Ethics, Rules of Conduct and Professionalism: RICS Requirements

Question 1

What is your understanding of the background to the RICS?

Answer 1

Founded in 1868, has a royal charter, has over 140,000 qualified and trainee members

Question 2

What does the RICS royal charter mean?

Answer 2

A royal charter is a formal document issued by the King, granting a right or power to an individual or a corporate body. It defines its objectives, constitution and powers to govern its own affairs.
The royal charter requires the RICS to “promote the usefulness of the profession for the public advantage in the UK and in other parts of the world.”

Question 3

Why do you want to become a member of the RICS?

Answer 3

Status – It provides confidence to both employers and clients that I am of a reputable standard within the industry

Knowledge and Progression – Allows me to continue my development with the access to the RICS CPD offerings and training

Maintaining Professional Standards – Ensures I am up to date with the RICS’s and the industry’s latest regulations and requirements
Network – Opportunity to network with other industry professionals

Question 4

What are the four levels of membership to the RICS?

Answer 4

FRICS
MRICS
AssocRICS
Trainee/Student

Question 5

What are the requirements to become a Fellow of the RICS

Answer 5

Evidence of achievement of four fellowship characteristics (includes five or more years at MRICS, a leadership role, professional/technical achievement, academic achievement and raising the profile of the RICS)
Also need a portfolio of professional achievement to support the application

Question 6

Who is the current RICS president

Answer 6

Tina Paillet

Question 7

What are the three main roles of the RICS?

Answer 7

1. To maintain the highest standards of education and training.
2. To protect consumers through strict regulation of professional standards
3. To be the leading source of information and independent advice on land, property, construction and associated environmental issues
   N.B. can also mention that the RICS promotes and enforces the highest professional qualifications and standards in the development and management of land, real estate, construction and infrastructure.

Question 8

Give a brief overview of the current governance structure of the RICS

Answer 8

The Governing Council, chaired by the President, runs the RICS, providing management and strategic direction. The Standards and Regulation Board and the Management Board report to the Governing Council.

Question 9

Who is the current CEO of the RICS/

Answer 9

Justin Young

Question 10

Why was the Bichard Review commissioned?

Answer 10

In response to the internal governance failings highlighted by the Levitt review

Question 11

What were the key aims of the Bichard review (2022)?

Answer 11

Clarify the purpose of the RICS, including its responsibility to act for the public advantage
Make recommendations on its governing structure to deliver that purpose
provide proposals for the incoming leadership and governing body on the future culture and strategy of the Institution

Question 12

Discuss some of the key recommendations of the Bichard Review

Answer 12

Renewed and increased focus on the public interest remit of the RICS, including amending the Royal Charter and creating a public interest panel to advise the Governing Council.
Maintaining self-regulation through greater independence for regulatory functions
Increased focus on diversity and inclusion across the profession and within RICS governance
Empowering and enabling members through greater support for regional boards, alongside increased member engagement, with renewed focus on younger members
Undertaking an independent review of RICS’ governance and effectiveness at delivering against its Charter for the public advantage once every five years.
A new simplified, clear, accountable governance structure
Showing greater leadership on issues that matter most to society, including sustainability and climate change

Question 13

What is your knowledge of the RICS’ Five Future Foundations?

Answer 13

These were published following the publication of the Bichard review and focus on five key areas:
1. Vision - a natural and built environment that is sustainable, resilient and inclusive for all.
2. Mission - inspire members; advance knowledge; uphold standards
3. Strategic goals - lead an influence on sustainability; attract a diverse next generation; strengthen trust in the profession; enhance member value and engagement
4. Values - professional; collaborative; inclusive; ambitious
5. A world class organisation - an efficient, effective and inspiring professional body that is easy to do business with

Question 14

When is a firm required to register for regulation by the RICS and why is this the case?

