Ethics, Rules of Conduct and Professionalism - Part 2

Question 1

Who does the Duty of Care exist to?

Answer 1

Clients and Third Parties

Question 2

Surveyors must act with…

Answer 2

Reasonable care and skill

Question 3

A claim for damages arises when?

Answer 3

When the duty of care is breached and there is a loss

Question 4

What did Yianni V Edwin Evans (1981) establish?

Answer 4

A residential valuer instructed by a mortgagor lending institution could owe a duty of care in tort to a mortgagee purchaser relying on a valuation

Question 5

What did Scullion V Bank of Scotland plc (t/a Colleys) (2010) show?

Answer 5

This relates to a breach of the duty of care owed to Mr Scullion in relation to a valuation report prepared for a flat in Cobham, Surrey

The Court of Appeal held that a surveyor who provides advice on a value to a lender in respect of a buy-to-let property does not owe a duty of care to the borrower who is seeking funding to purchase the property.

It over turned the original court decision in the case of a ‘commercially astute’ borrower

Question 6

What did Burgess V Lejonvarn (2020) establish?

Answer 6

Professionals providing professional services including pro bono and without a contract owe a duty of care in tort to act with reasonable care and skill in respect of the services they provide.

COA also determined that they are not under a duty to advise or give warning nor are they liable for work they do not do

Question 7

What is the relevant case law for negligence?

Answer 7

Yianni V Edwin Evans (1981)

Scullion V Bank of Scotland plc (t/a Colleys) (2010)

Burgess V Lejonvarn (2020)

Question 8

Difference between Contract Law and Tort Law?

Answer 8

Contract - deals with contracts and the failure to complete what was agreed

Tort - deals with the duty of care that the law imposes on us

Question 9

What is the Act which applies to negligence?

Answer 9

Limitations Act 1980

Question 10

What are the current limitation periods for negligence

Answer 10

Contract - 6 years from the date of the negligent act, breach of contract or omission

Section 14A provides an alternative limitation period of 3 years from the date of knowledge of the damage subject to the 15 years long stop from the negligent act or omission.

Tort - 6years from the date the claimant suffered the loss

Question 11

How can negligence claims be avoided or reduced?

Answer 11

Clearly understand the clients objectives and confirm precise instructions in the written TOE

Ensure you are competent

Undertake work in accordance with the relevant RICS Standards and Guidance Notes

Make detailed files notes and take photographs

Keep up to date with market knowledge, legislation and CPD

Cap professional liability excess on your PII Policy in the TOE

Question 12

The importance of complying with client money requirements is outlined in what?

Answer 12

Rules of Conduct

Question 13

What does the ROC say on Clients Money?

Answer 13

Firms keep client money safe and have appropriate accounting controls

Question 14

What can client money include?

Answer 14

Holding deposits

Rent

SC

Retentions

Question 15

What is the RICS Guidance on Clients Money?

Answer 15

RICS Professional Statement ‘Client Money Handling’ 1st Edition (2019)

Effective in January 2020

Question 16

What six areas of good practice are set out in the PS?

Answer 16

1. Holding client money
2. Providing information to clients
3. Receipt of client money
4. Payment from client accounts
5. Accounting records and controls
6. Compliance

Question 17

What procedures are important when dealing with clients money?

Answer 17

1. Separate client accounts which need to be clearly identifiable
2. The word client on the bank account and cheque book
3. The client must be able to have the monies on demand
4. Payment of interest agreed with the client and accounts must be kept in credit
5. Accurate records are kept with a running balance available
6. Signatories must be agreed with authorized staff and two signatures should be required

Question 18

What is the Client’s Money Protection Scheme used for?

Answer 18

Ran by the RICS

For claims from clients which provides last resort protection where an RICS Regulated firm is unable to repay a clients money.

There are limits and exceptions set out in the scheme rules

Question 19

What are the two types within the RICS Clients Money Protection Scheme?

Answer 19

1. Client Money Protection for Surveying Services - General client money protection, covering money held by firms undertaking surveying activities
2. Client Money Protection for Residential Agents - Residential agency activity in England protection, covering areas under the Client Money Protection Schemes for Property Agents Regulations 2018

Question 20

RICS Compliance for starting a new practice?

Answer 20

1. Inform RICS of new practice through completing a FIRM DETAIL FORM
2. Appoint a Responsible Principal for all RICS comms
3. Register with RICS for regulation of the firm by the Regulation Board
4. Arrange PII and send to RICS
5. Set out procedures for the requirements for Client Money Handling - including a protection scheme
6. Register for RICS Valuer Registration Scheme (VRS) - if undertaking Red Book Global vals
7. Gain RICS approval for CHP
8. Set up a complaints log
9. Appoint a Complaints Handling Officer (or if SP elect from different company)
10. Plan for succession/future running of the business if a SP (locum)
11. Ensure CPD is logged on RICS CPD Management System & set up staff training
12. Complete online RICS Annual Return at the end of each year

Question 21

Statutory Compliance for starting a new practice?

Answer 21

1. Requirement to disclose business name
2. Disability discrimination compliance (Equality Act 2010)
3. Financial Services Compliance (Financial Services and Markets Act 2000)
4. Bribery Act 2010
5. Appoint a Money Laundering Reporting Officer (Money Laundering Regulations 2017)
6. Health & Safety Compliance (Health 7 Safety Act 1974)
7. Asbestos Register
8. Fire Safety Compliance (Regulatory Reform (Fire Safety) Order 2005)
9. Register for Data Protection (General Data Protection Regulation 2016 and Data Protection Act 2018)
10. Estate Agency compliance
11. Inform HMRC for VAT and Tax Registration (VAT threshold is currently £85k pa turnover)
12. Ensure compliance with current employment law eg. National Living Wage / working hours
13. Ensure insurance compliance for employer and publiiic liability