Ethics, Rules Of Conduct And Professionalism Flashcards
Tell me about the Rules of Conduct for Members & Firms (2021)
There are five RICS Rules of Conduct, which are:
(1) Must be Honest, act with integrity and comply with personal obligations
(2) Maintain professional competency and services are provided by competent individuals
(3) Provide good quality and diligent service
(4) to treat others with Respect, and encourage diversity and inclusion
(5) act in the Public Interest, take responsibility for their actions and maintain public confidence in the profession.
These became effective from Feb 2022
Why was there a change of the Rules of Conduct?
Simpler structure, clear examples, focus on respect, diversity and inclusion.
Can you give us an example of where you have acted in line with the Rules of Conduct?
During my Case Study, I acted with integrity in that I ensured that there was no pre-existing conflict of interest that would prevent me from impartially undertaking the instruction, and I respected the confidentiality of information provided to us by the Client.
What are the mandatory professional obligations for Members?
- Comply with CPD Requirements set out by the RICS.
- Cooperate with the RICS.
- Provide all info reasonably requested by Standards and Regulation Board.
What are the mandatory obligations for RICS Regulated Firms? (8) When setting up a new practice.
- Inform RICS - Firm Detail Form
- Appoint a Responsible Officer
- Register with the RICS for regulation of firm
- Arrange PII + send details to RICS
- CHP + Complaints Log + CHP Officer
- Use Logo Kit
- Plan Succession if sole practitioner
- Ensure completion of RICS Annual Return
What tools can you utilise to help with making ethical decisions?
Use the RICS Ethics Decision Tree which provides a framework of questions which members should ask themselves when facing a situation in which they are asked to act in an unethical manner.
What is the difference between an RICS Professional Standard / Statement and a Guidance Note?
A professional Standard / Statement is mandatory and a guidance note providers users with recommendations or an approach for accepted good practice.
How can a disciplinary procedure be triggered?
By someone complaining to the RICS. A failure to follow any RICS guidance will be considered by the RICS by examining the behaviour of the member or firm. This is outlined within the RICS ‘Regulatory Decision Making’ (February 2022 and disciplinary process is outlined within ‘RICS Regulatory Tribunal Rules’ 2020.
What are the THREE levels of disciplinary action?
- Action by Head of Regulation.
- Disciplinary Panel (drawn from the independent Regulatory Tribunal)
- Appeal Panel.
What FOUR actions can the Head Of Regulation initiate upon completion?
- Serve a Fixed Penalty Notice.
- Make a Regulatory Compliance Order.
- Refer the matter to a single member of the Regulatory Tribunal for consideration.
- Refer the matter directly to a Disciplinary Panel.
If a breach of Conduct is referred to the Disciplinary hearing, what penalties can be imposed on the Breaching Party?
- Issue a consent order
- Impose an unlimited (but proportionate) fine for each breach.
- Conditions on Continued Membership of the RICS.
- Expulsion from Membership or Remove a firm.
- Require publication of the results of a hearing in Modus magazine, on the RICS website and in the local newspaper of the area where the offending firm is located.
What legislation is there regarding use of Social Media?
RICS Guidance note entitled ‘Use of Social Media’ 2021. Highlights importance of social media to members and firms. RICS may take action if a post may damage public confidence or trust in profession
When might the RICS investigate social media posts?
If it involves:
Discrimination
Dishonesty
Abusive or threatening behaviour
Bullying
What is the need for Professional Indemnity Insurance?
To protect clients, surveyors and third parties against negligence claims when there is a duty of care breached and claim for damages.
What is the difference between Informal and Formal when it comes to CPD?
Informal includes any self-managed learning that is relevant to your professional whereas Formal has clear learning objectives and outcomes.
What are the appropriate levels of turnover when it comes to PII?
£100,000 or less (turnover) = £250,000 (cover)
£100,001 to £200,000 (turnover) = £500,000 (cover)
£200,001 and above (turnover ) = £1,000,000
In accordance with RICS Requirements for Professional Indemnity Insurance (2019)
What is the RICS Document on Complaints Handling?
RICS Global Professional Standard on Conflicts Of Interest, 2017 (Effective 1 January 2018)
What is Informed Consent?
Informed Consent occurs when a party who might be adversely affected by a conflict of interest acknowledges the existence of that risk but still agrees to instruct an RICS regulated firm / member to proceed.
