Ethics, Rules of Conduct and Professionalism L1-3

Question 1

WHAT IS THE MEANING OF THE RICS MOTTO?

Answer 1

‘Est Modus in Rebus’ in Latin translates to ‘There is measure in all things’.

Question 2

WHAT IS THE MISSION STATEMENT OF RICS?

Answer 2

To qualify and equip their members to provide the highest standard of professional service.

To promote and enforce standards.

To lead solutions to the major challenges facing the built environment via professional expertise.

Question 3

WHEN WAS RICS FOUNDED?

Answer 3

Founded 1868.

Question 4

HOW IS RICS STRUCTURED?

Answer 4

Founded in 1868 with the Royal Charter being granted by the Privy Council in 1881.

RICS is self-regulated and internally monitored, not regulated by the Government or external parties.

The Bye-Laws determine how RICS is regulated.

The Governing Council manage and agree the strategy for RICS.

The Regulatory Board, Audit Committee and Management Board are beneath the Governing Council, executing the strategy set by the Governing Council.

Question 5

WHAT IS A BYE-LAW?

Answer 5

A regulation made by a company to control the actions of it’s members.

Question 6

WHAT ARE THE RICS 5 PRINCIPLES OF BETTER REGULATION?

Answer 6

PACTT:

1. Proportionality
2. Accountability
3. Consistency
4. Targeting
5. Transparency

Question 7

WHAT IS THE DIFFERENCE BETWEEN THE RICS ETHICS AND RULES?

Answer 7

Ethics are a set of moral values.

Rules of Conduct are a framework that we work to.

Question 8

HOW MANY GLOBAL PROFESSIONAL AND ETHICAL STANDARDS ARE THERE?

Answer 8

Until 1st February 2022 there were 5 Global Professional Ethics & Standards.

From 2nd February 2022 onwards the Global Professional & Ethical Standards have been consolidated with the New Rules of Conduct 2022.

Question 9

WHEN DID THE RULES OF CONDUCT CHANGE?

Answer 9

Effective from the 2nd February 2022.

Question 10

WHAT ARE THE NEW RULES OF CONDUCT?

Answer 10

Rule 1. Members and Firms must be honest, act with integrity and comply with their professional obligations, including obligations to RICS.

Rule 2. Members and Firms must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise.

Rule 3. Members and Firms must provide good quality and diligent service.

Rule 4. Members and Firms must treat others with respect and encourage diversity and inclusion.

Rule 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 the profession.

Question 11

WHY DID THE PREVIOUS RULES OF CONDUCT CHANGE?

Answer 11

The previous rules had been in place since 2007.

Following consultation with RICS Members, Firms and the general public, the majority voted in favour of replacing the existing Rules and separate Global Professional & Ethical Standards with a single document, enabling greater clarity for RICS Members & Firms.

I also understand there is a greater focus on clearer example behaviours, climate change and understanding evolving technology.

Question 11

TALK US THROUGH YOUR UNDERSTANDING OF THE RULES OF CONDUCT CHANGES?

Answer 11

The Rules of Conduct October 2021 Global Practice Statement overhauled the previous separate documents:

• Rules of Conduct for Members
• Rules of Conduct for Firms
• Global Professional & Ethical Standards

Appendix A of the Rules of Conduct now contains the professional obligations for Firms and Members.

Question 12

WHAT ARE THE ETHICAL PRINCIPLES OF THE RULES OF CONDUCT?

Answer 12

HICSRR:

Honesty

Integrity

Competence

Service

Respect

Responsibility

Question 12

WHAT ARE THE PROFESSIONAL OBLIGATIONS OF FIRMS?

Answer 12

Noted in Appendix A of the Rules of Conduct 2022:

1. Members must comply with the CPD requirements set by RICS.
2. Members must co-operate with RICS.
3. Members must promptly provide all information requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf.

Question 13

WHAT ARE THE PROFESSIONAL OBLIGATIONS OF FIRMS?

Answer 13

Noted in Appendix A of the Rules of Conduct 2022.

