Ethics, Rules of Conduct and Professionalism Flashcards
What are the five rules of conduct?
- Be honest, act with integrity and comply with their professional obligations, including obligations to RICS.
- Maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise.
- Must provide good-quality and diligent service.
- Must treat others with respect and encourage diversity and inclusion.
- Act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence.
Provide an example where you have acted in accordance with Rule 1?
Not changing a valuation for a client without market evidence.
Provide an example where you have acted in accordance with Rule 2?
Identify limitation in my ability to complete an instruction. Thereby referring instruction onto someone who was more competent.
Provide an example where you have acted in accordance with Rule 3?
Valuation - Establishing my clients needs at the outset of the instruction, producing work in a timely fashion and ensuring regular communication to ensure alignment with their expectations.
Provide an example where you have acted in accordance with Rule 4?
Delivery of work experience programme at KFIM.
Provide an example where you have acted in accordance with Rule 5?
Work in alignment with RICS / statutory regulations
When was the RICS founded and when did it receive its Royal Charter?
Founded in 1868 and Royal Charter 1881
What is meant by Royal Charter?
Gives an Industry power to self-govern and self-regulation.
Important changes of the constitution must be ratified by the king via the government via the privy council
Who is the CEO of the RICS?
Justin Young
Who is the President of the RICS?
Tina Paillet
What are the different levels of membership?
FRICS
MRICS
AssocRICS
Trainee/Student
What is the RICS governance structure?
Governing Council at the Top
Management and Regulatory Boards
Sub divisional representatives for each service line/ Group panels
What is the role of the RICS?
Promotes the following:
- High Standards of Education
- Protects customers through regulation
- To act as the leading source of information
What are the five benefits of being a member?
Status – Professional Credentials
Recognition – Governments and Markets
Knowledge - CPD
Market Advantage – RICS status
Network – Other Members
What are the benefits of being a registered firm?
Confidence – Client Confidence
Professionalism
Security – CHP and PII
When does a firm need to be regulated?
- Firm provides surveying services to the public.
- At least 50% of the firms principles are RICS members.
When is a firm eligible to register?
- Firm provides surveying services to the public.
- At least 25% of the Firm’s Principals are RICS members.
What do the rules for the regulation of firms 2022 state?
50% of firm principles = must be regulated
Each firm must have a Responsible Principal
What is a Responsible Principle?
Sole practitioner, directors, partners etc i.e. someone who can act without supervision of a firm.
What are the mandatory professional obligations for members?
Appendix A of RoC – Professional Obligations
Members Must:
- Comply with CPD requirements.
- Cooperate with RICS
- Promptly provide all information reasonably requested by Standards and Regulation Board.
What are the mandatory professional obligations for firms?
Appendix A of RoC – Professional Obligations
Firms Must:
- Publish Complaints Handling, including details on the Alternative Dispute Resolution (ADR) provider and complaints log.
- PII cover on all previous and current professional work.
- If sole, make succession plans
- Cooperate with RICS
- Promptly provide information requested
- Display a designation to note they are RICS regulated
Who made the Rules for the registration of firms (2022)?
Standards and Regulation Board - In accordance with Bye-laws.
What can you use to help in decision making?
Ethics Decision Tree
-Encourages considering the legality of one’s actions and their consistency with the Rules of Conduct.
-Ultimate test is whether the member would want their actions made public or not.
Why were the RoCs updated?
- Simpler structure
- Clearer examples – 12 case studies
- Focusing on diversity and respect
- Understanding evolving tech
- Tackling global issues
What would you do if you heard a colleague being racist?
Context i.e. social event or client event.
-Address it on a one to one basis next day if social.
-Client meeting: pause meeting and address specifically with the individual.
- Would raise with my and their line manager and follow formal internal process with HR supervision.
What would you do if a member of your team did agree to change the valuation?
Confront colleague: confirm if valid adjustment.
If not, breach of ROC1; inform line manager and could be escalated to best practice and/or compliance officer & HR department.
Who in the RICS regulates the surveying profession?