What is the difference between Conflict Avoidance v Conflict Management ?
Conflict Avoidance is when you do not accept the instruction.
Conflict Management is when the instruction is accepted and steps are put in place to manage the conflict.
How would your firm handle a complaint?
My firm would respond to the complaint within 7 days and would look to resolve the complaint within 28 days. If the complainant wasn’t happy with the resolution offered, they would be referred to our third party redress service. (For us it is Property Redress Scheme)
Give me some examples of Third-Party Resolution Schemes?
If complainant is not happy with review, second stage can be via use of independent redress scheme such as Centre for Dispute Resolution, Property Redress Scheme and RICS Dispute Resolution Service.
What is Dual Agency ?
Where an agent has a contractual agency relationship with both the seller and the buyer at the same time.
This practice must not be undertaken in any circumstances from 1 January 2018 by any RICS members.
What is the RICS Professional Statement on Clients Money Called?
The statement is called “Client Money Handling”, published October 2019. Effective from January 2020.
What are the Three Objectives of Handling Client Money? (3)
(1) Keep Client’s Money Safe
(2) Ensure Client accounts are used appropriately
(3) Firms to have appropriate procedures in place to ensure best practice.
What are the SIX main areas of good practice as set out in RICS Professional Standard ‘Client Money Handling’ 2019?
- Holding Client Money
- Providing information to Clients
- Receipts of Client Money
- Payments from Client accounts
- Accounting records and controls.
- Compliance.
What are the 8 Mandatory Requirements of Client Money Handling (2019)?
(1) Confirm that client’s money is to be held in a client account (including bank account details), that the firm has exclusive control over.
(2) Ensure client money account contains no other funds, and funds withdrawn in error are replaced.
(3) Not to hold office money in the account, unless it is in receipt of mixed monies
(4) All client money accounts include the word “client” in their name.
(5) Ensure money held in a client account is immediately available even at the sacrifice of interest.
(6) Only withdraw out of a high interest (penalty-bearing account) with written consent from the client.
(7) Confirm account operating conditions with bank (No set-off for other firm accounts, no mixing of funds)
(8) Ensure that when a client requests it, money is held in an account that the firm and client have access to. (Has to be an account established by the client, not the firm).
What steps must be taken upon starting a new practice? RICS Compliance? (8)
Inform RICS of new practice through a Firm Detail Form
Appoint a Responsible Principal
Register with RICS for regulation of firm
Arrange professional indemnity and send details to RICS
Set up procedures for Client Money Handling and appoint a Complaints Handling Officer
Use logo kit
Plan succession if sole practitioner.
Ensure completion of RICS Annual Return
What steps must be taken to close a practice?
Inform RICS
Ensure clients are informed at earliest convenience
Return any monies held by clients
Inform insures and procure professional indemnity insurance run off cover for a minimum of 6 years
Hold client records for 6 years.
What are the Statutory Compliance obligations for setting up a practice? (8) THINK ‘COMPLIANCE’
- Requirement to disclose business name
- Disability Discrimination Compliance
- Financial Service Compliance
- Bribery Act 2010 Compliance
- Appoint AML officer
- Estate Agency Compliance
- Register for data protection
- Inform HMRC for VAT and Tax
What is the maximum level of uninsured excess for firm turnover in the preceding year of £10m and above?
No limit.
Who chaired the Independent Review of RICS in September 2021?
Alison Levitt QC
What were the three aims of the Bichard Review?
To clarify the purpose of RICS
To make proposals on the governing structure of RICS
To make proposals for the incoming leadership and governing body on the future culture and strategy of the RICS.
What is RICS incorporated by?
Royal Charter
What councils/boards/panels make up the RICS current corporate governance structure?
Privy Council
Governing Council
Standards & Regulation Board
Regulatory Tribunal
RICS Board
Audit, Risk Assurance & Finance Committee
Nominations & Remuneration Committee
World Regional Boards
Market Advisory Panels
How many years after an instruction has been completed can a Professional Indemnity Insurance claim be made?
15 years
What type of cover would you need to cover a claim brought after a firm or member ceases to trade?
Run off cover
What are the roles of the RICS?
Global leading professional body promoting the highest standards in the property industry.
Gold standard of professional regulation.