Members and Firms must:

1. Publish a complaints handling procedure, including an Alternative Dispute Resolution provided approved by RICS, and maintain a complaints log.
2. Ensure all previous and current work is covered by adequate and appropriate professional indemnity insurance that meets the standards approved by RICS>
3. Firms with a sole principal must make appropriate arrangements for their professional work in the event of their incapacity, death, absence or inability to work.
4. Co-operate with RICS.
5. Promptly provide all information reasonably requested by the Standards and Regulations board, or those exercising delegated authority on its behalf.
6. Display on their business literature, in accordance with the RICS published policy on designations, a designation to note they are regulated by RICS.
7. Report to RICS any matter that they are required to report under the Rules for the Registration of Firms.

Question 14

WHAT ARE THE RULES FOR THE REGISTRATION OF FIRMS?

Question 15

WHY DOES RICS HAVE RULES OF CONDUCT?

Answer 15

To provide a framework to work to so a client receives a set level of service.

Important tool for the Institution, Rules of Conduct are also a professional guide for individual RICS members.

Question 15

YOUR BROTHER IS A CHARTERED SURVEYOR, YOU FIND OUT HE IS WORKING OUTSIDE THE RICS RULES OF CONDUCT. WHAT DO YOU DO?

Answer 15

I verify the facts, confront him and remind him of his duties as a RICS member.

I inform RICS specifying my relationship to the person and any corrective action I believe should be put in place.

Question 15

IN THE CASE OF A BREACH OF A RULE OF CONDUCT, WHAT IS THE PROCEDURE?

Answer 15

A formal investigation by the Head of Regulation at RICS, however, not every shortcoming will result in proceedings.

RICS can request info / visit and inspect to investigate compliance.

Members must co-operate fully with enquiries.

Question 16

HOW CAN A DISCIPLINARY PROCEEDING BE TRIGGERED?

Answer 16

Someone complaining to RICS.

An allegation by a client or third party.

Information received or established by RICS.

Question 17

EXPLAIN THE STEPS OF THE RICS ETHICS DECISION TREE

Answer 17

Sufficient facts?

Is it legal?

Is it in line with RICS Rules of Conduct?

Have you consulted with appropriate people to make an informed decision?

Do you have clear reasoning in reaching your decision?

Would you be content for your actions to be made public, i.e. newspaper / internet?

Question 18

WHAT THREE ACTIONS CAN BE IMPOSED AT THE END OF A RULE BREACH INVESTIGATION?

Answer 18

Fixed penalty - Administrative fine by RICS.

Consent order - Written agreement between RICS and a member/firm concerning disciplinary issue on a breach of RICS rules.

Disciplinary panel - Panel held in public for more serious matters, the burden of proof is on RICS. A balance of probabilities approach is taken. RICS Bye-Laws provide enforcement power to make disciplinary and regulatory decisions.

Question 19

WHAT SORT OF BREACH WOULD EXPULSION BE SUITABLE FOR?

Answer 19

Gross, persistent, or wilful failure to comply with a RICS Rule of Conduct.

Fraud, dishonesty, conviction of a criminal offence, gross incompetence, deliberate discrimination, misappropriation of a clients money.

Question 20

WHAT PROCEDURES MUST YOU FOLLOW WHEN SETTING UP A NEW PRACTICE?

Answer 20

• Contact RICS for guidance and receive a company start up pac.
• Inform RICS and register for regulation
• Appoint a contact officer for all RICS communication
• Prepare a complaints handling procedure
• Obtain Professional Indemnity Insurance
• Abide by the Rules of Conduct for Firms
• Use the designation ‘Regulated by RICS’ on all practice material

Question 20

WOULD YOU ADVERTISE YOUR COMPANY IN THE PRESS?

Answer 20

Yes, as long as it is in a trustful and responsible manner in line with the Rules of Conduct for Firms.

Question 20

WHAT INSURANCES WOULD YOU NEED IF YOU WERE STARTING UP YOUR OWN FIRM?

Answer 20

Professional Indemnity Insurance

Employer’s Liability Insurance

Public Liability Insurance

Building Insurance of an office premises.

