Ethics, Rules of Conduct and Professionalism Flashcards
What does RICS stand for?
Royal Institution of Chartered Surveyors.
Who is the current RICS president?
Tina Paillett FRICS
How is the RICS governed?
Under the rules of the Royal Charter, which requires the RICS to act in the public interest.
Explain the structure of the RICS?
The governing council sit at the top of the hierarchy, but is closely supported by the Standards and Regulation Board. Below this, there are a number of professional groups, representing different lines of work undertaken by RICS members and firms.
Who is the CEO of the RICS?
Justin Young
What are the three main roles of the RICS?
To maintain the highest standards, of educations and training
To protect consumers through strict regulation of professional standards
To be the leasing source of information and independent advice on land, property, construction and associated environmental issues
TRAINING / PROTECT CONSUMERS / INFORMATION
What do you understand about the Levitt reviews?
Reviews undertaken in 2021 exposing that the clarity, structure and purposes of the RICS is lacking. This led to the Bichard review which recommended numerous actions that could be implemented.
This included recruiting new Management and Standards and Regulatory Boards.
What are the 5 benefits of being an RICS memeber?
STATUS - professional credentials provide client confidence
RECOGNITION - promotion of excellence to governments and markets
MARKET ADVANTAGE - RICS status gives competitive advantage
KNOWLEDGE - practice standards, guidance, CPD etc
NETWORK - Access to 125,000 professionals world-wide
What are the rules around the use of the RICS logo?
Only registered members and firms can use the logo.
It must be displayed on the website, letter heads, terms of engagement (set text) and the complaints handling procedure.
It is recommended to be used on advertising
What information would the RICS require if you were to register with them as a firm?
Type of business and staffing details
Name of the Responsible Principal
Statutory regulated activities (e.g. financial services)
Nature of clients
Complaints handling procedure details and records
PII
Whether the firm holds client money
What are the 5 Rules of conduct?
Implemented in October 2021, and now applicable to both members and firms
1 - Integrity and honesty
2 - Competence (expertise)
3 - Diligence (provide a good quality and diligent service)
4 - Respect (to others and encourage diversity and inclusion)
5 - Responsibility (act in the public interest and and maintain confidence)
Why were the Codes of Conduct updated?
So that they were clearer and simpler for all to refer to. Updated February 2022
What happens if a complaint is made to the RICS about a member or firm?
If it is deemed to be in the public interest, the Head of Regulation will launch a formal investigation. They will then action 1 of 4 things.
1 - Serve a fixed penalty notice (used for breaches relating to the supply of information to the RICS. Usually consist of a fine and/or caution)
2- Regulatory Compliance Order (usually for low level breaches. State what should or shouldn’t be done with a time limit, and usually incorporates a fine)
3 - Refers to the Regulatory Tribunal Disciplinary Panel (used for more serious breaches as a hearing is required. Can enforce a regulatory compliance order, reprimand, fine, conditions on future membership, expel member or firm from RICS and can publish hearing results on RICS website, MODUS and local newspapers).
Appeal panel - can consider an appeal relating to the above and can alter any conditions or fines.
When may the RICS investigate a social media post?
Use of Social Media: Guidance for RICS members 2021
Concerns would involve -
Discrimination
Dishonesty
Abusive or threatening behaviour
Bullying or harassment
Frequent concerning posts of lesser severity
Ignoring previous warnings about the above concerns
What are the main two RICS material types?
Professional Standards - were professional statements etc. Mandatory material that must be followed by any RICS member and firm.
Practice Information - were guidance notes etc. Are supplementary to Professional Standards and promote best practice, but are not mandatory.
How do you calculate your fees?
My fees are usually hourly, which is based on my firms fee scales and I use previous experience to determine the appropriate time required to complete the task.
I understand that I must not undercut another firm, however know that healthy competition is ok.
What are the three main considerations / steps to take prior to proceeding with work?
1 - Check whether I am professionally competent to carry out the work
2 - Check for conflicts of interest
3 - Obtain signed terms of engagement
What legislation allows for a 14-day cooling off period?
Consumer Rights Act 2015
The consumer has the right to cancel the contract / service within the first 14-days of signing ToE’s. If work is undertaken within that period at the clients request, the firm has the right to charge the cost of producing any work completed so far.
What is the RICS material advising on Conflicts of Interest?
RICS Global Statement on Conflicts of Interest 2017
Informed consent must be obtained prior to going ahead where there is a conflict, and only were I believe I can still act in the best interest of both parties. Informed consent only stands if the member has been completely transparent about the material factors of the situation.
