Ethics, Rules of Conduct and Professionalism (Level 3)

Question 1

What is the meaning of the RICS moto?

Answer 1

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

Question 2

What is the Mission Statement of the RICS?

Answer 2

• To qualify and equip their members to offer the highest standards of professional service.
• To promote and enforce standards
• To lead solutions to the major challenges facing the built environment through professional expertise.

Question 3

When was the RICS founded?

Answer 3

1868

Question 4

How is the RICS Structured?

Answer 4

Privy Council - grants and awards royal charter

Governing Council - manage and agree strategy

Regulatory Board, Audit Committee, Management Board - execute the strategy

Self regulated - no government intervention

By Laws - determine how RICS is regulated

Question 5

What are the RICS’ 5 principles of better regulation?

Answer 5

• Proportionality.
• Accountability.
• Consistency.
• Targeting.
• Transparency.

Question 6

What is the difference between RICS ethics and rules?

Answer 6

Ethics are a set of moral values

Rules of conduct are a framework we work to

Question 7

What are the New Rules of Conduct?

And when did they change from the Global Professional & Ethical Standards?

Answer 7

They changed in 2022 to…

• 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 8

What are the changes to the rules of conduct?

Answer 8

• The Rules of Conduct October 2021 Global Practice Statement will overhaul the previous separate
documents:
o Rules of conduct for Members.
o Rules of Conduct for Firms.
o Global Professional and Ethical Standards.
• Appendix A of the Rules of Conduct now contains the professional obligations of Members and
Firms.

Question 9

Why did the previous Rules of Conduct change?

Answer 9

• To replace the existing Rules of Conduct and separate Global Professional and Ethical Standards.
• This was to provide a single document to enable greater clarity for RICS members and firms.
• I also understand there is now a greater focus on clearer example behaviors, understanding evolving technology and tackling climate change.

Question 10

What are the professional obligations of members?

Answer 10

• 1. Members must comply with the CPD requirements set by the 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 its behalf.

Question 11

What are the professional obligations of firms?

Answer 11

• 1. Firms must publish a complaints-handling procedure, which includes an 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 and appropriate professional indemnity cover that meets the standards approved by RICS.
• 3. Firms with a sole principal must make appropriate arrangements for their professional work to continue in the event of their incapacity, death, absence from or inability to work.
• 4. Firms must cooperate with RICS.
• 5. Firms must promptly provide all information reasonably requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf.
• 6. Firms must display on their business literature, in accordance with RICS’ published policy on designations, a designation to denote that they are regulated by RICS.
• 7. Firms must report to RICS any matter that they are required to report under the Rules for the Registration of Firms

Question 12

Why does the RICS have Rules of Conduct?

Answer 12

• To provide a framework that we can all work to and so the client knows he is getting a set level of service.
• As well as being an important tool for the Institution, the Rules of Conduct are also a useful professional guide for individual institution members

Question 13

Your brother-in-law is a chartered surveyor. You find out that he is working outside the RICS Rules of Conduct. What do you do?

Answer 13

• I verify the facts and confront him reminding him of his duties as a member of the RICS.
• I inform the RICS specifying my relationship to the person and any corrective action which I believe my brother-in-law is committed to put in place

Question 14

In the case of a breach of a rule of conduct what is the procedure?

Answer 14

• Not every shortcoming will necessarily give rise to proceedings.
• A formal investigation by the Head of Regulation of the RICS is the first step in the process.
• The RICS can request information and/or visit and inspect to investigate compliance.
• Members must cooperate fully with all enquiries

Question 15

In the case of a breach of a rule of conduct what is the procedure?

Answer 15

• Not every shortcoming will necessarily give rise to proceedings.
• A formal investigation by the Head of Regulation of the RICS is the first step in the process.
• The RICS can request information and/or visit and inspect to investigate compliance.
• Members must cooperate fully with all enquiries

Question 16

How can a disciplinary proceeding be triggered?

Answer 16

• Someone complaining to the RICS.
• An allegation by a client or third party.
• Information received or established by the RICS

Question 17

What three actions can be imposed after the end of the investigation stage?

Answer 17

Fixed penalty
Consent order
Disciplinary panel

Question 18

What are fixed penalties?

Answer 18

A fine by the RICS

Question 19

What are consent orders?

Answer 19

• It is a written agreement between the RICS and a member or firm concerning a disciplinary issue on a breach of the RICS rules.
• It can require the member to take certain corrective actions, or restrain them from taking certain actions for a specified period of time and may require them to pay a fine or costs

Question 20

What sort of breaches would expulsion be suitable for?