Question 21

WHAT INFORMATION DO REGISTERED FIRMS HAVE TO SEND TO RICS ANNUALLY?

Answer 21

‘Annual return’ carried out online, failure to do so leads to a fixed penalty. It includes:

• Type of business and staffing
• Nature of clients
• Training provision
• Complaints handling procedure and records
• PI Insurance details
• Whether the firm holds client money

Question 22

WHAT PROCESSES DO REGULATED FIRMS NEED TO PUT IN PLACE WHEN HOLDING CLIENTS MONEY?

Answer 22

Ensure security of the clients money which does not wholly belong to the company.

RICS regulated firms that operate a client account must:

• Set clear segregation of duties for employees
• A Principle oversees the client money accounting, yet Principles cannot override controls
• Competent & knowledgeable staff are to manage the account, with cover in place in case of long term absence
• Account systems and data must always be secure, but allow client access to the funds
• Client money must be kept separate and clearly identified as ‘client’ in the bank account name
• We must agree the terms and advise the client on bank details
• We must maintain client ledgers and provide a running balance, which is never overdrawn

Question 23

WHAT ARE THE DIFFERENT TYPES OF CLIENT MONEY ACCOUNTS?

Answer 23

General accounts hold money for more than one client.

Discrete accounts reference a single named client.

Question 24

WHAT IS MEANT BY THE TERM NEGLIGENCE?

Answer 24

Duty of care is owed to all clients and 3rd parties using reasonable skill & care.

If it is breached, a Negligence claim may arise resulting in damages being paid or Professional Indemnity Insurance claim.

Negligence is the failure to provide the duty of care that is owed to the client.

Question 25

TELL US ABOUT THE MERRIT V BABB CASE LAW?

Answer 25

2001 case highlights the importance of having run-off cover in place.

A surveyor was sued for a negligence claim by a former client.

The firm was no longer in existence therefore the individual surveyor was pursued for damages successfully.

This highlights the need to ensure that run-off cover is in place for all previous employees.

Question 26

WHAT LIMITATION PERIODS ARE ASSOCIATED WITH UNDERHAND AND DEED FORMS OF CONTRACT?

Answer 26

6 years when executed under hand.

12 years when executed as a deed.

Question 26

WHAT IS AN INDEPENDENT REDRESS SCHEME?

Answer 26

Consumer scheme for small issues disproportionate for court proceedings.

If the scheme favours the complainant, it is binding. If it favours the firm, the complainant can escalate to court.

RICS must specify which redress scheme they want to use, i.e. ombudsman, arbitration or adjudication.

If it relates to a large amount of money or if the complainant wishes so, they can take the matter to court.

Question 27

WHAT MUST A COMPLAINTS HANDLING PROCEDURE INCLUDE?

Answer 27

RICS provides a model form.

The process must include a redress mechanism (means remedy).

Details of the policy issued to a client with the Term’s of Business.

Must be clear, quick, transparent, impartial, free of charge at the first stage, and be investigated within 28 days.

Name and contact details of the investigating person must be stated.

All complaints, their progress and outcome must be recorded.

We must inform PI Insurers of a complaint immediately.

Must have 2 stages at minimum:

Stage 1 - Complaint considered by a senior member of the firm or complaints handling officer.

Stage 2 - If not resolved, handed to a 3rd party with authority to award redress. The complainant may be expected to contribute towards costs at this stage.

Question 28

WHAT DO YOU DO IF YOU RECEIVE A LETTER OF COMPLAINT?

Answer 28

I would acknowledge receipt and forward it to my firms complaints handling officer, as per our complaint handling procedure, providing further info as necessary.

I would also highlight the importance of informing our Professional Indemnity Insurance.

Question 28

WHAT IS THE CLIENTS MONEY PROTECTION SCHEME?

Answer 28

Money protection scheme operated by RICS.

Contains provision for any member of the public to be reimbursed when using a RICS regulated firm.

This is provided via a RICS Insurance policy.

