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Ethics, Rules of Conduct and Professionalism Flashcards

1
Q

What are the 5 rules of conduct

A

Effective from 02/02/2022
Members and firms:
1. Act with honesty and integrity
2. Ensure competence
3. Good and diligent service
4. Treat others with respect with a focus on diversity and inclusion
5. Act in public interest
Appendix A - mandatory requirements to comply with the RICS

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2
Q

when was RICS founded

A

Founded in 1868 by John Clutton
Gained its royal charter in 1881

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3
Q

Give me some background to RICS

A

RICS regulations / bye-laws set out governance
140,000+ members
4 levels of membership - Student, AssocRICS, MRICS, FRICS

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4
Q

Who is the current CEO and President

A

Justin Young
Justin Sullivan - Nick Maclean

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5
Q

What is the current structure of the RICS

A

Governing council - management and strategy of RICS
RICS Board - direct RICS affairs under delegated authority from Governing Council
Standards and Regulations & Board/Managing Board

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6
Q

What does the RICS UK structure consist of?

A

4 National associations
10 regional boards & local associations
17 specialist groups - each with an elected board and competency specific

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7
Q

what is the Royal Charter

A

Requires the RICS to ‘promote the usefulness of the profession for the public advantage’

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8
Q

What is the role of RICS?

A

Maintain and uphold the highest professional standards
Protect consumers through self-regulation
To be leading source of information for the real estate industry

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9
Q

What was the bichard review?

A

following the Levitt review (2021) which called for a an independent review ‘purpose,governance, strategy’

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10
Q

What was the levitt review

A

A review commissioned to assess the effectiveness of the Royal Institution of Chartered Surveyors (RICS) in promoting professionalism and ethical standards.

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11
Q

What was the RICS bichard review

A

Bichard called for an independent review to clarify purpose of RICS through 7 key recommendations
Increased focus on public interest remit - creation of public interest panel
Maintain self regulation
Support for regional boards
Undertake independent review - every 5 years
New simplified governance structure
Greater leadership on social issues - sustainability/climate change

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12
Q

What are the RICS future foundations?

A

Published post bichard review
Vision
Mission
Strategic Goals
Values
World Class Organisation

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13
Q

What are the benefits of being an RICS member?

A

Professional status - provides client confidence
Recognition
Market advantage
Network
Knowledge - professional guidance & CPD

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14
Q

What are the requirements for registration to the RICS

A

Firms providing surveying services to the public must be registered
RICS Rules for Registration of firms, 2022;
50% of principles RICS members then have to be regulated.
If 25% then can apply
Must nominate a responsible principal
Must provide an annual return to RICS

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15
Q

What are the benefits of registration for firms?

A

Confidence
Professionalism
Security

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16
Q

What is contained/required within an annual return?

A

Type of business & staffing details
Nature of clients
Statutory compliance
Published CHP + ADR
Adequate PII Cover
If/how firms deal with client money

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17
Q

What do you understand by the principles of registration?

A

PACTT
Proportionality
Accountability
Consistency
Targeting
Transparency

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18
Q

What is an example of the rules of conduct case study?

A

12 case studies all together
Client pressure example - employer and client want a valuation increased
Commercial pressure is not a good reason to change your professional opinion
Opinion needs to be honest and objective

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19
Q

Why were the rules of conduct updated?

A

Simpler structure
Clear examples
Focus on diversity, respect and inclusion
Tackle social issues - sustainability and climate change
Face evolving technologies

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20
Q

what are the mandatory requirements of members of the RICS?

A

Comply with cpd requirments - 20 hours of cpd a year, 10 of which must be formal
Co-operate with the RICS
Provide any information required to standards and regulation board

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21
Q

What are the mandatory requirements of firms of the RICS?

A

Published CHP + ADR
Adequate PII cover for there instructions
Sole principal - contingency plan in case of their death/illness
Co-operate with RICS
provide any information to S+R boards
Fulfil statutory duties

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22
Q

What is the ethics decision tree?

A

It is a framework of questions to ask yourself when faced with a potentially unethical situation
Examples include - is it legal?
Is it in line with the rules of conduct?
Would you want your actions to be made public?

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23
Q

What is formal and informal CPD?

A

Formal CPD has specific learning outcomes and objectives
Informal CPD is self-managed learning

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24
Q

what would give rise to disciplinary procedure?