What are the 3 types of conflicts of interest?
Party conflict - working for the same instruction for both parties (buyer and seller)
Own interest - conflict with personal interest
Confidential information - were information is owed to one client, but should be kept confidential to another
How would you manage a conflict of interest with prior informed consent?
Establish a chinese wall / information barrier to ensure there is no exchange of information between the two surveyors working for opposing clients.
Appoint an officer to manage this.
Should be physically separate in different offices / rooms
Electronic and paper files inaccessible between surveyors
What are the RICS requirements for a complaints handling procedure?
RICS Guidance Notes on Complaints Handling 2016
- must be approved by the RICS
- notify PI insurers of any complaint that could lead to a claim for negligence
- should be issued with terms of business / engagement
- complaints records should be kept
- policy must include RICS approved ADR mechanism (ours is RICS Dispute Resolution Services)
-must have a complaints handling officer, but if you are a sole practitioner, this must be another surveyor from another firm.
Explain your firms complaints handling procedure.
Complaint must be in writing.
Procedure document must be provided immediately.
Details of the complaints handling officer must also be provided immediately.
Complaint must be acknowledged within 7 days.
Complaint must be investigated within 28 days.
If complainant still not happy, refer to ADR mechanism or appropriate redress scheme (RICS Redress scheme)
What are the 4 requirements of CPD?
1 - minimum of 20 hours
2 - at least 10 hours must be formal
3 - maintain an understanding of the Rules of Conduct on a 3-year rolling period
4 - must be recorded on the management system by the 31st January
What is formal and informal CPD?
Formal = structures learning with clear objectives (seminars, courses)
Informal = self managed learning (private study, on the job training)
RICS CPD Decision tree is very helpful.
What are the requirements of PII?
RICS Professional Indemnity Insurance requirements - April 2022
Policies must be underwritten by an RICS approved insurer
Policies must be fully retroactive (claims basis so claims made based o the year they are raised, rather than the year the negligence occurred)
PII certificates must be sent to the RICS annually as part of the firms RICS annual return
What insurance would you need to put in place if your firm stopped trading?
Run-off cover should be obtained for six years, of a minimum of £1m of aggregate cover.
There is an RICS Run-off pool available where cover cannot be sought in the open market.
What is negligence and how can you avoid it?
Where a surveyor breaches the duty of care to a client, there is a loss and a claim for damages arises.
Negligence claims can be bought forward for up to 6-years from the breach (Limitation Act 1980)
Avoidance measures include -
- clearly understanding the clients objectives and confirm precise instructions in writing
- ensure I am competent to undertake the work
- undertake work in accordance with RICS mandatory and supplementary material
- keep detailed file notes and photographs
- cap the professional liability within the terms of engagement
What are the requirements of client money handling?
RICS Professional Standard Client Money Handling 2019
- accounts should be separate and clearly identifiable
- the word client must be in the account name
- client must be able to have the money on demand
- payment of interest is to be agreed with a client and accounts must never become overdrawn
- records are checked and produced monthly
- annual audit carried out
- money can only be transferred is properly required
- any cash transactions must be recorded
- signatories must be agreed and two signatures should be required
- procedures should be displayed on website
RICS regulatory review visits can be conducted on around a 3-year cycle, by an accountant employed by the RICS.
RICS client money protection scheme is there as a last resort where claims have been made and the firm cannot repay clients money.
If you were to set up your own firm tomorrow, what would you need to do?
- inform RICS by completing a Firm Details form
- appoint a responsible person for RICS communication
- register with RICS
- arrange PII and send details to the RICS
- set up client money handling procedures
- register with the RICS Valuer Registration Scheme if undertaking Redbook valuations
- Obtain RICS approval for complaints handling procedure
- set up a complaints log
- appoint a complaints handling officer
- use a logo kit from the RICS for all material
- plan for succession and have a ‘locum’ if a sole practitioner
- ensure completion of annual return to RICS
What do you need to do if you are closing your practice?
- inform the RICS
- ensure clients are informed and hand-over arrangements are implemented
- return any monies held for clients
- inform insurers and procure run-off cover
- retain client files for a minimum of 6-years
Who regulates the Bribery Act 2010?
The Serious Fraud Office
Maximum penalty of 10 years imprisonment and/or unlimited fine for individuals and companies
What are the requirements for anti-money laundering?
Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017
- have a written money laundering policy
- implement systems, policies and controls to address the risks
- provide staff training
- comply with due diligence requirements
- ensure appropriate record keeping
- monitor the ongoing business relationship
- a compliance officer must be appointed
How and who reports suspicious activity in relation to money laundering activity?
The money laundering reporting officer should report suspicious activity by submitting a suspicious activity report to the National Crime Agency
What must firms do in relation to Bribery and Corruption?
As per the RICS Professional Statement: Countering bribery, corruption, money laundering and terrorist financing 2019
- not offer or accept anything that could constitute a bribe
- have procedures in place to comply with the law
- report suspicion to the relevant authority
- act with due diligence and carry out regular reviews on the firms risks
- retain records to show how the firm has complied with requirements
What must firms do in relation to Money laundering and terrorist financing?
As per the RICS Professional Statement: Countering bribery, corruption, money laundering and terrorist financing 2019
- not facilitate or be complicit in ML or TF
- have systems in place to comply with the laws
- report suspicion
- evaluate and review risk
- only use third party referencing where you can be confident in the information they provide
- verify the client with basic ID checks
- retain records to show how the firm has complied with requirements
If a client came into the office to try to pay their bill using cash, and said that they are leaving the country tomorrow so can only pay it now, what would you do.
My firm does not accept cash, however in the instance that i worked for a firm that did, the maximum amount we can accept is 10,000 euros as per RICS client money handling and anti-money laundering regulation.
Can you provide me with some headings included within your Terms of Business?
Responsibility for payment of fees, disbursements and charges.
Basis of charge (time, fixed, commission).
Timing of payment, interest and VAT.
Expenses and disbursements
Payment methods
Right to cancel
Privacy notice (brief summary and where to find it).
Can you provide me with some headings included within your Terms of Engagement?
Identification of client
Identity of person with overall responsibility for the work
Conflict of interest (declaration if there is one, and management of that conflict)
Description of assignment (scope of works)
Assumptions
Information source and use (taking third party information at face value and limiting liability if that is incorrect)
Liability limitation (linked to PII max)
Nature of service (tangible or non-tangible)
Basis of the fee
Follow up work
Complaints handling procedure
What is a quality management system?
A set of interrelated policies, processes and procedures that impacts the ability to meet a clients requirements and improve consistency in providing a service that your client has asked for.
Can you give me examples of some things that would be included in a quality management system?
- conflicts of interest checks
- customer due diligence
- key task checklist for files
- data handling and security processes
- a process to check and feedback on the quality of work, especially for new or junior members of staff
- a billing process
- complaints handling procedure (standard RICS check form)
How can consistency be introduced in a firm?
Use templates for certain things (TOE’s, conflict checks etc)
Strong Quality Management systems
Firm policies and procedures that are consistent throughout
Checked work (especially for junior members)
What things would you consider before accepting instruction?
Am I qualified to do the work?
Am I competent to do the work?
Are there any conflicts of interest?
If due diligence shows something that means that you had to decline instruction, how would you inform the client?
Speak with a senior colleague and/or compliance officer to discuss.
I am aware that you do not have to disclose why, but it may be prudent to state that for example, insurance wouldn’t cover my undertaking of the work.
Can you give me an example of a quality management system?
Plan, do, check, act (or adjust)
Why is a quality management system important?
Mitigating risk
Ensuring high quality, diligent service which contributes to public trust and confidence
Who regulates UK Data protection?
UK Information Commissioners office
What is a privacy notice?
Document outlining what information you have, what that information will be used for, whether you will share to third parties, how long you will keep the information for and what legal rights they have.
If there was a data breach, what would you do?
Inform the compliance officer within the firm.
I am aware that the persons whose data has been breach may need to be notified, and the regulator may also need to be notified.
Please can you state one Rule of Conduct and give me an example of when it has applied to you.
Rule 2 is Members and Firms must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise.
I complete all of the relevant CPD, I have turned down work outside of my competence (woodland management plan).
I stay up to date with legislative changes.
When did the existing rules of conduct take affect?
2nd February 2022
If a client was prepared to pay you in advance for a service you were providing, how would you ensure this was dealt with?
Set up a client account that is compliant
Provide the client with a statement of account
Inform and agree drawdowns
Send statements agreeing amounts to be drawn down and the services provided.
What is the difference between ethics and integrity?
Ethics are moral values that affects a persons behaviour or conduct.
Integrity is the quality of being honest and having strong moral principals.