Question 29

WHAT IS THE PURPOSE OF JOINT NAMES ON A CLIENT ACCOUNT?

Answer 29

For dual authorisation.

Question 30

WHAT ARE THE CONTINUOUS PROFESSIONAL DEVELOPMENT REQUIREMENTS?

Answer 30

Members must undertake and record lifelong learning.

Provided to RICS on request to evidence they have carried out the necessary CPD and improved their levels of professional expertise.W

Question 31

HOW MANY HOURS CPD MUST YOU DO?

Answer 31

48 hours per annum as an APC candidate.

20 hours per annum as MRICS, 10 hours of which must be formal.

Members must undertake RICS Ethics learning on a rolling 3-year period.

All CPD must be recorded via the RICS online system.

Question 32

WHAT ACTIVITIES ARE INCLUDED IN THE REQUIRED CPD LEARNING?

Answer 32

It must have a clear learning objective relevant to my role to count as CPD.

Formal CPD - Web based training, structured assessments, formal seminars, and training others requiring research and preparation.

Informal CPD - Private reading, internal CPD’s and shadowing on the job.

Question 33

WHAT TYPE OF ARTICLES DO YOU READ AS CPD?

Answer 33

My firm’s research & development team send us monthly digests of relevant press.

I read RICS Journals (Modus, Construction Journal & RICS Regional Magazine)

I also keep up to date via RICS website, Estates Gazette, Building Magazine

Question 34

WHAT RECENT ARTICLE HAVE YOU READ FROM RICS?

Answer 34

Read RICS Journals and memorise a couple.

Question 35

HOW DO YOU KEEP UP TO DATE WITH TOPICAL ISSUES WITHIN THE INDUSTRY?

Answer 35

My firm’s research & development team send us monthly digests of relevant press.

I am on the mailing list for CPD providers.

I exchange industry articles and news with colleagues during working hours.

I follow updates on the RICS website and Journals.

I undertake my own research of key topics relevant to my field.

Question 36

WHAT IS YOUR CPD STRATEGY?

Answer 36

I meet with my manager twice a year to review my career development plan and objectives.

I build my CPD strategy around these objectives, current topics and personal interest.

Candidate explains their own interest and personal objectives related…

Question 37

WHAT DOES PII STAND FOR?

Answer 37

Professional Indemnity Insurance

Question 38

WHAT IS THE PURPOSE OF PROFESSIONAL INDEMNITY INSURANCE?

Answer 38

To provide financial cover in the event a client suffers financial loss via a breach, i.e. duty of care, negligence, errors, omissions.

Question 39

WHAT BENEFITS DOES PII PROVIDE FOR A PROFESSIONAL?

Answer 39

The professional is protected from financial losses.

The firm does not have to meet the claim from their own assets and resources.

Question 40

ON WHAT BASIS IS PII UNDERWRITTEN IN THE UK?

Answer 40

On a claims made basis.

This means the insurance policy in place at the time the breach is discovered is responsible for providing the indemnity, not the policy in place when the breach was made.

Question 40

WHAT ARE THE REQUIREMENTS REGARDING PII SET BY RICS?

Answer 40

RICS sets out minimum levels of indemnity.

Claims are to be made on an ‘each and every’ claim basis.

RICS sets out maximum levels of uninsured excess.

Run-off cover must be in place for 6 years.

The cover must include cover for past and present employees, directors & partners.

Question 40

WHAT BENEFITS DOES PII PROVIDE FOR THE CLIENT?

Answer 40

They are able to recover financial losses.

Question 41

WHAT ARE THE MINIMUM LEVELS OF INDEMNITY AND MAXIMUM LEVELS OF UNINSURED EXCESS?

Answer 41

Minimum Indemnity Levels:

Firms turnover @ £100k or less, minimum indemnity @ £250k.

Firms turnover @ £101k-£200k, minimum indemnity @ £500k.

Firms turnover @ £201k +, minimum indemnity @ £1m.

Maximum Levels of Uninsured Excess:

Firms turnover £10m or less, maximum uninsured excess @ the greater of 2.5% of the sum insured, or £10k.