A

Violation of ethical standards or professional conduct.
Someone complaining to the RICS
Third party allegation

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25
What are the possible levels of disciplinary action?
Action by head of regulation Disciplinary panel Appeal panel
26
What would action by the head of regulation consist of?
Formal Investigation of complaints then 4 possible actions Serve a fixed penalty notice (breach in relation to supply of information - fine or caution) Serve a regulatory compliance order - low level breaches easily corrected - MandF must desist from action for a certain time period + agree to pay fine Refer mater to member of a regulatory tribunal Refer matter to disciplinary panel
27
What action is taken at the disciplinary panel?
For more serious breaches - panel includes lay members; Issue regulatory compliance order Reprimand Fine (unlimited fine per breach) Conditions on registration in the future Expulsion Publication of results
28
What should a member consider when using social media
RICS Guidance: Use of social media 2021: RICS Not involved unless - posting is damaging to reputation / against rules of conduct Will get involved if discrimination, bullying or harassment
29
What action is taken at the Appeal panel?
the panel can allow/vary the penalty previously imposed. Also includes lay members.
30
What are some mandatory guidance standards
International Standards - IPMS + Redbook
31
What is the current status of RICS core material?
Professional standards are replacing statements & guidance notes - in process of re-categorizing RICS Professional Standards: set requirements & expectations for RICS Members, mandatory (must) + best practice (should) RICS practice alerts: alerts for key tools for emerging areas of risk such as (fire safety) RICS Practice Information: do not contain advice but are good practice and information to support the practice
32
What do you know about fee. Negotiations?
Should be calculated on a market based - ad hoc basis Shouldn’t undercut/price fix 1-2% on agency instructions
33
What are terms of engagement?
State in writing the scope of instruction, including: Fee basis Payment of expenses Copy of CHP + ADR
34
What’s the process of starting and instruction?
Check competence Conduct COI check Draft ToE - get signed copy returned
35
When does a COI arise?
when your impartiality is compromised due to the existence of a COI
36
Under what scenarios might you decline an instruction?
You are not competent The client won’t sign the TOE or AML checks A conflict of interest, which is unmanageable Advice for friend/pro bono - if your PII won’t cover it
37
What are some examples of a COI
Financial Interest Personal interest Commercial Relationships Acting on both sides of a transaction
38
What is conflict avoidance?
declining an instruction due to the COI
39
What is conflict management?
Instruction accepted. - but steps are put in place to manage the conflict
40
Are you aware of any RICS guidance in relationship to COI
RICS Global Professional Standard: COI, 2017 RICS Professional Statement: COI - UK Commercial Investment Agency 2017
41
How would you handle a conflict?
Firstly I would determine whether I need to avoid the conflict If the conflict is manageable I would write to both parties informing them of the conflict I would then actively manage the conflict
42
How can a conflict of interest be managed?
After receiving informed consent from both parties; I would create an information barrier Robust enough to allow no information to get through Physical separation Information stored securely Audit trail of COI process - overseen by firms compliance officer
43
What is stated within the RICS Global Professional Statement: COI 2017?
Effective 1st January 2018 A member must not advise/represent client when doing so would involve a conflict/significant risk of a conflict. Unless informed consent gained from all parties.
44
What is stated within the RICS Global PS: COI UK Comm Investment Agency 2017
Bans dual agency Multiple introductions require clarity on exclusive / non exclusive basis Incremental advice - only when informed consent gained Cannot proceed when you have a personal/own interest conflict
45
What do you understand about confidentiality within your role?
One of the bye-laws - client confidentiality must be minted for all client affairs If third party want files - must gain clients consent - unless police/HMRC Old files must be held for a minimum 6 years before being destroyed securely Cannot use confidential information for own purposes - must record with compliance officer Confidential material received in error should be destroyed securely
46
Are you aware of any Complaints Handling procedure guidance?
Rics professional standard note on CH, 2016 Requirements for firms to have published CHP Notify PII insurers - complaint could lead to negligence Complaints must be logged Firms must have RICS approved ADR
47
What are the minimum procedures for handling a complaint?
Stage 1 - In House Issues details of CHP on receipt of a complaint Quick clear transparent procedure Details of complaint handling officer provided Ensure the complaint in writing Timescales recorded - must be acknowledged by 7 days - investigated within 28 days with an answer Stage 2 - ADR independent redress scheme - if the complainant is not happy with the review Name of ADR - needs to be included within CHP