Answer 14

1. the firm provides surveying services to the public
2. the firm is operating in the UK
3. at least 50% of the firm’s principals are RICS members
   This is to ensure there is a recognised quality benchmark for all firms, providing a gold standard of quality control for clients.

Question 15

When is a firm eligible to register for regulation by the rics?

Answer 15

• the firm provides surveying services to the public and
• at least 25% of the firm’s principals are RICS members

Question 16

Who is a responsible principal?

Answer 16

The person nominated by each regulated firm to ensure all reasonable steps are taken and systems are in place to ensure compliance with regulatory and RICS requirements, including reporting to the RICS as required.

Question 17

What information is required by the RICS for registration?

Answer 17

Type of business and staffing details
Name of responsible principal
statutory regulated activities - such as for financial services
nature of clients
complaints handling procedure details and records
professional indemnity insurance details
whether the firm holds clients’ money

Question 18

What are the five rules of conduct (2021)

Answer 18

1 Members and firms must act with honesty and integrity
2 Members and firms must maintain their professional competence and ensure that all services provided by competent individuals who have the necessary expertise
3 Members and firms must provide a good quality and diligent service
4 Members and firms must treat others with respect and promote diversity and inclusion
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 19

Who do the RICS Rules of Conduct apply to, when were they introduced and what did they replace?

Answer 19

RICS Rules of Conduct apply to all members and firms, introduced 2nd February 2022.

They replaced the former RICS Rules of Conduct for firms and members and the global and professional ethical standards.

Question 20

Why were the RICS Rules of Conduct changed?

Answer 20

Provide a simpler structure
Provide clear examples and application
Focus on diversity, inclusion and respect
Account for evolving technology
Tackle global challenges such as climate change and sustainable development

Question 21

What are the 6 ethical principles that the Rules of Conduct are based on?

Answer 21

Honesty
Integrity
Competence
Service
Respect
Responsibility

Question 22

Can you give an example of when you have demonstrated honesty and integrity?

Answer 22

Whilst carrying out a valuation of a retail unit in Kensington, the client asked me to provide a higher ERV for the unit, which would have increase the value. However, having thoroughly reviewed the comparable evidence and consulted with retail leasing and investment agents, I concluded that there was insufficient evidence to justify my client’s request and therefore maintained my original assumption.

Question 23

Can you give an example of when you have acted within your professional competence?

Answer 23

Whilst working in office leasing, I received an offer from an occupier who had only been trading for two years and therefore did not pass the profits test. Given that I am not qualified to provide financial advice, I recommended that my client sought third-party advice as to the covenant strength of the proposed occupier and any steps they wanted to take to increase their surety of income. They subsequently decided to request a six month deposit.

Question 24

Can you give an example of when you have provided a good quality and diligent service?

Answer 24

Swallow Place office disposal:
met my client’s key objectives (swift disposal whilst maximising cost savings)
Client expressed satisfaction with my service and subsequently appointed my firm to undertake further office disposals on their behalf

Question 25

Can you give an example of when you have promoted diversity and inclusion?

Answer 25

Undertaken D&I training –> improved my understanding of unconscious bias and how to mitigate it
Mentored work experience students from varied backgrounds

Question 26

Can you give an example of when you have acted in the public interest, prevented harm or promoted trust within the profession?

Answer 26

When carrying out an office leasing with a join agent I was aware that they had greatly embellished the marketing particulars. I highlighted to the Client that this was misleading and ensured that the information was rendered accurate before being published.

Question 27

What are the core professional obligations of members to the RICS?

Answer 27

Members:
- Comply with the CPD requirements
- Members must co-operate with the RICS
- Members must promptly provide all information requested by the Standards and Regulation board

Question 28

What are the core professional obligations of firms to the RICS?

Answer 28

Firms:
1. Firms must publish a complaints-handling procedure, which includes an alternative dispute resolution provider approved by RICS, and maintain a complaints log.