Firms turnover £10m or more, no maximum uninsured excess limit set.

Question 41

WHAT IS THE MEANING OF MAXIMUM LEVEL OF UNINSURED EXCESS?

Answer 41

The point of the claim that the firm must pay for itself.

The Maximum Levels of Uninsured Excess are:

Firms turnover £10m or less, maximum uninsured excess @ the greater of 2.5% of the sum insured, or £10k.

Firms turnover £10m or more, no maximum uninsured excess limit set.

Question 41

WHAT MEASURES SHOULD BE TAKEN TO AVOID PII CLAIMS?

Answer 41

Issue minutes and/or actions following meetings and conversations.

Record advice and recommendations given.

Use proper Terms of Engagement and Scope of Services when gaining instruction.

Don’t advise on queries outside of your specialism.

Use RICS Guidelines.

Avoid poor management and excessive workloads.

Question 41

IF YOU MADE A MISTAKE IN YOUR WORK, I.E. COST PLAN, WHAT WOULD YOUR INSURER EXPECT YOU TO DO?

Answer 41

To notify them and comply with procedures set out in the insurance policy.

Question 41

HOW CAN YOU LIMIT YOUR LIABILITY WHEN AGREEING TERMS OF APPOINTMENT WITH A CLIENT?

Answer 41

Run off cover must be in place.

Execution of appointment underhand provides 6 years cover only, rather than as a deed for 12 years.

Base the appointment on reasonable skill and care, not fitness for purpose (more onerous).

If a client’s request is performance based, this implies fitness for purpose.. it is advised to request a clause limiting the appointment to reasonable skill and care only.

Question 41

IF AN ESTIMATE IS INCORRECT PREPARED BY A QS, CAN THE CLIENT CLAIM DAMAGES?

Answer 41

An incorrect estimate in itself will not provide a client with the right of redress

The client must demonstrate that the QS warranted the accuracy of the estimate, or incorrect due to lack of skill and care.

It could be incorrect outside of the QS’ control, i.e. market conditions, item referred to in the Terms of Engagement & Scope of Services exclusions.

Question 42

WHAT IS REASONABLE SKILL AND CARE, AND WHAT IS FITNESS FOR PURPOSE?

Answer 42

Reasonable skill and care:

Creates a performance obligation comparable to the standard of care in negligence. It is an implied duty to exercise the level of skill and care expected of another reasonably competent member of the profession.

Fitness for Purpose:

Requires work or services to be good enough to do the job they were intended to do.

A party cannot defend against fitness for purpose as it is an obligation to deliver in line with the contract document, and cannot plead they discharged their services with reasonable skill and care.

Question 42

IF YOUR CLIENT GIVES YOU A LUMP SUM BEFORE YOUR HOLIDAY, WHAT WOULD YOU DO?

Answer 42

I would place the monies in a separately identified client account and drawdown from the account against the agreed services being provided to the client.

Question 42

YOU HAVE A VERBAL JOB AGREEMENT WITH YOUR CLIENT, WHAT DO YOU DO NEXT?

Answer 42

Follow up with a formal letter including the agreed fee, Scope of Services and Terms of Engagement.

Question 42

IF TWO MONTHS INTO A JOB, YOU REALISE THE AGREED APPOINTMENT IS UNDER FORECASTED, WOULD YOU REQUEST FURTHER FEES FROM YOUR CLIENT?

Answer 42

If project requirements, scope or value of the project have increased, it is reasonable to request a fee increase.

If the scope of works remains the same, this highlights a mistake in the fee bid. The remaining work needs to be completed at the same quality of service without requesting additional fees from the client.

Question 42

WHAT ARE THE MAIN ELEMENTS INCLUDED WITHIN A FEE PROPOSAL?

Answer 42

Scope of Services

Terms of Engagement

Exclusions

Assumptions

Question 42

TELL ME WHAT YOU UNDERSTAND ABOUT CONFLICTS OF INTEREST?

Answer 42

A conflict of interest is where someone in a position of trust has competing personal and professional interests, making it difficult to act impartially.