Answer 20

• Gross, persistent or willful failure to comply with an RICS rule of conduct.
• Fraud, dishonesty, conviction of a serious criminal offence, gross incompetence, deliberate discrimination, misappropriation of a client’s money

Question 21

What procedures must you follow if you are starting up a new practice?

Answer 21

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

Question 22

Would you advertise your new company in the press?

Answer 22

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

Question 23

What insurances would you need if you were starting up your own firm?

Answer 23

• Professional Indemnity Insurance.
• Employer’s Liability.
• Public Liability.
• Building’s insurance of an office premises

Question 24

What sort of information do registered firms have to send to the RICS annually?

Answer 24

It is called annual return and carried out on-line.

Failure to do so leads to a fixed penalty.

It includes:
- Type of business and staffing.
- Nature of clients.
- Training provision.
- Complaints handling procedures details and records.
- PI insurance details.
- Whether the firm holds clients’ money

Question 25

What processes do regulated firms need to put in place when handling Clients’ Money?

Answer 25

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

RICS regulated firms that operate a client account must:
- Set clear segregation of duties for employees.
- A Principal oversees the client money accounting functions.
- Principles cannot override controls.
- Competent and knowledgeable staff are to process clients’ money with cover provided for long term absence.
- Accounting systems and data must be secure.
- Client money must be kept separate and clearly identifiable with the word ‘client’ included in the bank account name.
- Clients must always have access to funds.
- We must agree the terms and advise the client on bank details.
- The account must not be overdrawn.
- We must maintain client ledgers and provide a running balance.

Question 26

What are the different types of client money accounts?

Answer 26

• General accounts hold money for more than one client.
• Discrete accounts reference a single named client.

Question 27

What is meant by the term Negligence?

Answer 27

• A duty of care is owed to all clients and 3rd parties using reasonable skill and care

• If it is breached due to Negligence a claim may arise resulting in damages being paid or a Professional Indemnity Insurance claim

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

Question 28

Tell us about the Merrit V Babb case law?

Answer 28

• This case dates back to 2001 and highlights the importance of having run-off cover in place.
• A surveyor was sued for negligence by a former client.
• Because the surveying firm was no longer in existence therefore the individual surveyor was pursued for damages successfully.
• This caused a big shock in the industry and highlighted the need to ensure that run-off cover is in place for all previous employees

Question 29

What limitation periods are associated with underhand and deed forms of contract?

Answer 29

• 6 years when executed under hand.
• 12 years when executed as a deed.

Question 30

What must a complaints handling procedure include?

Answer 30

• The RICS provides a model form.

• The process must include a redress mechanism.

• Details of the policy should be issued to the client with the Terms of Business.

• It must be clear, quick, transparent and impartial and free of charge within the first stage.

• Names and contact details of the nominated investigating person must be stated.

• The complaint must be investigated within 28 days.

• All complaints, their progress and outcomes must be recorded.

• We must note the need to advise PI insurers of a complaint immediately.

• The process must have two stages as a minimum:
- Stage 1 is where there needs to be consideration of the complaint by a senior member of the firm or the complaints handling officer.
- Stage 2 if the issue is not resolved, the complaint is referred to an independent third party with the authority to award redress. The complainant may be expected to contribute towards costs
at this stage

Question 31

What is an independent redress scheme?

Answer 31

• It is a consumer scheme designed to handle small issues that would be disproportionally expensive to take to court.
• If the scheme judges in favour of the complainant, it is binding.
• If it judges in favour of the firm, the complainant can escalate the matter to court.
• RICS firms must specify which redress scheme they want to use, it could be an ombudsman,
arbitration or sometimes adjudication.
• If the complaint relates to a large amount of money or if the complainant wishes so, he can take the matter to court

Question 32

What do you do if you receive a letter of complaint?

Answer 32

• I would acknowledge receipt and I would forward it to my firms designated complaint handler, as per our complaint handling procedure, providing additional information as required.

• I would also highlight the importance of informing our Professional Indemnity insurance providers immediately

Question 33

What is the ‘Clients’ Money Protection Scheme’?

Answer 33

• This is a money protection scheme operated by the RICS.
• It contains provision for any member of the public to be reimbursed their direct loss of funds when using an RICS regulated firm.
• This is provided through an RICS insurance policy

Question 34

What is the purpose of the joint names on a client account?

Answer 34

For the purpose of dual authorisation

Question 35

What is the purpose of Professional Indemnity Insurance?

Answer 35

To provide 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 36

What benefits does PII provide for the professional?

Answer 36

The professional is protected from financial losses

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

Question 37

What benefits does PII provide for the client?