In relation to Professional Indemnity Insurance, what is the minimum limit of indemnity for turnover under £100,000 (in the preceding year)?
£250,000
When did the Bribery Act 2010 come into force?
1 July 2011
What is the key objective of RICS?
To promote usefulness of the professional for the public advantage
What is the role of the privy council?
Grants and awards the Royal Charter
Are RICS members regulated by Government as well as RICS?
No - the profession is self-regulated. However, there are Government proposals to regulate RICS but these have not been legislated yet.
What are the functions of the RICS?
Consumer protection
Influence policy
Set standards
Accredit professionals
Quality assurance
If you are a sole practitioner, what do you need to have in place?
A locum to cover your incapacity/death.
What are potential sanctions by the RICS
Fixed Penalty Notice
Panel Hearing
Consent Order
Interim Measure
Expulsion
What is the purpose of Professional Indemnity Insurance?
To protect firms from financial loss in the event of a negligence claim and consequences to pay third party damages.
To protect clients from financial losses which the firms cannot meet.
What are requirements of the RICS in relation to Professional Indemnity Insurance?
Minimum policy wording
On a each & every claim basis/fully retroactive
Covers past and present employees
Minimum level of indemnity based on turnover
Underwritten by an approved insurer
Includes run off cover
Provides a maximum level of uninsured excess.
What does the term fully retroactive/each and every claim basis mean?
Covers claims made during the insurance cover period irrespective of when the original act occurred.
What should you do if you receive notification of a Professional Indemnity Claim?
Inform your line manager
Inform your insurer.
What is a bribe?
Exchange of something of value in return for someone doing or agreeing to do something improper in a business context.
Can you accept a gift if it is proportionate and genuinely promotes/improves your firms image in the usual course of doing business?
Yes - providing it doesn’t compromise your impartiality/integrity.
What are the 5 principles of better regulation?
Transparent
Proportional
Accountable
Consistent
Targeted
Would it be wise to accept a gift closer to the award of a key decision/tender?
No - it could be perceived as a bribe.
Does the Bribery Act 2010 apply to non-UK businesses operating in the UK?
Yes
What are the penalties for breaching the Bribery Act?
10 years imprisonment
Unlimited fine
Directors can be disqualified
EU-wide ban in relation to public procurement.
Is it a corporate criminal offence to fail to prevent bribery?
Yes
Who should you report acts of bribery to?
RICS
Serious Fraud Office
When did the RICS Conflict of Interest Professional Standard take effect from?
1 January 2018
What are the three types of conflict under the RICS guidance?
Party Conflict
Own Interest Conflict
Confidential Information Conflict
Can information barriers still be used under the RICS Conflicts of Interest Practice Standard?
Yes - if appropriate
What is dual agency/double dipping?
Acting for the buyer and seller of the same property.
How many hours of CPD do qualified members need each year?
20 hours
What is the latest Money Laundering guidance called?
Money Laundering and Terrorist Financing (Amendment) Regulations 2022
What is Customer Due Diligence in relation to money laundering?
Must carry out due diligence on both parties (leasing/letting and purchase/sale transactions) before entering into a business relationship.
What are some offences under the Proceeds of Crime Act 2022?
Concealing, disguising, converting or transferring criminal property
Acquisition, use or professional of criminal property
Becoming involved in an arrangement relating to criminal property
Disclosing/tipping off that a SAR has been submitted.
Tell me what you understand about conflicts of interest?
A conflict of interest is where someone in a position of trust has competing personal or professional interests making it difficult for them to fulfil their duties impartially.
Members and Firms have an obligation to make clients aware of any conflict of interest and if necessary must look to decline work opportunities where a conflict of interest occurs.
What are the minimum levels of indemnity / How do you determine the level of PI cover?
This depends on the firms turnover.
If turnover is £100k or less it is £250k
If turnover is £100-200k it is £500k
If turnover is above £200k it is £1m
What are the maximum levels of uninsured excess?
This depends on the firms turnover in the proceeding year.
If the turnover is £10m or less, the maximum uninsured excess is the greater of 2.5% of the sum insured or £10,000.
If the turnover exceeds £10m or above, there is no set limit.
What sort of Insurances do Chartered Surveyors need to have?
Professional Indemnity Insurance
Buildings insurance
Contents insurance
Employers Liability Insurance
Run off cover
Why did the previous rules of conduct change?
