer for all RICS communication
4. Prepare a complaints handling procedure
5. Obtain professional indemnity insurance cover
6. Abide by the Rules of Conduct for Firms
7. Use the designation ‘regulated by RICS’ on all practice material

Question 29

What insurances are required for setting up a practice?

Answer 29

1. Professional Indemnity Insurance
2. Employers Liability
3. Public Liability
4. Buildings insurance of an office premises
   Regarding insurance, I would refer to RICS website and documentation regarding the minimum wording required for the insurance policies for guidance.
   I would go on the RICS website to obtain the list of approved insurers.

Question 30

What are the Annual Returns required by RICS regulated firms?

Answer 30

Annual returns are required to be submitted to RICS. this can be carried out online. Failure to do so leads to a fixed penalty.
These include:
1. Type of business and staffing
2. Nature of clients
3. Training provision
4. Complaints handling procedures details and records
5. PI insurance details
6. Confirmation whether the firm holds the client’s money.

Question 31

What is your firms complaints handling procedure?

Answer 31

1. Initial Concern - Concerns are raised with the Manager who will be responsible for dealing with the instruction, in person, writing or by telephone. (Manager = oversees the local department within whom you had initial dealings).
2. Formal complaint - If the Client is not satisfied with the outcome, a formal complaint will be required in writing to the Director, detailing the relevant engagement, description of the complaint together with any key dates / events. (Director = overall responsible of the department).
3. Response - On receipt of the complaint, the Director will acknowledge complaint in writing within 7 days. At this stage we will give the Client our understanding of the case and invite the Client to make any further comments that they may have. The acknowledgement will state that the complaint is being handled under the CHP.
4. Investigation – The Director will investigate the complaint, and contact client to request further information or documentation. The Director will endeavour to respond to the complaint within 21 working days from receipt. This may involve further site visits etc. depending on instruction. After 21 days, we will inform the result of the internal investigation and inform the actions we are to take.
5. Apology / Redress - if the Director believes that it is appropriate. If the Client accepts the outcome, it will conclude the matter.
6. Alternative Dispute Resolution – If the Client is dissatisfied with the handing of the complaint, we provide two further nominated contacts who are directors of the firm who will undertake a separate review.
   Following this, if the Client remains dissatisfied, we would refer the complaint to a third-party organisation for Adjudication.
   Centre of Effective Dispute Resolution (CEDR) – Building Surveying
   The Property Ombudsman (TPO)
   RICS Dispute Resolution Service (DRS)
7. Register on Complaints Log - Details, date, logged, reference number, relevant persons, details of complaints, investigation and outcome, action taken.
8. Reflection – We will reflect on the issues raised within the complaint and provide the necessary training if there are any shortfalls in our service.

Question 32

What is the minimum level of runoff required?

Answer 32

For a consumer (any natural person acting for purposes outside their trade, business or
profession) claims, the requirement is for a limit of £1,000,000 in all for a period of six years
from the expiry date of the policy in force at the time of cessation.

Question 33

Can you explain what tort means?

Answer 33

A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act.

There are four types of damages that may be awarded in a successful tort action:

nominal damages (small sums of money)
compensatory damages (money equivalent to the damage suffered – such as covering medical expenses)
aggravated damages (compensation plus additional for distress or injury caused)
exemplary/punitive damages (large sums of money intended as punishment – such as when organisations are fined for being liable).