Ethics, Rules of Conduct, and Professionalism Flashcards
Who is the current President of the RICS?
Tina Paillet
What is Professional Indemnity Insurance (PII) for?
To protect clients from losses that the firm cannot meet and to protect firms from financial loss in the event of a negligence claim
What is the minimum level of professional indemnity insurance and run off cover required?
Depends on turnover:
£100,000 or less - £250,000
£100,001 to £200,000 - £500,000
£200,001 plus - £1,000,000
6 year run off cover is required to the appropriate level
What are the rules for VAT when setting up in practice?
Must be registered for VAT if turnover is over £60k
What would you do if you overhead a confidential conversation between another surveyor and his client?
Do nothing
State 3 requirements of the RICS when you set up in practice
Register with RICS
Set up Professional Indemnity Insurance with the minimum levels of cover
Create a Complaints Handling Procedure
Name 3 core values which you use
Honesty
Objectivity
Respect
Integrity
Responsibility and accountability
Knowing limitations
What are the main rules for holding clients’ money? Who gets the interest on client accounts?
Must be in a separate, named client account
Interest accrues to client
Regular bank reconciliation
Account kept in credit
Rigorous accounting procedures
Name the levels of the RICS disciplinary procedures
The regulatory functions of RICS are led and overseen by the Standards and Regulation Board (SRB).
Fixed penalty notice
Regulatory compliance orders/consent orders
Disciplinary and regulatory sanctions (caution, reprimand, undertakings, fine, conditions, expulsion/removal)
What are the rules for dealing with a conflict of interest between 2 clients in your practice
Notify each party in writing immediately
Offer to withdraw from transaction
What is a conflict of interest and examples
A conflict of interest is when someone’s judgement or actions at work are - or could be - affected by something unconnected with their role. This includes any circumstances that affect - or could be seen to affect - someone’s independence or impartiality
Tell me about some professional development which you have undertaken outside your office
What procedures do you have to undertake when taking on a new instruction in order to comply with current money laundering regulations?
Know your client
Check proof of identity (passport, UK bank account)
Can you give a friend some free (pro bono) advice? What are the implications of doing so?
Yes, but can still be sued and help liable
Outline the contents of your company’s complaints handling procedure
In the first instance, please speak to the partner dealing with your matter.
- We will acknowledge in writing receipt of your complaint within 3 working days
- We will then investigate your complaint. A formal written outcome of our investigation will be sent to you within 15 working days of sending the acknowledgement email/letter.
- If, at this stage, you are still not satisfied, you should contact us again and we will arrange for a separate review to take place by a senior member of staff.
- We will write to you within 15 working days of receiving your request for a review, confirming our final viewpoint on the mater.
- In the event you remain dissatisfied with our final response, you can refer your complaint to one of the following organisations:
For business clients
Property Redress Scheme
Premiere House
1
st Floor, Elstree Way
Borehamwood
WD6 1JH
info@theprs.co.uk
For private individuals and consumer clients
The Property Ombudsman Services Limited
How do the regulatory functions of RICS work?
The regulatory functions of RICS are delegated from RICS’ Governing Council to the independently led Standards and Regulation Board
What is the purpose of the Rules of Conduct?
To support positive change in the built and natural environments, through promoting and enforcing the highest ethical standards in the valuation, development and management of land, real estate, construction, and infrastructure
What 6 ethical principles are the Rules of Conduct based on?
- Honesty
- Integrity
- Competence
- Respect
- Responsibility
- Service
Professional and ethical practice by RICS members and firms do what?
- provide a foundation for effective markets
- pioneers better places to live and work
- is a force for positive social impact
Who needs to comply with the new Rules of Conduct?
- Apply to all members and firms regulated by RICS
- RICS members and firms operate around the word, and the ROC apply to members and firms wherever they work or practice
What is integrity?
- integrity is a broader concept than honesty
- it can be seen to reflect the higher standards which society expects from professional persons
- there is a close link between integrity and the manner in which professions serve the public
Why are ethics important?
Ethics minimise risk and financial losses by protecting professionals from being fired or replaced for refusing unethical actions.
A code of ethics provides a framework for resisting unethical decisions or conduct.
Reasons in favour of professional codes of ethics?
Guide ethical/professional behaviour
Ensure consistency in decision making
Set levels of professional expectation
Help to promote trust from the public
Help to promote confidence in decisions/behaviour from stakeholders
Provides a justification for a particular course of action
Provide protection in alleged cases of misconduct
Serve as a point of reference in disciplinary proceedings
Ensure that decisions are unbiased/not overly subjective
Sets professional standards for all across the board
What is a conflict of interest
In ordinary terms, it is a situation where your duty to someone is potentially compromised by the fact that you have a material interest at stake in the matter
What is a Party Conflict?
