Ethics, Rules of Conduct and Professionalism Flashcards
What is Rule 1, from the RICS Rules of Conduct?
Rule 1: Members and firms must be honest, act with integrity and comply with their professional obligations, including obligations to the RICS.
What is Rule 2, from the RICS Rules of Conduct?
Rule 2: Members and firms must maintain their professional competence and ensure that their services are provided by competent individuals who have the necessary expertise.
What is Rule 3, from the RICS Rules of Conduct?
Rule 3: Members and firms must provide a good quality and diligent service.
What is Rule 4, from the RICS Rules of Conduct?
Rule 4: Members and firms must treat others with respect and encourage diversity and inclusion.
What is Rule 5, from the RICS Rules of Conduct?
Rule 5: Members and firms must act in the public interest, take responsibility for their actions, and act to prevent harm and maintain the public confidence in the profession.
What are the professional obligations of members?
- Comply with CPD requirements as set by RICS.
- Cooperate with RICS
- Promptly provide all information reasonably requested to the Standards and Regulation Board, or those exercising delegated responsbility on its behalf.
What are the professional obligations of firms?
- Publish a complaints handling procedure, which includes an alternative dispute resolution provider and maintain a complaints log.
- Ensure all previous and current professional work is covered by adequate and appropriate professional indemnity cover that meets standards approved by the RICS.
- Fires 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.
- Must cooperate with RICS.
- Must promptly provide all information reasonably requested to the Standards and Regulation Board, or those exercising delegated responsbility on its behalf.
- Must display a designation to denote they are regulated by RICS on their business literature, in accordance with RICS’ policy.
- Must report to RICS, any matter they are required to report under the Rules for the Registration of Firms.
Where are the professional obligations found?
In Appendix A of the Rules of Conduct.
What is a conflict of interest?
A conflict of interest arises in a situation where there may be an actual, perceived or potential risk that the professional judgement of an RICS-regulated firm or member will be compromised when undertaking an assignment.
What types of conflict are there?
*A ‘party conflict’ – a situation in which the duty to act in the interests of a client or other party in a professional assignment conflicts with a duty owed to another client or party in relation to the same or a related professional assignment.
- An ‘own interest conflict’ – a situation in which the duty to act in the interests of a client in a professional assignment conflicts with the interests of that same RICS member/firm.
- A ‘confidential information conflict’ – a conflict between the duty of an RICS member to provide material information to one client, and the duty of that RICS member to another client to keep that same information confidential.
Why would you identify a conflict of interest?
The most important reason for avoiding conflicts of interest is to prevent anything getting in the way of your duty to advise and represent each client objectively and
independently, without regard to the consequences to another client, any third party, or your own interests and that the clients and in turn the public can be confident you are doing so.
What is an information barrier or ‘Chinese wall’?
The physical and/or electronic separation of individuals (or groups of individuals) within the same firm that prevents confidential information passing between them.
You have identified a conflict of interest; what are your next steps?
You should always consider whether your proposed course of action might:
- reasonably be perceived to imply a lack of integrity
- cause embarrassment to your profession or
- mean that you are unable to advise and represent each client objectively and independently.
If there is a material risk of your proposed course of action having such an effect, you must not proceed.
Is there an instance when you might proceed even though a conflict of interest has been identified?
The Conflict of Interest professional statement does not allow you to choose whether you can proceed despite a Conflict of Interest or a significant risk of one: it prohibits you from proceeding, unless you obtain prior Informed Consent from all affected parties.
What is informed consent?
Consent is given willingly by a party who may be affected by a conflict of interest to proceed, in the understanding that:
- there is a conflict of interest or a significant risk of one,
- all the facts are known by the RICS member/firms advising the party
- what the conflict of interest is or may be
- the conflict of interest may affect the ability of the RICS member/firm to advise or act fully in the interests of the client.
What is your firm’s gifts and hospitality policy?
Any gift, hospitality or benefit which
might reasonably be seen to compromise the Company’s position or your personal judgment and integrity, is to be refused.
A register of gifts and hospitality shall be kept for any gifts or hospitality received including if it has been accepted or declined.
No gifts should be accepted where they may appear to be disproportionately generous or could reasonably be construed as an bribery to affect a business decision.
Under no circumstances should gifts of cash be accepted.
All gifts accepted must be declared and it will be at the Company’s discretion whether to claim the gift and pool it at a later date (i.e. in a Company or charity raffle) or to allow the individual to retain it.
You should only accept invitations to lunch or dinner from an external organisation where the reason for accepting an invitation is to discuss business matters.
What is your firm’s Anti-Bribery and Corruption policy?
The Company operates in compliance with the laws relevant to countering bribery and corruption in the UK. This includes the Bribery Act 2010.
Wherever possible, the Company will use procedures to minimise the opportunity for corruption by subcontractors and suppliers against the company.
The Company is committed to ensuring that its partners, suppliers, contractors, agents and other third parties with which we do business, have a code of conduct which explicitly prohibits the making of corrupt payments.
The Company is open and transparent about the process by which contracts of major interest to stakeholders have been notified, opened to potential bidders and awarded.