48
What is your firms CHP/ADR procedure?
Complaints handling officer - Usha D’Souza CHP: Contact within 7 days - response within 28 days ADR: Property Redress Scheme
49
What are the minimum PII requirements based on turnover?
100k or less turnover - 250k cover 100k - 200k turnover - 500k 200k + = £1M
49
What is professional indemnity insurance?
Insurance protecting you against claims for loss/damages as a result of negligent services/advice provided It is mandatory for regulated firms + within rules of conduct All PII policies must be underwritten by RICS approved insurer
50
What is negligence?
Failure to exercise appropriate duty of care ⇒ resulting in loss ⇒ leading to a claim for negligence Duty of care breached ⇒ loss ⇒ damages (negligence claim)
51
Are you aware of any case law in relation to negligence?
Yianni v Edwin Evan’s - residential valuer (instructed by mortgagor) could owe DOC in tort to mortgage purchaser relying on valuation
52
How can you avoid negligence?
Understand your clients objectives - clear ToE Ensure competence Detailed notes/files Cap professional liability excess in ToE
52
What is the limitation act 1980?
Outlines limit creditor can chase a debtor for outstanding debts Contract - 6 years from breach of contract (s14a alternative - limitation period if 3 years from date of knowledge - subject to 15 years long stop negligent act) Tort - 6 years from date claimant suffered loss
53
What is the maximum level of uninsured excess required by the RICS?
firms turnover under £10m - 2.5% of sum insured / 10k whatever is greatest Turnover £10m + - not set limit of excess
54
How is runoff cover required following the cessation of trading?
Consumer claims - minimum £1m of cover for 6 years Commercial claims - consider what is adequate/appropriate for 6 years Firms unable to obtain run-off cover - can apply to RICS Run off pool
55
Are you aware of any RICS guidance in relation to Handling Client Money?
RICS Professional Standard Client Money Handling 2019
56
What does the client money handling professional standard outline
Client accounts must be kept separately Word ‘client’ must be on account/cheque book Client access monies on demand Payment of interest agreed Accurate records kept Annual audits by RICS qualified accountant Money available to withdraw whenever Firms handling of client money needs to be displayed on their website
57
What are some things you should do when setting up a new practice via RICS
Inform the RICS - fill out a registration form Identify a responsible principal Outline work/type of clients Published CHP + ADR Adequate PII Cover State if you will be holding client money
58
What are some of the statutory compliance things you should do when setting up a firm
Register the business name Financial services compliance Money laundering report officer Register for taxes - inform HMRC for tax/vat Adhere to health and safety regulations Bribery act compliance Register for data protection
59
What types of insurance would you need when setting up a firm?
Public liability insurance Employers liability insurance
60
What are some things you would do when closing a practice?
Inform RICS and de-register Ensure I would inform my clients and arrange a handover Return any client money Inform insurers - arrange appropriate run off cover for a minimum of 6 years Retain copies of client files for a minimum of 6 years
61
What key pieces of legislation are you aware of in relation to Bribery & Corruption
Bribery Act 2010
62
What is the bribery act 2010?
criminal legislation aiming to reduce bribery in business
63
What is a bribe?
Giving, offering, receiving or promising an advantage (gift/payment) in return for a service which breaches your duty of care of trust/is illeg
64
What are the six principles of the Bribery Act 2010?
Proportionality Top level commitment Risk assessment Due diligence Communication Monitoring/review (Pts really don’t care man)
65
What are the 4 offenses relating to bribery?
Giving a bribe Receiving a bribe Failure to prevent a bribe Bribing a foreign official
66
How can companies counter bribery/provide a defense for bribery?
Companies are responsible for their employees - must show they have policies/procedures in place Compnaies must have taken specific steps to prevent bribery; Risk assessment Clear policies/ reviews Gift register and policy
67
Is hospitality prohibited?
No, hospitality is not prohibited within the Bribery Act 2010 However, lavish hospitality can be considered a bribe Hospitality must be reasonable/proportional Hospitality must also be recorded within the gifts register
68
Who monitors/ polices acts related to Bribery?
Serious Fraud Office
69
What are the penalties related to bribery?
Policed by Serious Fraud Office People - unlimited fine and/or 10 years in prison Companies - unlimited fine
70
Tell me about your companies gift policy?
Public sector - gifts up to £30 - must be pre-authorized & declared on gift register Private sector - gifts up to £120 - must be declared on gift register
71
What is money laundering?
When illegal funds are realized through property/businesses which disguise them as legitimate
72
Are you aware of any legislation relation to Money Laundering
Money laundering, terrorist financing & transfer of funds regulations 2017