How can professional practices look to encourage ethical environments with high standards of integrity?
Set up a confidential whistleblowing procedure.
Raise awareness and provide CPD on ethical matters.
Become RICS accredited.
Monitor ethical performance amongst staff members.
Why did the Rules of Conduct change in 2022?
The previous rules had been in place since 2007.
A consultation was held and members voted in favour of replacing current rules.
Decided that one single document would provide greater clarity.
There is now greater focus on example behaviours and understanding of evolving technology and climate change.
What are the professional obligations of members?
Comply with CPD requirements.
Members must corporate with the RICS.
Members must promptly provide all information if rested by the standards and regulation board.
Are you aware of guidance for social media use?
‘Use of Social Media’: Guidance for Members - June 2021
How do you ensure you operate inline with RICS guidance when using social media?
Always ensure use is responsible and professional, in the same way i would communicate face to face or written communication.
I am aware that a post should not be dishonest or offensive
When might the RICS investigate a social media post?
If it is discriminatory, dishonest, abusive or threatening, likely to cause harm, distress or offence, shows a pattern of concerning communications or if someone has ignored advice or warnings about concerning posts.
Can you explain your understanding of how Professional Statements and Practice information differ?
Birchard Review recommended the implementation for two new categories of material -
Professional statement - mandatory
Practice information - guidance
What are the rules around the use of the RICS logo?
What is the maximum uninsured excess allowed?
RICS states that for companies earning less than £10m per year, the maximum uninsured excess is the lesser of £10,000 or 2.5% of turnover.
If the company earns over £10m per year, there is no maximum excess.
What is the role of the RICS?
Why is the RICS important?
It promotes the highest professional qualifications and standards.
How does the RICS regulate?
Provides extensive mandatory and advisory information, while auditing its members.
In the event of non compliance, it has the power to self regulate and sanction.
What are the RICS professional standards?
A set of documents setting out mandatory rules to ensure that services provided by RICS members are of the highest standard and that members are always acting in the public interest.
What are the five Codes of Conduct?
Integrity
Competence
Diligence
Respect
Responsibility
What are the RICS Global and Professional Standards?
These were superseded by the new 5 Rules of Conduct.
What is CPD?
Continued Professional Development
Learning activities that develop and enhance a professionals abilities and knowledge.
What are members requirements for CPD?
1- 20 hours
2 - at least 10 of which should be formal
3 - based on ethics and the rules of conduct on a 3 year rotation
4 - recorded by 31 January on the RICS portal
What is your firms PII cover?
£10,000,000
Why is PII important?
Protect firm and client from loss.
What are conflicts of interest?
There are 3 types of conflict, but fundamentally it is were a professional has an interest in another person or thing that will impede their ability to act objectively and independently for another party.
What are your firm procedures for checking is a conflict of interest exists?
Check client database and email the agency team.
Complete a conflict of interest form.
What should be included within terms of engagement?
Valuer
Client
Property
Currency
Purpose of valuation
Basis of value
Valuation date
Special assumptions
Nature and extent of investigations (review of title or not, condition of buildings (building survey?), whether there is services in place)
Nature and source of information
Restrictions on use and distribution
Third party liability
Statement to say report will be in accordance with RICS Redbook
Fee
Complaints
RICS Monitoring
Limitations to liability
What is a complaints handling procedure?
Written document outlining how a complaint should be handled. This should be provided to all clients and all employees must be aware of it.
What regulates the movement and handling of Client Money?
RICS Client Money Handling (Professional Statement) Oct 2022
You talk about your level of competence, how do you establish what that is?
My level is competence is based on the work I have previously undertaken. Should something be outside of my competence, it may be inside of a colleagues competence whereby i could assist them.
How do you ensure you provide a high level of service to your client?
As part of my firms quality management system, i ensure I used firm approved templates and get my work checked by a senior colleague.
What are the consequences of acting outside of your competence?
Potentially providing the client with poor quality service which increases the risk of complaints, reputation damage and insurance claims.
What is integrity?
Relates strongly to honesty and acting in a moral way
Can you name some of the RICS Bye-Laws?
2 - deals with membership and registration
3 - Designations (use of MRICS etc)
4 - Contribution to funds (paying subscriptions)
5 - Conduct (members must act in line with rules of conduct and RICS have powers to monitor and regulate this)
6 - Governing council
7 - Subordinate boards, committees and groups
8 - Procedure for general meetings
9 - accounts and audit
10 - general