An existing relationship will reduce impartiality, Chartered Surveyors have an obligation to declare this to clients and if necessary, decline work opportunities where a conflict of interest occurs.

Question 42

HOW COULD A CONFLICT OF INTEREST BE RESOLVED IF TWO SEPARATE DEPARTMENTS ARE WORKING FOR THE SAME CLIENT?

Answer 42

I would put procedures in place to ensure exclusivity of staff, avoiding crossover between the departments.

Ensure separate communication lines to the client.

Separate geographical locations with secure office and data storage.

If necessary, non-disclosure agreements could be signed.

Ongoing monitoring of the potential conflict and keep the client updated.

Question 42

IF A CLIENT INSISTED YOU WORKED FOR THEM DESPITE A CONFLICT OF INTEREST, HOW WOULD YOU PROCEED?

Answer 42

I would check my clients understanding of the conflict of interest and potential for reduced impartiality.

If they remained insistent, I would gain a formal letter of instruction to continue.

Following agreement, I would set procedures in place to manage the conflict of interest with the client and teams involved.

Question 42

WHAT ARE THE MAIN PRINCIPLES OF THE BRIBERY ACT?

Answer 42

The offences are:

• Making a bribe
• Receiving a bribe
• Bribery of a foreign public official
• Failure of a corporate entity to prevent bribery on its behalf

The legislation applies to all UK companies and includes associated Persons, i.e. sub-consultants, external advisors.

There are six principles of prevention companies should put in place:

1. Proportionate procedures
2. Top level commitment
3. Risk assessments
4. Due diligence
5. Communication
6. Monitoring & review

Question 42

WHAT BRIBERY PRINCIPLES SHOULD A COMPANY PUT IN PLACE FOR PREVENTION?

Answer 42

There are six principles of prevention companies should put in place:

1. Proportionate procedures
2. Top level commitment
3. Risk assessments
4. Due diligence
5. Communication
6. Monitoring & review

Question 42

UNDER THE BRIBERY ACT, UNDER WHAT CIRCUMSTANCE IS A FACILITATION PAYMENT PERMITTED?

Answer 42

The only circumstance to make a facilitation payment is when you are under duress.

For example, if there is a real and present risk or danger to ‘life, limb or liberty’.

If you or your companion are under immediate physical threat.

Safety first, make the payment, report the matter immediately to your manager or ethics compliance contact.

Question 42

YOU ATTEND A MAIN CONTRACTOR BUSINESS CONFERENCE AND RECEIEVE THE PRIZE OF AN IPAD AIR, HOW WOULD YOU ACT IN THIS SCENARIO?

Answer 42

I would be extremely uncomfortable accepting the prize in this scenario, the prize being of significant value and could be interpreted as a bribe.

If working with the Contractor at the time, this could be seen to impair my impartial judgement.

I would respectfully decline the prize and suggest it is made a charitable donation to a charity of the Contractor’s choice.

I am aware bribes are commonly distributed as prizes and due to the seriousness of the incident, I would report it to my line manager.

Question 42

YOU RECEIVE AN INVITE TO ATTEND THE THEATRE WITH YOUR PROJECT TEAM BUT THEY DROPPED OUT DUE TO ILLNESS LAST MINUTE, WOULD YOU STILL ATTEND?

Answer 42

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 decline the invite due to the Project Team dropping out.

Since they will not be present, this will not be a genuine business event.

Consequently, I would decline the hospitality at the Project Teams expense.

Question 42

YOU ARE INVITED TO A FINE DINING LUNCH WITH A CONTRACTOR JUST BEFORE THEY SUBMIT A TENDER PROPOSAL, HOW WOULD YOU RESPOND?

Answer 42

Going for an expensive lunch paid for by a bidder during a tender process is against Company Policy and is an offence under the UK Bribery Act.

If this were the first time, it would be sufficient to politely decline and explain it is inappropriate.

If the supplier is persistent, this is a red flag that the bidder wants to discuss things he cannot put in writing, so should be reported as an infringement.