The previous rules had been in place since 2007.
Following research & consultation with members, firms and public, majority voted in favour of replacing the existing rules of conduct.
This was to provide a single document to enable greater clarity for RICS members and firms.
I also understand there is a greater focus on clearer example behaviours, understanding evolving technology and tackling climate change.
What are the main principles of the Bribery Act 2010?
Making a bribe
Receiving a bribe
Bribing a foreign public official.
Applies to all UK entities
Includes associated persons.
What are the SIX principles of Prevention of the Bribery Act?
Proportionate Procedures
Top Level Commitment
Risk Assessments
Due Diligence
Communication
Monitoring & Review.
Under the Bribery Act, under what circumstance is a facilitation payment permitted?
The only circumstance in which it is OK to make a facilitation payment is when you are under duress. I.e. there is a real and present risk or danger to ‘life, limb or liberty”
You should put safety first, make the payment and report the matter immediately.
You are attending a Main Contractor organised business conference where it is announced that you have been randomly selected as the winner of this months prize draw. It is an iPad. How would you act in this scenario?
I would be extremely uncomfortable accepting the prize in this scenario.
The prize is of significant value and could be interpreted as a bribe.
If working on a project with the main contractor at the time of the scenario, accepting the prize would be highly inappropriate.
I would respectfully decline the prize and suggest that this is made as a charitable donation to a charity of the contractors choice.
I am aware that bribes are commonly distributed as random prizes and due to the seriousness of this incident, I would report this to my line manager or director.
You receive an invite to attend the Theatre with some members of your Project Team but they dropped out to illness at the last minute, would you still attend?
In the first instance, I would declare this hospitality on my companies gifts and hospitality register.
Assuming the invite was approved and I was authorised to attend, i would need to decline the invite due to the project team dropping out since they wont be present, this will not be a genuine business event.
You are bidding for a project and the client advises that if you reduce your fee bid by £3,000 you will be first place and win the tender, how would you advise the client?
First of all this scenario has become an unfair competition.
Not treating others with respect.
Not acting with integrity
Unsustainable to undertake the business in this capacity
Devaluing the profession.
This could be interpreted as a bribe
A client takes you out for lunch after a business meeting, where they continue to discuss business. The bill for the lunch comes to £200. What should you do now?
This lunch had a legitimate business purpose, so I felt it was okay to accept the hospitality. But the client should have considered how a £200 bill for a lunch could be perceived and have chose a more modest restaurant.
Given the size of the bill, it must be declared on the Hospitality Register and I would make my line manager aware immediately afterwards.
I would offer to reciprocate but ensure this is carried out in a more modest manner.
Tell me about Merrett v Babb case law?
Court case in 2001
Babb had carried out a valuation as an employee of a company for a house purchase by Merrett.
Valuation later found to be negligent
Original company no longer existed
Court ruled Merrett could pursue Babb (as an individual) for the losses.
Big shock in the industry
What is the significance of it (Merrett v Babb)?
Considered if a professional employer was vulnerable to claims brought directly against them for advice given on behalf of their employers.
Highlights the importance of having adequate run off cover.
Professional individuals and firms must ensure that run off cover is in place after they leave their firm’s employment or a firm ceases trading.
Individuals should ensure that their ex company keeps up this cover on their behalf.
How long should run off cover be in place?
Usually 6 years if contract executed under hand.
12 years if executed as a deed.
Please explain the professional obligations of members?
Members must comply with CPD requirements (20 hrs, 10 hrs formal)
Members must cooperate with RICS
Members must promptly provide all reasonably requested information.
What are the requirments regarding PI by the RICS?
Must be made on an ‘each and every’ claim basis.
Gives min wording
Sets out minimum levels of indemnity
Sets out maximum levels of uninsured excess
Run off cover must be in place for at least 6 years
Should include cover for past and present employees, directors and partners.
What if the loss exceeds the cover provided by the PI claims?
Keep full and detailed records of meetings & conversations
Record recommendations and advice given
Use proper letters of engagement, scope of services and ToE
Use RICS guidelines
Avoid poor management and excessive workloads.
Are you familiar with the term limit of liability and where would it be used?