Unsuccessful bidders will be notified of decisions made the basis for selecting winning contracts.
How do you manage conflicts of interest in your professional work?
I would initially exercise my professional judgement to see if a conflict exists and which type.
I would exercise my professional judgement to determine if I can represent the client objectively and without bias.
If I can, I would then obtain informed consent from all parties involved before proceeding.
Alterntively I would consider recommending another colleague or organisation.
What are the three types of conflicts of interest?
- Party conflict - A conflict between two parties on the same job.
- Own interest conflict - when representing the client conflicts your own interests.
- Confidential information conflict - A conflict when you are asked to share/withold information.
How do you keep up to date with current affairs and topic issues ?
On mailing list, office discussion, CPD email group, magazines and publications etc
What information is required by the RICS for registration and in the annual return?
Type of business and staffing details
Statutory regulated activities - such as for financial services
Nature of clients
Complaints handling procedure and records
Professional indemnity insurance certificate
Whether the firm hold clients’ money
How does your behavior differ professionally and personally ?
My approach and behaviour does not change.
What would you do if you considered your directors advice to be incorrect ?
Consider :
* The implications of the advice
* Is it legal ?
* Discuss with managers, colleagues
* Refer to the Ethics decision tree
What is the status of a RICS professional statement ? who does it apply to ?
Mandatory
RICS trainees, members, regulated firms
You set up your own business but you decide to go off on a skiing holiday for 2 weeks, you break your leg and the doctors say you must have complete bed rest and no access to emails or work phone, what do you need in place to cover this situation?
A Locum agreement
You see that a colleague is having some unwanted attention from a male colleague and it has happened a few times, what action if any would you take and what is this?
Consider this as a potential form of workplace harassment. I would go and speak to the male colleague and tell him its not acceptable behavior, I would also report to my senior.
Why do you want to become chartered ?
- Gold standard in my profession
- Offers guidance and support from RICS
- Designation will help my career
- I am committed to lifelong learning
- I want to give back to the up and coming surveyors
What is the RICS ethical decision tree?
The RICS decision tree assists me in making informed decisions , confirming my actions are ethical and legal.
What are ethics?
Moral principles that govern an individuals behaviour.
Why are ethics important?
Act as an anchor to appropriate behaviour and ensure consistency and clarity in the market. It allows us to provide the best service for the client and recognise the wider public.
What does it mean to act ethically as a Chartered Surveyor?
Acting ethically means complying with standards and ensuring that you are acting on behalf of your clients best interests.
What are the three types of due diligence?
Simplified Due Diligence – Where you determine the business relationship is low risk of money laundering/terrorism
Enhanced Due Diligence – for high risk customers and transactions with greater threat to financial sector
New Customer Due Diligence – doing the checks to ensure your client is who they say they are.
What are the three benefits of regulation for firms?
CPS:
* Confidence - for client as regulated firms are monitored by RICS regulation
* Professionalism - firms have to provide clear, impartial and expert advice
* Security - firms have to have recognised CHP, access to ADR and PII cover
Why does you firm have Terms of Engagement? What should be included in Terms of Engagement?
Creates a contract with the client and clear definition of what is expected and on what terms etc.
Sets out the proposed fee basis, payment of expenses and that a copy of the firm’s complaints handling procedure is available upon request.
How would you close down a practice?
- Inform the RICS
- Inform clients and arrange for them to be handed over to a new firm
- Return any clients’ money
- Set-up professional indemnity run-off cover for a minimum of 6 years
- Retain a copy of client files and record for a minimum of 6 years
How long should files be kept for?
- A minimum of 6 years before disposing and destroying them securely (although can be sued for negligence for up to 15 years)
What do the new rules state about the use of the RICS logo and designation?
- Use of the RICS logo has been restricted to members and regulated firms only
- The ‘regulated by RICS’ designation must be displayed clearly to ensure visibility
- Prescribed text that must be included in the terms of engagement
- Companies are only allowed to use ‘chartered surveyor(s)’ designation in trading name and not company name
How would you limit the risk of working with a client or contractor who may be financially unstable ?
- Screening process:
- Dun & Bradstreet credit check
- Company search (Account information from Companies House)
- Internet search (Client website for additional information judgement on reliability)
If your client asked you to lower your fees because of their limited funding, what would you do?
The client would have to pay the required price for the level of service required or reduce the scope of works involved. I could consider if the scope of work could be reduced however on the client request i would not just lower my fees.
How do you know you are competent ?
Having the knowledge and skills to undertake an instruction. If you have dealt with that type of property and location and you’ve carried out that task, you are deemed as competent. This can be defined as :
- Skills
- Knowledge
- Attitude
- Training
- Experience
Can you advise somebody as an individual ?
Unless you have the correct insurances in place, you should not be giving any professional advice to anybody, friend or family or strangers. I would advise them to contact me during normal working hours as long as it does not become a conflict of interest and TOE can be defined etc.
How do ethics link with conduct rules?
Rules of conduct are a detailed description of how we are expected to carry ourselves and how to set the highest possible level of standard.
If faced with a situation that you felt was unethical, how would you proceed?