If you work for two different clients on a matter, where those two clients have conflicting interests, you will be conflicted
What is a Confidential Information Conflict?
You are conflicted if you are obliged to keep certain information confidential for one party but obliged to reveal the same information to another party
When should you manage a conflict of interest?
Where a conflict of interest or a significant risk of one exists, you should only consider proceeding with the work (and seek Informed Consent in order to proceed) if you are satisfied that all of the relevant clients’ (or other parties’) interest will be served by your firm doing the work (as opposed to another firm doing it).
You should not seek Informed Consent in order to proceed because your firm’s interests are served by doing so.
What should you do in the case of a potential conflict of interest with a client who has dementia or does not have time to digest what they need to know?
There may be reasons to believe that the party affected does not have sufficient understanding of the issues to make an informed decision on the implications of what is required.
In such a case, the instruction should be declined, unless the prospective client has taken advice from an independent and suitably qualified professional about the situation before instructing the RICS firm or member to proceed despite a conflict of interest.
If a Conflict of Interest arises, what conditions must be satisfied before you act?
- All clients will gain if you act
- Clients have given informed consent
- Acting will not look bad
- You will act objectively and diligently for each client
- Acting is lawful
If you do proceed, you need to keep the decision under review - the situation may change and new information may need to be disclosed to clients.
Also need to keep good records.
In order to become trustworthy, professionals must:
- Ensure they are competent to do the work by developing and maintaining their specialist knowledge
- Affiliate with a professional body and accept a code of practice that determines how they practice
- Commit to putting the client and public interests ahead of their own interests should the two clash with respect to an assignment
Why do clients and the public need to trust professionals?
Because the things they do are important for clients and public
Because clients and the public do not have the same knowledge and expertise as professionals, so they cannot judge the quality of professionals’ work
What are the 5 core principles? Give examples of when you have complied with these.
1) Act with integrity - Identifying to my client that a draft valuation report had a mistake, then rectifying said mistake
2) Provide a high standard of service - Ensuring key lease terms and implications were clarified to tenant
3) Act in a way that promotes trust in the profession - Agreeing to a realistic timescale and sticking to it
4) Treat others with respect - Being polite and courteous
5) Take responsibility - Always acting with skill, care and diligence by reviewing works before being sent off
What steps are required to set up in practice as a chartered surveyor?
There are a number of statutory and RICS requirements.
Statutory Requirements
- Have a health and safety policy and risk assessment with regard to the H&S at Work Act
- Comply with Data Protection and GDPR regulations
- Comply with Equality Act
RICS Requirements
- Register for regulations by submitting a firm details form
- Purchase PII
- Complaints handling policy
- Client money handling procedures
- Training provisions for staff
- Comply with RoC
- Nominating a Responsible Principal
How do you deal with conflicts of interest?
To consider the RICS Professional Standard, Conflicts of Interest (2017)
Consider if the conflict can be managed through informed consent, if it can establish an appropriate information barrier. If it cannot, this would mean being unable to progress.
What would you do if a client offered to pay your fees in cash?
Consider if this would be appropriate (avoid money laundering).
Liaise with company’s CFO and seek guidance from them.
Why does the RICS have RoC?
To provide members and firms a strong foundation for members, helping to protect the public and uphold the reputation of the profession.
When was RICS founded?
1868
Who should you report acts of bribery to?
- RICS
- Serious Fraud Office
Tell me about the property ombudsman
Mediation service who review complaints.
ADR service which most estate agents and valuers use.
What is run-off cover and what are the requirements?
- Run off cover protects a client if the firm ceases trading.
- Need it for 6 years and for £1m
What is Lionheart?
RIC’s benevolent fund
What RICS guidance relates to handling client money?
RICS Professional Standard, Client Money Handling (1st Edition, 2019) and RICS Client Money Protection Schemes 2020
What is the difference between guidance notes and professional statements/standards?
- Guidance notes are best practice
- Professional statements/standards are mandatory
Can you name a professional statement/standard?
- Surveying Safely (2018)
- RICS Valuation - Global Standards
What are the 5 rules for principles of better regulation?
PACTT
- Proportionality
- Accountability
- Consistency
- Targeting
- Transparency
Please give examples of conflicts of interest
Party Conflict - Where the duty owed to one client conflicts with the duty owed to another
Personal/Own Conflict - Where the duty owed to one client conflicts with own interests
Confidential Information Conflict - Where duty to provide information to once client conflicts with duty to keep that same information confidential to another
How would you protect your client’s interests if you decided to give up practice?
- Locum appointed who can carry out the advice
- Advise client in a timely manner
- Run off cover
- Advise insurers
What would be your approach if the client wished to pay you in advance for your services?
It would depend on the payment schedule set out.
If it was earlier than what the payment schedule set out, I would advise they are not obliged to pay until the work is carried out.