Standards and Regulatory board
What are the three levels of disciplinary action?
- Action by Head of Regulation (RICS)
- Disciplinary Panel
- Appeal Panel
Can you outline the step by step process involved in the disciplinary process?
Initial Investigation State - Formal Investigation in which Head of Regulations can initiate one of following actions upon completion of investigation:
- Serve Fixed Penalty Notice
- Make Regulatory Compliance Order
- Refer matter to single member of the Regulatory Tribunal
- Action by a Disciplinary Panel
What is a Fixed Penalty Notice?
Administrative fine and or caution issued by RICS when a regulated member breaches the Rules.
Relates to supply of information to RICS by firms and members (CPD)
What is a Regulatory Compliance Order?
Agreement between RICS and Regulated Member that they are liable for disciplinary action due to minor breach of rules.
Member may be required to pay fine or stops taking certain actions within a specified period of time.
What does Action by Disciplinary Panel entail?
Procedure used for serious breaches
Head of Regulation can consider that a hearing is required
Lay members (non-RICS members) sit on panel
Penalties available include:
- Issue Regulatory Compliance Order
- Reprimand
- Fine
- Impose unlimited fine per breach (must be proportionate to the offence).
- Impose conditions relating to future RICS registration
- Expulsion from membership or remove a firm
- Require publication of the results of the hearing in RICS Modus magazine.
Can you outline what is available to members in relation to social media?
Use of Social Media: Guidance for RICS Members, 2021
When would the RICS become involved in a social media post?
If it was discriminatory, bullying or threatening to a firm or individual = disciplinary action
Posts can be critical of people or institutions; as long a language and context are professional and appropriate, RICS will not get involved
How do you determine a fee?
Market based and agreed on ad hoc basis:
Valuation Work - set fee based on the scope of works (desktop vs. inspection; time frame etc.)
Agency Work - This is a fee which is proportionate to the values achieved, considering the scope of works.
Don’t undercut competitors
What are the rules surrounding fees?
Firms should NOT:
- Fee fix
- Collude with competitors
- Aggressively fee cut
- Undercutting another firm
Firms can:
- Have healthy competition
- Can enter fee negotiations provided it doesn’t limit standard of service
- Be transparent for all re referral fees (needs to be stated in ToE).
If you were working on a fixed fee basis, how would you determine the fee?
Market based, and based on the scope of work and historical evidence of similar instructions
what are the three steps required to follow when deciding to draft ToE?
C - I - T
Confirm COMPETENCE
Confirm no conflicts of INTEREST
Confirm TERMS OF ENGAGEMENT in writing before starting work on the instruction.
What legal requirements are required when drafting ToE for agency work?
Compliance with Section 18 of the Estate Agency Act (1979)
Money Laundering Regulations 2017 (CDD checks, proof of funds, identity checks)
When may is it appropriate to decline an instruction?
Not competent (lack of experience)
Lack of sufficient facts
Client won’t sign ToE or complete AML
Conflict of Interest
PII cap not agreed
Client is on sanctions list
What is a conflict of interest?
Situation whereby a member or firms independence or objectivity is threatened due to existence of a competing interest
What would you do if your family member was a chartered surveyor and you saw them breaching the rules of conduct?
Follow the same procedures as normal:
- Confront them
- Take further action if not resolved, HR, report to RICS.
What is the point of the Rules of Conduct?
Provides a structure for making ethical decisions about how to behave as a professional.
Tell me about a time you failed to adhere to the Rules of Conduct?
I seek to uphold the RoC in everything I do.
What is the difference between ethics and rules?
Ethics - are innate or learnt values.
Rules - are instructions or principles which set out actions.
What client money handling procedures are you aware of?
RICS Professional Standard Client Money Handling (2019)
- Client accounts must be kept separate
- Accounts kept in credit
- Held in account which includes the word ‘client’ (written in full) and the name of the the firm in the title of the account.
- Ensure money is immediately available even at sacrifice of interest
- Interest pre-agreed
- All firms handling client money need to display their procedure document on their website.