Limit of liability is used to place a cap on the level of expose a business signs up to
If cover is for each and every claim, it is that level for each claim
Anything not covered by PI insurance can be gone after so assets could be at risk
Companies may try and place a limit of their level of exposure.
Limit of liability is used to place a cap on the level of expose a business signs up to
If cover is for each and every claim, it is that level for each claim
Anything not covered by PI insurance can be gone after so assets could be at risk
Companies may try and place a limit of their level of exposure.
Assuming you were successful in getting chartered, how would you deal with a situation such as a friend who asks you to provide them with professional advice?
I could not offer advice on my own without PI Insurance
If I did have my own PI Insurance, I would ensure that the information given was the subject to the thorough checking process given to all information prior to issue regardless of who it was.
If I felt uncomfortable acting for them, I would direct them to use the RICS “find a surveyor scheme”
What was the Carsberg Report 2005?
This was a thorough internal and external review of the regulation of RICS.
A response to members general dissatisfaction with aspects of RICS regulation.
What are the 5 Principles of better regulation?
Proportionality
Accountability
Consistency
Targeting
Transparency
What is the purpose of the 5 principles of regulation?
The RICS is a self-regulated professional body that has a duty to the public interest.
The 5 principles set out how the RICS regulates itself internally to maintain the highest standards of professionalism and integrity in the benefit of the public interest.
Name some topics on which the RICS publishes help sheets and policy documents?
CPD
Handling client’s money
PI insurance requirements
Complaints handling procedures
Maintaining professional and ethical standards
Procurement & Tendering
Cash flow forecasting
Why does the RICS have Rules of Conduct?
To provide a framework that we can all work to and so the client knows he is getting a set level of service.
What steps would you need to take when setting up in practice?
Inform RICS
Appoint a Contact Officer
Register with RICS for Regulation
Arrange Professional Indemnity Insurance
Set up Client Account for handling Client money
Set up complaints handling procedure
Set up staff training and CPD
What steps must you take for the handling of clients money?
Clients must always have access to funds
Client money must be kept separate and clearly identifiable
Include ‘Client’ in account name
Interest on the account must be agreed with the client
Maintain client ledger or running balance of any transactions
Agree the terms and advise client on bank details
Must not be overdrawn
What is the Clients Money Protection Scheme?
Run by the RICS
Provides for any member of the public to be reimbursed their direct loss of funds
This is provided through RICS insurance policy
If a client was prepared to pay you in advance for services you were providing, how would you ensure this was dealt with?
Set up a separate client account that is properly named and clearly identifiable.
Provide the client with a statement of account
Inform and agree drawdowns
Once complete, show a final statement, ensuring everything is complete and transparent.
What sort of information do registered firms have to send the RICS annually?
Annual return and can be done online. Failure to do so leads to a fixed penalty.
Type of business and staffing
Nature of clients
Training provision
Complaints handling procedure details and records.
PI Insurance details
Whether the firm hold client’s money.
What are the RICS bye-laws?
- Applications and Definitions
- Membership and registration
- Designations
- Contributions to funds.
- Conduct
- Governing council, officers and staff
- Subordinate boards, committees and groups.
- Procedure for general meetings
- Accounts and audit
- General
What is GDPR?
General Data Protection Regulation
GDPR is designed to protect personally identifiable information (personal data)
How will GDPR affect surveying practices?
Data in valuation systems
Data in compliance systems, including accounts , book keeping, payroll and HR data.
Any working papers that support your compliance
Emails and correspondence, both internal and external
How do firms comply with GDPR?
Firms and staff must have knowledge of the data your store and process.
Firms and members must be able to provide information on how the data is used and on the rights of individuals regarding their data.
Firms and members must demonstrate that you are managing personal data in manner compliant with the regulations and be able to supply, on request, the details of the data you hold and how it has been used.
How could the conflict of interest be managed internally if two separate departments were working for the same client?
Ensure exclusivity of staff to each department
Separate communication lines into the client
Sign up to confidentiality / non disclosure agreements
Monitor the potential conflict and keep the client updated
Information Barriers
If the client was insistent that you worked for them despite an existing conflict of interest, how would you proceed?
Check the clients understanding around the conflict of interest
Make them aware of the potential for reduced impartiality
Seek a letter of instruction from the client to continue
Talk through working procedures to manage the conflict of interest
Agree this formally in writing with the client.