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.
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.
Firms must cooperate with RICS.
Firms must promptly provide all information reasonably requested by the Standards and Regulation Board
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.
Firms must report to RICS any matter that they are required to report under the Rules for the Registration of Firms.

Question 29

What is the RICS Ethics Decision Tree?

Answer 29

provides a framework of questions which members should ask themselves when facing a situation in which they are asked to act in a potentially unethical manner

Question 30

What does the RICS ethics decision tree encourage?

Answer 30

it encourages considering the legality of one’s actions and their consistency with the Rules of Conduct, as well as to consult with appropriate people and have clear reasoning before making decisions. The ultimate test is whether members would be content to have their decisions or actions made public.

Question 31

What body within the RICS is responsible for regulating the surveying profession?

Answer 31

The Standards and Regulation Board

Question 32

How could a disciplinary procedure be triggered?

Answer 32

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

Question 33

What are the three level of disciplinary action?

Answer 33

action by head of regulation
disciplinary panel
appeal panel

Question 34

What would be the disciplinary process following a complaint?

Answer 34

There would be a formal investigation by the Head of Regulation of the RICS. If they consider that disciplinary action is required they can take one of the following four steps:
1. Serve a fixed penalty notice
2. Make a regulatory compliance order
3. Refer the matter to a single member of the regulatory tribunal for consideration
4. Refer the matter directly to a disciplinary panel

Question 35

What are fixed penalties?

Answer 35

Procedure used for breaches of the rules relating to the supply of information to the RICS by firms and members. These may consist of a fine and or a caution

Question 36

What are regulatory compliance orders?

Answer 36

A written document stating the terms upon which a member or firm must take or desist from taking certain actions in a specific time period and an agreement to pay a fine.
These are issued for low level breaches of the Rules, including failure to undertake appropriate CPD.

Question 37

When would action be taken by a disciplinary panel

Answer 37

This is a procedure used for more serious breaches of conduct

Question 38

What penalties are available to the disciplinary panel?

Answer 38

Sanctions can range from fines to expulsion - this will be determined by the disciplinary panel

Question 39

Do members or firms have any recourse to challenge decisions made by the disciplinary panel?

Answer 39

They can take their case to an appeal panel

Question 40

What is Practice Information?

Answer 40

Information to support the practice, knowledge and performance of RICS members and regulated firms. These publications can included good practice, information, insights and processes.

Question 41

What are professional standards?

Answer 41

Set requirements or expectations for RICS members and regulated firms about how they provide services or the outcomes of their actions. They may include mandatory requirements or best practice advice.

Question 42

What are Practice Alerts?

Answer 42

In 2023 the RICS launched a new web page to collect Practice Alerts, which are tools for warning or alerting the profession to emerging areas of risk over which the RICS has concerns.

Question 43

What should be considered when deciding upon a fee?

Answer 43

The amount of time and resources required and whether you have the appropriate expertise.
Firms should also avoid price fixing, aggressive fee cutting or collusion with competitors - fees should be market based and agreed on an ad hoc basis with clients

Question 44

What guidance applies to referral fees?

Answer 44

You must completely transparent with clients and consumers so that they understand that you may be in receipt of, or offering, a referral fee and state so in terms of engagement if applicable.

Question 45

What must be agreed in terms of enagement?

Answer 45

The client’s agreement to the proposed fee basis, payment of expenses and that a copy of the firm’s complaints handling procedure is available upon request.

Question 46

What steps should be taken before you start work on an insruction?

Answer 46

1. Check you are professionally competent
2. Check there are no conflicts of interest or personal interests
3. Confirm terms of engagement in writing and get written approval from the client before you start work on the instruction

Question 47

What are some reasons it may be appropriate to decline an instruction?

Answer 47

1. You are not competent to undertake the work as it outside your limitations
2. You do not have sufficient facts on the issue
3. The proposed clients will not sign your TOE or complete AML check
4. There is a conflict of interest or personal conflict
5. A PII liability cap cannot be agreed
6. The potential client is included in the UK govt.’s sanction list

Question 48

What is a conflict of interest?