- Annual audit
What happens if a firm loses client’s money and can’t pay it back?
RICS Client Money Protection Scheme
How often is client money reviewed?
I have no personal experience of this:
- Expenditure records check monthly
- Subject to annual audit by certified accountant
Can you outline some of the recommendations as a result of Bichard’s review?
- Renewed interest in the public
- Greater independence of regulatory functions
- Increased focus on diversity and inclusion
- Renewed focus on younger members
- Independent review every 5 years
- Clearer governance structure
- Showing greater leadership in current issues eg sustainability.
What is the role of the Governing Council?
Highest governing body, setting our global strategy and ensuring RICS fulfils its Royal Charter obligations
How would you determine your level of PII if you were a new business?
Estimate the turnover and adjust in due course accordingly.
What are the maximum levels of uninsured excess?
Turnover:
Up to £10m - Great of 2.5% sum insured or £10k
Over £10m - No set limit
What is required for a firm who has ceased trading?
Adequate and Appropriate Run off Cover:
Consumer Claims - £1m over minimum of six years
Commercial claims - No set minimum for six years
Is PII need for pro-bono (unpaid) work?
Yes - can still be negligent
What is available firms who cannot arrange cover?
RICS Run-off pool
What are your firm’s liability caps?
Case by case basis
General rule: 50 times fee or £1m, whichever is higher.
What types of conflict of interest are there?
Party Conflict
Own Interest Conflict (Personal)
Confidential Information Conflict
What is a Party Conflict?
Duty of member to act in interest of one client on an instruction conflicts with duty owed to another party.
i.e Agency instruction - acting for more than one party on transaction.
What is an Own Interest Conflict?
Situation in which duty to act in interests of a client during an instruction conflicts with the interests of that same RICS member or firm.
What is a Confidential Information Conflict?
When duty of RICS member/firm to provide information to one client conflicts with duty to another client to keep that information confidential.
Give an example of a Party Conflict
Disposing of asset for Client A and a Client B (potential buyer) requests planning advice on the same property.
Give an example of an Own Interest conflict?
Recommending friends building surveying firm to tenant.
Give an example of a Confidential Information Conflict?
Provided Confidential Information from transaction done with Client A and used as comparable for Client B
What Professional Guidance is available for Conflicts of Interest?
RICS Global Professional Standard on Conflicts of Interest, 2017
DO NOT ACCEPT IF THERE IS A COI, UNLESS INFORMED CONSENT IS PROVIDED
What is the difference between Conflict Management and Conflict Avoidance
Management = Information Barriers in place - proceed with instruction.
Avoidance = Decline the instruction.
What is informed consent?
Party affected by COI provides WRITTEN approval to carry out the work
Process explained transparently
Could you sell a property for a client which you firms valuation team had valued 18 months ago?
What other guidance is relevant for agent conflicts of interest?
RICS Professional Statement: Conflicts of Interest – UK Commercial property market investment agency, 2017
Relatedly solely to investment agency work.
Are you allow to have a contractual agreement with both the seller and the buyer at the same time?
No dual agency NOT ALLOWED
What is incremental advice?
Advice (i.e planning, valuation, building surveying) related to a purchase or disposal that is incremental to an existing instruction to advise the buyer or seller.
Is Incremental advice allowed?
Set out in RICS Professional Statement: Conflicts of Interest – UK Commercial property market investment agency, 2017
Yes - can be provided on the condition:
- Informed consent is granted.
- Information barriers are put in place between the teams dealing with the existing instruction.
- Client must be notified before incremental advice is provided to prospective buyer.
What is required if you are acting for a connected person?
Personal interest MUST NOT interfere with or influence your professional judgement.
FULL transparency is required
Declare facts promptly and in writing prior to accepting the instruction.
(Section 21 - Estate Agents Act 1979)
What RICS guidance is their on confidentiality?
RICS bye-Law - client confidentiality must be maintained
- Old files held for min. 6 years
- Do not share confidential information
- Client to be made aware of any errors
Who is your firm’s compliance officer?
David Love
