Ethics, Rules of Conduct and Professionalism

Question 1

What does RICS stand for?

Answer 1

Royal Institution of Chartered Surveyors.

Question 2

Who is the current RICS president?

Answer 2

Tina Paillett FRICS

Question 3

How is the RICS governed?

Answer 3

Under the rules of the Royal Charter, which requires the RICS to act in the public interest.

Question 4

Explain the structure of the RICS?

Answer 4

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.

Question 5

Who is the CEO of the RICS?

Answer 5

Justin Young

Question 6

What are the three main roles of the RICS?

Answer 6

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

Question 7

What do you understand about the Levitt reviews?

Answer 7

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.

Question 8

What are the 5 benefits of being an RICS memeber?

Answer 8

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

Question 9

What are the rules around the use of the RICS logo?

Answer 9

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

Question 10

What information would the RICS require if you were to register with them as a firm?

Answer 10

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

Question 11

What are the 5 Rules of conduct?

Answer 11

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)

Question 12

Why were the Codes of Conduct updated?

Answer 12

So that they were clearer and simpler for all to refer to. Updated February 2022

Question 13

What happens if a complaint is made to the RICS about a member or firm?

Answer 13

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.

Question 14

When may the RICS investigate a social media post?

Answer 14

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

Question 15

What are the main two RICS material types?

Answer 15

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.

Question 16

How do you calculate your fees?

Answer 16

My fees are market based and agreed on an ad-hoc basis with my clients. I understand that I must not undercut another firm, however know that healthy competition is ok.

Question 17

What are the three main considerations / steps to take prior to proceeding with work?

Answer 17

1 - Check whether I am professionally competent to carry out the work
2 - Check for conflicts of interest
3 - Obtain signed terms of engagement

Question 18

What legislation allows for a 14-day cooling off period?

Answer 18

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.

Question 19

What is the RICS material advising on Conflicts of Interest?

Answer 19

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.

Question 20

What are the 3 types of conflicts of interest?

Answer 20

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

Question 21

How would you manage a conflict of interest with prior informed consent?

Answer 21

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

Question 22

What are the RICS requirements for a complaints handling procedure?

Answer 22

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.

Question 23

Explain your firms complaints handling procedure.

Answer 23

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.

Question 24

What are the 4 requirements of CPD?

Answer 24

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

Question 25

What is formal and informal CPD?

Answer 25

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.

Question 26

What are the requirements of PII?

Answer 26

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

Question 27

What insurance would you need to put in place if your firm stopped trading?

Answer 27

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.

Question 28

What is negligence and how can you avoid it?

Answer 28

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

Question 29

What are the requirements of client money handling?

Answer 29

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.

Question 30

If you were to set up your own firm tomorrow, what would you need to do?

Answer 30

• 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

Question 31

What do you need to do if you are closing your practice?

Answer 31

• 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

Question 32

Who polices the Bribery Act 2010?

Answer 32

The Serious Fraud Office
Maximum penalty of 10 years imprisonment and/or unlimited fine for individuals and companies

Question 33

What are the requirements for anti-money laundering?

Answer 33

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

Question 34

How and who reports suspicious activity in relation to money laundering activity?

Answer 34

The money laundering reporting officer should report suspicious activity by submitting a suspicious activity report to the National Crime Agency

Question 35

What must firms do in relation to Bribery and Corruption?

Answer 35

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

Question 36

What must firms do in relation to Money laundering and terrorist financing?

Answer 36

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