73
What is meant by CDD
Means Customer Due Diligence, a member must Identify the client and verify their identity (driver licence/passport) Identify beneficial owners of the company (person of significant control companies house) Must have the company name, number and address Must have the company names of directors required (unless LSE listed) Obtain information on nature of business & funding
73
What are the key provisions from Money laundering, terrorist's financing & transfer of funds regulations 2017?
companies must; Have a written ML/TF risk assessment Implement systems/policies/ controls to address ML/TF Adopt appropriate internal controls Provide staff training Comply with CDD/EDD requirements Ensure appropriate record keeping
74
How is ML/TF this relevant to estate agents?
Must be registered/approved by HMRC to trade within real estate Must declare lettings of £10k (euros) pcm to HMRC Must provide staff training on ML Must comply with CDD/EDD requirements
75
When would you undertake Enhanced Due Diligence (EDD)
Requires additional evidence & monitoring: High-risk customers High risk third world country (Pakistan, Iran) Complex ownership structures Politically exposed persons (PEPs) Unusual transaction patterns Geographic risk factors
76
What are other key requirements related to EDD?
Limit of £10k (euros) acceptance of cash Must have a compliance officer Must report suspicions to National Crime Agency Maintain records for a min 5 years
77
What are the typical evidence requirements for CDD?
Public limited company - London Stock Exchange Listing Publicly accountable company - Government ownership/control Private limited company - Certificate of incorporation. Full name, registered number, office, address, names of directors and shareholders with more than 25% holding Private individual - Valid photo ID (passport/driving license), bank statement/bills with evidence of address (within 3 months)
78
What are red flags associated with potential money laundering?
Inability/unwillingness to supply documentation Changes to parties information Unusual transactions, urgency, acceptance of potential loss Payment of fees/transactions in unusual currencies
79
What would you do if you found one of the money laundering red flags?
Decline the instruction DO NOT INFORM the party Report it to the compliance officer
80
What is the proceeds of Crime Act?
Effective 2002 Gives government power to reclaim/seize assets bought with proceeds of crime Sets out criminal offences intended to combat ML
81
What are the criminal offences laid out in the proceeds of Crime act 2002?
Concealing criminal property Arrangements - becoming aware of they know to be use of criminal property on behalf of someone else Acquisition use & possession
82
Are you aware of any RICS guidance in relation to AML?
RICS Professional Standard, Countering Bribery, Corruption, Money Laundering & Terrorist Financing, 2019
83
What does the RICS Professional Standard on countering bribery, corruption, ML and TF state?
Sets out mandatory/globally applicable requirements for M&Fs in relation to bribery, corruption, money laundering & terrorist financing
84
What does RICS PS on countering Bribery, corruption, ML & TF state in regard to Bribery&corruption
M&F must; Not offer/accept any constituting a bribe Have procedures in place (comply with Bribery Act) Report suspicion (Serious Fraud Office) Act with Due Diligence (CDD/EDD) Keep/retain records (min 6 years)
85
What does RICS PS on countering Bribery, corruption, ML & TF state in regard to ML&TF
M&F must; Not facilitate/ be complicit in ML/TF Have procedures in place (comply with ML, TF & Tranfer of funds) Report suspicion (National Crime Agency) Risk assessment of the firm Due Diligence (CDD/EDD) Retain records (min 6 years)
86
What else does the professional standard Countering Bribery, C, ML & TF advise on?
Practical Guidance; Written policy in place Code of behavior/ staff training Set up gifts register Keep up to date with legislation Risk based approach - 3 W's Who you act for What you are doing Why you are being asked to do something Dealing with PEPs + EDD required
87
When have you demonstrated rule 1?
Been honest with clients about deadlines
88
When have you demonstrated rule 2?
Did not value a hotel as I did not have the experience Regularly carrying out CPD to develop my knowledge
89
When have you demonstrated rule 3
Maintain regular communication with clients Update them on deveoplements/ changes to timelines Ensure I meet all my clients objectives
90
When have you demonstrated rule 4?
Founded Young Professionals Committee within my firm Which is a voice for young professionals
91
When have you demonstrated rule 5?
Carrying out due diligence, comparable analysis and verifying information obtained. Being accountable for mistakes and acknowledging them and correcting them and not blaming others.
92
What do ethics mean to you?
It underpins being a member of the RICS. Guides what is right and wrong.
93
What is the test for damages?
Loss suffered must have been reasonably foreseeable at the time of breach by the surveyor and claimant.
94
What is the leading case law for PII cover?
Merrett v Babb
95
What did you learn from your CPD session on ethics and the rules of conduct?

Mandatories (10 decks)

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