How would you advise your client to give assurance as to how you were going to hold their money, so that is would be securely kept and accounted for?
In line with RICS Professional Standard Client Money Handling
- Separate accounts for client money
- Established accounting procedures and records
- Banking controls
- Regular bank reconciliations
- Never overdrawn
- Client will be able to access money immediately
What is the Bribery Act 2010?
Defines a bribe as giving someone a financial or other advantage to encourage that person to perform their functions or activities improperly.
6 steps to manage the risk of bribery:
- Proportionality
- Top level commitment
- Risk assessment
- Due diligence
- Communication
- Monitoring and review
Can you explain the process for safeguarding client’s interests in the event of death or prolonged illness of a sole trader Chartered Surveyor?
- Appropriate PII cover
- Locum - person who will stand in for you
- Ensure bank allows locum to have access to accounts
When does a firm have to register with the RICS?
RICS Regulation - Rules for the Registration of Firms (2022)
- The firm provides surveying services to the public
- The firm is operating in Regulated Area A (UK)
- At least 50% of the firms principals are RICS members
If your friend asked you for an opinion on a project he was considering carrying out, what advice would you give him?
That it would not be ethical to provide this. Instead, they would need to formally approach the company and agree an appropriate scope of service and agree to ToE
What would you advise if a client approached you and asked if you would work for them directly instead of your employer to reduce their cost?
I would decline, as this would not be ethical, as I do not have the appropriate PII in place outside my firm
I would advise them that they should approach me via my employer
Why do you want to be a Chartered Surveyor?
To have access to network of other professionals
To be recognised for the skills and competencies that I have
What laws and regulations govern the formation and working of RICS?
RICS bye-laws
What is the governing council of RICS and how are they elected?
Governing Council is RICS highest governing body, setting our global strategy and ensuring RICS fulfils its Royal Charter obligations.
It provides strategic oversight on requirements for entry into the profession, and the setting and enforcement of professional standards so that we continue to deliver confidence in the built and natural environment.
It also shapes our priorities as an influential thought leader, and provides high-level assurance on our operations as a sustainable business and professional body.
Voting is open to RICS professionals.
Letting Conflict Example - How did you identify the conflict?
Identified the conflict when a relative expressed interest in leasing the property I was marketing.
This created a personal connection that could potentially compromise my ability to act impartially in the client’s best interests.
Recognising this, I reviewed the situation, informed the client, and passed the instruction to a colleague.
Letting Conflict Example - Why did you feel it was a conflict of interest that couldn’t be managed?
I determined that the conflict couldn’t be managed impartially because of the close personal relationship with the prospective tenant.
Even with transparency, it would be difficult to maintain the objectivity and impartiality required in the marketing and negotiation process.
To uphold the RICS’ standards of honest and integrity, I felt it was best to withdraw from the instruction.
What is the ethics tree? What are the some of those questions?
- A simplified framework for ethical decision-making
- Do you have sufficient facts on the issue
- Is it legal
- Is in line with the RoC
- Have you consulted with appropriate people to make an informed decision
- If answer to any of the above is no, then do not proceed
What steps do you undertake when closing a practice?
- RICS provide guidance on their website for those considering closing down their practice, with a checklist
- Clients and others are fully informed
- The process is planned and implemented properly
Closing down checklist:
- Agree closure date
- Inform staff and clients
- Deal with client money outstanding in your client account
- Notify professional indemnity insurers and arrange run-off cover
- Make arrangements in respect of files and digital records
- Inform RICS
- Consider who else should be contacted about the closure of your practice
Who to repot fraud and anti-money laundering to?
National Crime Agency
Compliance Office
Serious Fraud Office
RICS - confidential hotline
Suspicious Activity Report
What is the role of the RICS?
- Global leading professional body promoting the highest standards in the property industry
- Gold standard of professional regulation
Can you name parts of the RICS’ governance strucutre?
- Governing council
- Privy council
- Standards & regulation board
- RICS board
How many years after an instruction has been completed can a Professional Indemnity Insurance claim be made?
15 years
When did the Bribery Act 2010 come into force?
1 July 2011
What is the name of the RICS guidance on bribery and money laundering and when is it effective from?
Professional Standard: Countering bribery and corruption, money laundering and terrorist financing
Effective 1 September 2019
When did the new RICS Rules of Conduct take effect?
1 February 2022
What would you do if you were asked to do something unethical?
- Speak to someone more senior (supervisor, line manager)
- Whistleblow if required, e.g. I would report suspected Money Laundering to the MLRO
When you take on a new client, what checks do you make?
Customer Due Diligence to identify the client and verify their identity.
If the client is a political exposed person or from a high-risk third country then you should undertake enhanced due diligence
How do you undertake a conflict of interest check?
I use my firm’s internal system/database to check the client name and address of the property against all known jobs
If your agency team sold a property, could you still value it?