Using the decision tree:
* Do I have sufficient facts?
* Is the matter legal?
* Is it in line with RICS Professional and Ethical Standards?
* Have I consulted with appropriate people?
* Do I have clear reasoning in reaching my decision?
* Would I be content for my actions to be made public?
If answered no to any of the above, I would not proceed with the situation alone and would consult senior staff with direction on how to proceed.
Why are ethics important?
- Prevents any issues with consistent behaviour
- Sets a standard of expertise and professionalism
- Promotes trust in the company and industry
What are the CPD requirements?
- Qualified/MRICS member – 20 hrs per year, min 10 hours formal. Ethics every 3 years.
What is the difference between formal and informal training ?
Formal has a learning objectives and a defined learning outcome, i could reference the CPD decision tree for further guidance.
What is your CPD strategy ?
My CPD plan is dictated by my skills and or knowledge gap considering future requirements and sectors etc. This is review bi annually to confirm i am getting suitable and appropriate CPD to my role.
Where would you find the RICS requirements for professional indemnity cover ?
- Professional indemnity insurance requirements
- Regulation Document
- Version 9 with effect from 1 April 2022
In relation to professional indemnity insurance, what is the minimum limit of indemnity for turnover under £100,000(in the preceding year )?
- £250,000. This is dependent on predicted turnover based on the previous year’s turnover
- The RICS defines 3 levels of cover:
o up to £100,000 = £250,000
o £100,001 - £200,000 = £500,000
o £200,001 + = £1,000,000 of cover
How many years after an instruction has been completed can a Professional Indemnity claim be made ?
15 years (Limitations Act)
What type of cover would you need to cover a claim brought after a firm or member ceases to trade ?
Run off cover. * Run off cover must also be held for a minimum of 6 years for a limit of £1million.
What cover do you need?
PII insurance - Professional indemnity insurance covers financial loss, personal injury and property damage resulting from your negligent act or error while you’re working for a client.
PLI insurance - Public liability insurance is there to protect you if a member of the public is injured (or their property is damaged) and your business is faced with a compensation claim as a result. It can cover you when you’re working at client sites or in public.
Employers Liability Insurance - Employers’ liability insurance covers you and your business for compensation costs if an employee becomes ill or injured as a result of the work they do for you. It’s legally required of all businesses with one or more employees.
Building Insurance (if you own your own premises)
Why do you need PII insurance?
Consultants provide expert advice and therefore face risks associated with making mistakes or errors in judgement that could cost a business in profits. When profits are lost due to any negligence or perceived negligence businesses often respond with lawsuits. It also protects the client, surveyor and firm.
What would you do if you dropped your camera on someone’s car bonnet during a survey?
Make numerous attempts to contact the owner to detail what has happened along with an sincere apology. If not available I would leave a note, take pictures etc. I would escalate this to the management team. This may prompt a claim under professional or public indemnity insurance.
What status is the RICS Professional Indemnity Insurance Requirements document?
A regulation document
Who does PII protect ?
Clients from financial loss, the firms form loss resulting in being able to continue trading and the surveyor.
What is meant by each and every claim ?
Each and every is cover for each claim that does not add up.
The opposite is ‘aggregate claims’, where the claims are added up to a certain agreed value.
You could have each and very claim up to £100,000 per claim or you could have £100,00 aggregate(which is a lot lower cover).
What measures should be taken to try and avoid PI claims?
- Keep full and detailed records of meetings, conversations etc
- Record recommendations and advice given
- Use proper letters of engagement, scope of services and terms of engagement
- Don’t advise on a specialism outside your field of experience
- Use RICS guidelines
- Avoid poor management and excessive workloads
In the RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing February 2019 - RICS Members and Firms must do what in relation to bribery and corruption ?
not offer or accept, directly or indirectly, anything that could constitute a bribe
ensure that they have adequate knowledge of bribery and corruption to be able to comply with the requirements of this professional statement
report any activity they are aware of that breaches applicable anti-bribery and corruption laws to the relevant authorities or a senior manager.
Can you name any Money Laundering Red Flags?
- Cash-only buyers
- An unusual sale price (too low or too high)
- Payments from multiple/different source to counterparty
- Funds provided by unknown third parties
What is money laundering?
Concealing the source of proceeds of criminal activity to disguise their illegal origin. This may take place through hiding, transferring and or recycling illicit money or other currency through one or more transactions, or converting criminal proceeds into seeming legitimate property.
Give me some examples of how your firm might comply with the Money Laundering Regulations.
We report cash payments over £10K. Carry out risk assessments to make sure that we take the necessary procedures when working with clients from high risk countries or high risk sectors.
What are the principles of the Money Laundering Regulations?
Sets additional obligations for private sector firms working in areas of high money launder risk. Aims to stop criminals using professional services to launder money and to investigate large or regular cash transactions. You have a duty to report cash payments over £10K. Carry out risk assessments to make sure that you take the necessary procedures when working with clients from high risk countries or high risk sectors.
If you were given a gift what would you do ?
Log it within the gift log.
I may decline the gift taking into account timings and proportionality and my companies gift handling policy.