Answer 37

They are able to recover from their financial losses

Question 38

On what basis is PII underwritten in the UK?

Answer 38

On a claims made basis

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

Question 39

What are the requirements regarding Professional Indemnity Insurance set by the RICS?

Answer 39

• The policy cover must be made on an ‘each and every’ claim basis.

• The RICS sets out the minimum levels of indemnity.

• The RICS sets out the maximum levels of uninsured excess.

• Run off cover must be in place for at least 6 years.

• The policy should include cover for past and present employees, directors and partners

Question 40

What are the new RICS minimum levels of indemnity and Maximum levels of uninsured excess?

Answer 40

Minimum indemnity levels:

Turnover up to £100k - £250k cover
Turnover £100-200k - £500k cover
Turnover over £200k - £1m cover

Maximum Levels of uninsured excess:

Firm turnover in the preceding year £10m or less - The greater of 2.5% of the sum insured or £10k

Firm turnover in the preceding year over £10m - No limit

Question 41

What measures should be taken to try and avoid PI claims?

Answer 41

• Keep full and detailed records of meetings and conversations.
• Record recommendations and advice given.
• Use proper letters of engagement, scope of services and terms of engagement.
• Don’t advise on a specialism outside your field of experience.
• Use RICS guidelines.
• Avoid poor management and excessive workloads

Question 42

If you made a mistake in your cost plan what would your insurance company expect?

Answer 42

For you to notify them and comply with any conditions & procedures set out in the insurance policy.

Question 43

If an estimate prepared by a QS is incorrect can the client claim damages?

Answer 43

• An estimate that is incorrect in itself will not provide the client with a right of redress.
• The client must demonstrate that the QS warranted the accuracy of the estimate or that it was incorrect due to a lack of reasonable skill and care.
• It could have been incorrect due to reasons outside their control for example market conditions or an item referred to in their exclusions

Question 44

How can you limit your liability when agreeing terms of appointment with a client?

Answer 44

• Base the appointment on reasonable care and skill rather than fitness for purpose which is more onerous.
• If the client’s requirements are performance based, this may imply fitness for purpose. It is advisable to request a clause limiting the appointment to reasonable skill and care only.
• Run off cover must be in place.
• Execution of the appointment under hand will result in a reduced liability period of 6 years instead of 12

Question 45

What are the main elements included within a fee proposal?

Answer 45

• Terms and conditions.
• Scope of services.
• Exclusions.
• Assumptions.

Question 46

Who is the president of the RICS?

Answer 46

Tina Paillet

Question 47

Why do you want to be part of the RICS?

Answer 47

An RICS qualification is a global benchmark for integrity and professionalism, recognised and valued by clients and governments around the world.

Question 48

Which RICS documents are Mandatory and which are good practice?

Answer 48

Mandatory:
- RICS Practice Statement
- RICS Code of Practice

Good Practice:
- RICS guidance notes
- RICS information paper

Question 49

What suits of contact are you aware of?

Answer 49

• JCT
• NEC
• PPC
• FIDIC

Question 50

What are the main features of the Bribery Act 2010?

Answer 50

Offences:
- Making a bribe
- Receiving a bribe
- Bribery of a foreign public official

Applies to all UK entities
Includes associated persons

6 principles of prevention:
- Proportionate procedures
- Top level commitment
- Risk assessment
- Due diligence
- Communication
- Monitoring and review

Question 51

Under the bribery act, under what circumstance is a facilitation payment permitted?

Answer 51

The only circumstance in which it is OK to make a facilitation payment is if you are under duress

I.e. if there is a real and present risk or danger to “life, limb or liberty”

If you or your companions are under immediate physical threat

Question 52

You are bidding for a project and the client advises you that if you reduce your fee by £3,000 you will win the job. What would you advise them?

Answer 52

• It’s unfair competition
• Not treating others with respect
• Not acting with integrity
• Unable to undertake business in this manner
• Avoid Dutch auctions as it devalues the profession
• Reduced scope of services, would a high standard of service still be achieved
• Could be interpreted as a bribe

Question 53

What was the Carsberg report 2005?

Answer 53

A thorough internal and external review of the regulation of the RICS.

Response to members general dissatisfaction of aspects of the RICS

Question 54

What were some of the key recommendations of the Carsberg report?

Answer 54

• A conduct board should be introduced to operate disciplinary structures
• The RICS should regulate firms as well as members
• A review of existing CPD requirements

Question 55

What were some of the key recommendations of the Carsberg report?

Answer 55

• A conduct board should be introduced to operate disciplinary structures
• The RICS should regulate firms as well as members
• A review of existing CPD requirements