Answer 48

Arises when a member or firm’s independence and impartiality is threatened due to the existence of a conflict between two clients.
E.g. any financial interest
a personal interest
commercial relationships
acting on both sides of a transaction

Question 49

What is conflict avoidance

Answer 49

When you do not accept an instruction on the basis of a conflict

Question 50

What is conflict management?

Answer 50

When the instruction is accepted but measures are put in place to manage the conflict, such as an information barrier, with the written consent of all parties.

Question 51

Are you aware of any RICS guidance relating to conflicts of interest?

Answer 51

The RICS professional standard on conflicts of interest came into effect in 2018 and stipulates that members must not advise or represent a client where doing so would involve a conflict of interest or a significant risk of a conflict of interest other than where all of those who are are or may be affected have provided their informed consent

Question 52

What is informed consent?

Answer 52

Can only be given in writing by the party if the person explaining the position to them is entirely transparent about any material factors and sure that the party involved understands what they are doing.
Surveyors should only seek informed consent if satisfied that it is in the best interest of all parties involved.

Question 53

What are the different types of conflict of interest?

Answer 53

Party Conflict - duty to act in the interests of one client conflicts with another in relation to the same professional assignment e.g double dipping
Own Interest Conflict - an individual’s impartiality is conflicted when acting in the interest of the client e.g dealing with family/friends in a professional setting
Confidential Information Conflict - the duty of a member to provide relevant information to one client impacts the duty to maintain confidential information of another client

Question 54

What is double dipping and why is it an unacceptable practice?

Answer 54

Double dipping - acting for multiple parties within the same transaction e.g acting for both the buyer and the seller

Impossible to act in the interests of both parties and is unethical

Question 55

What are the steps you should take where a conflict arises or may arise between the interests of two or more clients of a firm

Answer 55

1. Conflict avoidance - consider whether your impartiality is compromised and if so decline the instruction.
2. If you wish to accept the instruction, set out in writing as soon as possible the nature of the conflict and how your firm intends to deal with it and request written confirmation from both clients of their informed consent
3. Conflict management - Once you have received written consent from both clients, set up an information barrier in accordance with the provisions agreed with both clients

Question 56

How should an information barrier be operated?

Answer 56

The barrier must be robust enough to ensure that there is no chance of information passing between the two parties
The surveyors acting on the two sides must be ideally in separate buildings or at the very least on separate floors and with separate support teams
There must be a virtual IT barrier
All information regarding the instruction should be securely stored and there must be a clear audit trail of the conflict check process and all written and oral communication

Question 57

Are you aware of any additional RICS requirements regarding conflicts of interest in investment agency?

Answer 57

As per the RICS Professional Statement: Conflicts of Interest - UK commercial property market investment agency (2017), dual agency, whereby an agent has a contractual agency relationship with both the seller and the buyer at the same time, must not be undertaken in any circumstances

Question 58

Are investment agents allowed to make multiple introductions?

Answer 58

Yes. However, when a client appoints an agent to act on their behalf in purchasing an asset, the terms of engagement must clearly state whether the agent is acting on an exclusive or non-exclusive basis.
If the appointment is on an exclusive basis, other prospective buyers with whom the agent was in contact must be informed that the agent is no longer able to advise them.
If the appointment is on a non-exclusive basis the agent must obtain informed consent from the client(s) subject to the necessary information barriers being in place. On appointment, the seller or seller’s agent must be advised accordingly.

Question 59

What is incremental advice and under what circumstances is it permitted

Answer 59

Providing advice (e.g. planning/valuation etc.) related to a purchase or sale that is incremental to an existing instruction
E.g. an agent being asked by the buyer to provide a valuation for a building on which they are instructed to sell
In order for the agent to provide incremental advice they must first obtain informed consent and put in place an information barrier

Question 60

What is a personal interest / own interest conflict?