Cannot value the property if you have had previous involvement which is usually defined as being within the past two years
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
Would you ever accept a gift from a client?
Must consider proportionality and timing
I would consult the Ethics Decision Tree and my firms anti-bribery policy
Would also consider RICS Professional Standard Countering Bribery, Corruption, Money Laundering and Terrorist Financing 2019
If you thought it was appropriate to accept a gift from a client, how would you proceed?
Record it on my firms Gifts and Hospitality Register
What would you do if you were suspicious of a client?
Would not make them aware so not to tip off
Would report and escalate internally to a compliance manager
How do you ensure you comply with money laundering regulations?
- Undertake due diligence checks (KYC)
- Report suspicious activity to my firms Money Laundering Reporting Officer who will then report any suspicions to the National Crime Agency
Tell me what you would do if you felt that an instruction was outside your scope of experience or knowledge?
- Decline or,
- Proceed, with client approval, under supervision of a senior colleague
- Undertake CPD to address inexperience
- Refer client to RICS Find a Surveyor
Tell me about an instance when you have handled client’s money?
Tell me about how you would handle a client complaint?
- Speak to client to understand issue and try to address
- Follow complaints handling procedure (acknowledge, respond, refer to third party)
- Notify insurers
When would you reject a gift?
If I thought it would affect my impartiality
What would you do if you were asked by a client to reduce a fee proposal to win new work?
- Refuse - fees should be market based and should not undercut other firms
- I would potentially look at reducing the scope of services
What would you do if you became suspicious that a client was involved in terrorist activities?
Report to the police
If you were to set up in practice on your own, tell me about the types of insurance you would need?
- PII
- Employers Liability Insurance
- Building and Contents Insurance?
How can you find a solicitor?
The Law Society website has a find a solicitor webpage in which you can select a specific legal issue as well as a local area and the user will be matched with solicitors operating in that area of law
What does providing a high level of service mean to you?
- Acting within your scope of competence
- Transparent and clarity over fees
- Polite, respectful and professional
- Timely responses to queries
- Good communication
What would you do if a client offered to pay you in cash for your works?
- Check firms policy, having regard to Money Laundering
- Ask them to pay the cash into an online bank account then transfer the money
- A firm should have appropriate measures to ensure that cash and cheqeues are kept safe until banked
What are the maximum levels of uninsured excess?
- Based on turnover
£10mn or less = The greater of 2.5% of the sum insured, or £10,000
£10mn + = 2.5% of the sum insured
When is VAT applicable?
Based on turnover
VAT threshold for 2024 is £90,000
What is negligence?
Breach of duty of care which results in loss
If your firm accepted cash and a client wanted to pay £8,000 in cash, what would you do?
If my firm accepts cash, I’d follow the firm’s specific anti-money laundering (AML) policy and procedures. For a large sum like £8,000, I’d ensure it’s below the statutory reporting threshold, but even then, I’d consider it a red flag under the firm’s AML policies.
I would:
- Verify the source of funds to ensure they are legitimate.
- Document all necessary identification checks on the client.
- Report the transaction to my firm’s Money Laundering Reporting Officer (MLRO) if there are any suspicions of illicit activity.
- If permitted by the MLRO, I would then process the payment, ensuring complete adherence to AML compliance.
Would you take your client to an FA Cup match?
While corporate hospitality is common, I’d assess if taking the client to an FA Cup match could influence any upcoming decisions or negotiations. If it’s purely relationship-building, complies with the firm’s hospitality policy, and doesn’t create a perception of undue influence, it may be permissible.
I’d make sure:
- The event’s value is reasonable and recorded transparently.
- I review and follow my firm’s gift and hospitality policy.
- Ultimately, I’d exercise caution to avoid any appearance of a conflict of interest or bribery.
What are the principles of the Bribery Act and money laundering regulations?
The Bribery Act 2010 enforces strict anti-bribery principles, and it applies to all individuals and organisations in the UK. The main principles include:
- Prohibition of bribery: It’s illegal to give, receive, or offer bribes in any capacity.
- Prohibition of facilitation payments: Small payments to expedite services are also considered bribery.
- Corporate liability: Companies can be held liable if employees or associates engage in bribery, even if the management is unaware.
- Adequate procedures: Firms must have adequate procedures to prevent bribery, like training and a clear anti-bribery policy.
Money laundering regulations are designed to prevent and detect illicit financial activity. Key principles include:
- Customer due diligence (CDD): Verifying clients’ identities and understanding the source of their funds.
- Suspicious Activity Reporting (SAR): Reporting any suspicious transactions to the MLRO and possibly to the National Crime Agency (NCA).
- Record-keeping: Maintaining records of due diligence and transactions for a minimum period (usually 5 years).
- Risk assessments and policies: Firms must assess their risk exposure to money laundering and ensure staff are trained to recognise red flags.