Answer 60

an individual’s impartiality is conflicted when acting in the interest of the client e.g dealing with family/friends in a professional setting or with someone with whom you have a financial interest
As per Section 21 of the 1979 Estate Agents Act, agents have an obligation to disclose any personal interests in writing before accepting an instruction

Question 61

What do RICS bye-laws say about confidentiality?

Answer 61

Client confidentiality must be maintained for all client affairs

Question 62

What is your understanding of complaints handling procedures?

Answer 62

As per the RICS Rules of Conduct (2021) regulated firms must have a published CHP.
Whenever issuing TOEs the firm must make it clear in these that it has a CHP in place.
An RICS approved Alternative Dispute Resolution mechanism must be included in firms’ CHP.

Question 63

What is the guidance regarding how to deal with a complaint?

Answer 63

In the first instance, a complaint should be acknowledged in writing within 7 days of receipt and investigated within 28 days.
The Complaints Handling Office must be stated to the complainant

Question 64

If the complainant is not happy with a firm’s handling of their complaint, what are the potential third party solutions?

Answer 64

Relevant redress mechanisms include the Property Redress Scheme, the RICS Dispute Resolution Service and the Centre for Effective Dispute Resolution (CEDR) - the complainant should be informed of these mechanisms

Question 65

When would the RICS intervene in a complaint?

Answer 65

If the firm has failed to acknowledge receipt of the complaint or attempts to block the complaint being redressed by an independent party.

Question 66

What are the CPD requirements for members?

Answer 66

You have to undertake a minimum 20 hours of CPD per calendar year, of which at least 10 hours must be formal.
All CPD must be recorded on the RICS CPD Management System.
Failure to comply could result in a fine
Members must also maintain their understanding of the Rules of Conduct on a rolling 3-year basis

Question 67

What is formal CPD?

Answer 67

Structured training with clearly defined objectives/learning outcomes
E.g. online training / seminars delivered by experts

Question 68

What is informal CPD?

Answer 68

Could include private study/informal talks, seminars etc.

Question 69

What needs to have occurred in order for a negligence claim to be made?

Answer 69

Where there is a duty of care to a client that has been breached, resulting in loss, a damages claim can be made

Question 70

Are you aware of any momentous negligence cases?

Answer 70

Hope Capital Ltd v Alexander Reece Thompson LLP (2023) - found that when considering a negligence claim, the purpose of the valuation is central to the extent of the valuer’s duty. In this instance, the purpose of the valuation was loan security and the valuation was significantly overstated, which led to significant financial lost for Hope Capital
Burgess v Lejonvarn (2020) - established that professionals providing professional services pro bono and without contract still owe a duty of care in tort to act with reasonable care and skill in respect of services they provide.

Question 71

What are the current limitation periods for negligence?

Answer 71

As per the Limitation Act 1980, 6 years from the date of the negligent act, omission or breach of contract. Or, 3 years from the date of knowledge of the negligence, with a 15-year long stop (i.e. claims cannot be made after 15 years have elapsed from the initial negligence)

Question 72

What are some steps you could follow to avoid negligence claims being made against you or your firm?

Answer 72

1. Clearly understand your client’s objectives and confirm precise instructions in your terms of agreement.
2. Only undertake the work if you are competent to do so.
3. Undertake the work in accordance with the relevant RICS professional standards and practice information.
4. Take photographs and make detailed notes which you file.
5. Cap the professional liability excess on your PII policy in the terms of engagement.

Question 73

What is professional indemnity insurance?

Answer 73

Insurance cover to protect businesses from claims of negligence when a duty of care is breached

Question 74

What are the current minimum requirements for PII cover based on turnover and would firms only get the minimum cover?

Answer 74

Turnover In Previous Year Minimum level of indemnity required for
each and every claim
£100k or less £250,000
£100,001 - £200,000 £500,000
£200,001 + £1,000,000
Firms would have to consider the likelihood of receiving negligence complaints and may wish to get a higher level of cover depending on this risk.

Question 75

What is the maximum level of uninsured excess required by RICS?

Answer 75

Turnover in previous year Max uninsured excess
0-£10m Greater of 2.5% of the sum insured or
£10,000
> £10M No set limit

Question 76

What run off cover is required for firms after they cease trading?

Answer 76

Min £1m of aggregate cover over 6 years for consumer claims
Commercial claims: a level believed to be appropriate for min. six years

Question 77

What can a firm do if they are not able to get run off cover from their existing insurer or on the open market?

Answer 77

There is an RICS run-off pool to which they can apply for coverage

Question 78

What guidance is provided by the RICS on liability caps?

Answer 78

As per the RICS Practice Information - Risk, Liability and Insurance, 2021,: liability caps are recommended to manage risk associated with professional work
Firms should be cognisant of third party risk and ensure that only the client explicitly named in the TOE can rely upon the advice given

Question 79

What are the six main areas of good practice as per the professional standard n Client Money Handling, 2019?

Answer 79

1. Holding client money.
2. Providing information to clients
3. Receipts of client money
4. payments from client accounts
5. accounting records and controls
6. compliance

Question 80

Can you give examples of client money?

Answer 80

Payment on account of general costs
Rent
Service charges
Interest credited to a client account
Arbitration fees
Client money held but due to be paid to contractors

Question 81

Can you give examples of office money?

Answer 81

Interest on general client accounts which the client agrees will not accrue to them
Fees
Disbursements

Question 82

What happens if an RICS regulated firm is unable to repay a client’s money?

Answer 82

There is an RICS Clients’ Money Protection Scheme

Question 83

What is the current compensation limit for RICS Money Protection Schemes?

Answer 83

Limit per claim = £50,000
Cap on liability = £10,300,000

Question 84

What changes did RICS recently make to the Minimum Approved PII Wording?

Answer 84

Effective 1st May 2021 - new minimum policy wording means PII policies will provide greater fire safety cover
Fire Safety:
- Insurers may impose a fire safety exclusion
- From 1 May 2021 any exclusion will not apply to professional work relating to buildings four storeys or under

Question 85

What are some of the key procedures when handling client money according to the Client Money Handling Professional Standard (2019)?

Answer 85

Client accounts must be kept separate and clearly identifiable
A client must be able to have their monies on demand
Client bank accounts must be clearly labelled with the word “client”

Question 86

Explain the key steps you would take if you decided to set up in practice as a sole trader after qualifying.

Answer 86

Inform the RICS
Appoint responsible principle
Arrange PII cover
Set out requirements for client money handling
Set up a complaints handling procedure, complaints log and appoint a complaints handling officer (external 3rd party as a sole trader)
Outline a business succession procedure
Ensure there is a CPD logging procedure
Submission of RICS annual return
If undertaking Red Book Valuations – apply to be a part of the RICS Valuer Registration Scheme

Question 87

What are the statutory requirements when setting up a new practice?

Answer 87

Disclose business name
Ensure compliance with Equality Act (2010), esp. with regards to disability discrimination
Comply with 2010 Bribery Act
Appoint money laundering reporting officer
comply with Health & Safety Act 1974 (as amended)
Ensure fire safety compliance
Set up an asbestos register (allows building owners to know where asbestos is located, its condition and how to manage it safely)
Register for data protection
Ensure compliance with Estate Agents Act, 1979
Inform HMRC for VAT and Tax registration
Ensure compliance with current employment law (e.g. national living wage, working hours
Ensure insurance compliance for employer and public liability

Question 88

What RICS compliance is required to close a practice?

Answer 88

Inform RICS of closure and deregister
Inform clients informed as early as possible
return any monies held in client accounts
inform insurers and get run-off cover for min 6 years
keep copies of client files/records for min. 6 years