Ethics, Rules of Conduct and Professionalism - Part 1 RICS Requirements Flashcards
When was RICS founded
1868
Who granted RICS a Royal Charter and when
Privy Council
1881
What set out the governance of the Institution
RICS Regulations and Bye-laws
Current membership
Over 140,000 qualified and trainee members
What are the 4 levels of membership
- FRICS
- MRICS
- AssocRICS
- Trainee/Student
To become a Fellow what do you need to provide the Fellowship assessor
- Evidence of achievement of FOUR Fellowship characteristics
- Portfolio of professional achievement, including your CPD record
What are the five Fellowship characteristics
- Five of more years at MRICS
- A leadership role
- Professional/ technical achievement
- Academic achievement
- Raising the profile of the RICS
How is the RICS currently governed
By various internal councils and boards
How many members does Governing Council have
20+ members
What is the role of the Governing Council
Provide management and strategic direction
Who reports into the Governing Council
- The Standards and Regulation Board
- The Management Board
How many specialist professional groups
17 - covering property, land and construction
What is the role of the elected board for each of the specialist professional groups
Responsible for outlining standards of competence and practice
Who is the current CEO of the RICS
Justin Young (Jul 23)
Who is the current President of the RICS
Justin Sullivan (1st Jan 25)
Who chairs Governing Council
The President of RICS
Role of RICS
‘Promotes and enforces the highest professional qualifications and standards in the development and management of land, real estate, construction and infrastructure’
(RICS,2020)
Who is the RICS accountable to
Members and the public
What else is the RICS involved in
Policy influence
Political engagement
Three main roles of the RICS
(RICS,2015)
- R – Regulation - Protect consumers through strict regulation of professional standards
- A – Advice - Leading source of information and advice
- T – Training - Maintain the highest standards of education and training
What do standards documents lay out?
The ethical conduct and competence- related standards for the profession
What is achieved by working to RICS standards
Members and RICS regulated firms deliver confidence and transparency
How does RICS ensure standards are upheld
Through a system of independently led regulation
Why did the RICS commission Lord Bichard to undertake a review
Following the independent review of internal governance failings within RICS, carried out by Alison Levitt QC (2021)
What was the purpose of the Bichard Review
- Clarify the purpose of RICS, including responsibility to act for public advantage
- Make recommendations on its governing structure
- provide proposals of incoming leadership and governing body on the future culture and strategy of the Institution
Who was consulted during the Bichard Review
Members and external stakeholders
When was the Bichard Review reported
June 2022, with 36 recommendations in 7 areas
What was the outcome of the Bichard Review
Outcome was 5 key themes: Governance, Strategy, People, Member Service, Culture and Values
RICS 5 Future Foundations – Vision, Mission, Strategic Goals, Values and World class organization.
Benefits of being a RICS member
- MA - Market advantage
- R - Professional recognition
- K - Knowledge – International Practice Standards
- S - Status
- N - Global network
Why must firms providing surveying services to the public register for regulation
To ensure there is a recognised quality benchmark for all firms
To maintain registration what must firms do
Annually make a return to the RICS confirming compliance with obligations
A practice can be…
A corporate body, a partnership, an LLP or a sole practitioner practice
At what threshold does a UK firm have to be regulated
If 50% of Principals are RICS members
if at least 25% are then it can apply for regulation
What is a Principal (in the context of a firm)
Are sole practitioners, directors, partners or board members, or someone able to act without supervision
What is a Responsible Principal
A nominated individual who is obliged to ensure all reasonable steps are taken and systems are emplaced to comply with regulatory and RICS requirements
Who can use the RICS logo
Only RICS members and registered firms (April,2020)
When can firms use the designation Chartered Surveyors
In relation to the trading name only
7 things required by RICS for Registration
- Type of Business and Staff Info
- Name of Responsible Principal
- Statutory Regulated Activities
- Nature of Clients
- Complaints Handling Procedure Details (CHP)
- Professional Indemnity Insurance Details (PII)
- Is clients’ money held?
When were the Rules of Conduct published
October 2021, effective 2nd Feb 2022
What did the Rules of Conduct replace
Rules of Conduct for Members and Firms and the 5 Global Professional and Ethical Standards
How many case studies support the Rules
12
When did the RICS publish further guidance on Rule 4 (DEI)
March 2024
Rule 1
Honesty and Integrity - Members and firms be honest, act with integrity and comply with their personal obligations, including obligations to RICS
Rule 2
Competence – Maintain professional competence and ensure services are provided by competent individuals who have the necessary expertise
Rule 3
Service – Provide good quality and diligent service.
Rule 4
Respect – Treat others with respect and encourage diversity and inclusion.
Rule 5
Responsibility – Act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession.
What does Appendix A to the Rules of Conduct set out
Professional obligations
RICS members must do what
- Comply with CPD Requirements
- Cooperate with the RICS
- Promptly provide information requested by the Standards and Regulatory Board
RICS regulated firms must
- Publish a complaints handling procedure, including ADR provider, maintain complaints log
- Have appropriate PII covering all previous and current work
- Have a sole principal to take over in the event of incapacity or death
- Cooperate with the RICS
- Promptly provide information requested by the Standards and Regulatory Board
- On published literature have a designation to denote they are regulated by RICS
7.Report to RICS any matter they are required to do so under the Rules for the Registration of Firms
What does the Decision Tree provide
A framework of questions which members should ask themselves when facing a situation in which they have been asked to act in a potentially unethical manner or situation
Ethics Decision Tree steps
Facts?
Legal?
In line with Rules of Conduct?
Consulted others?
Clear reasoning?
Informed Decision?
Content if actions made public?
If all of these are yes:
1. Act (Reflect on the Outcome)
2. Record Decision and Reasoning
Why does RICS regulate the surveying profession
- Protect the public
- Uphold public confidence
- Uphold professional standards
(PCPS)
What board is responsible for regulating the profession
The Standards and Regulation Board
What can trigger disciplinary procedure
- Someone complaining to the RICS
- An allegation by a client or third party
- Information received/ established by RICS
What provides an outline of the regulatory approach by RICS of regulated members, non members and firms
RICS Regulatory Decision Making, 2022
What sets out the disciplinary process
The RICS Regulatory Tribunal Rules, 2022
What are the 3 levels of disciplinary action
- Action by Head of Regulation
- Disciplinary Panel (drawn for the independent regulatory tribunal)
- Appeal Panel
What are the four actions the Head of Regulation (RICS) can initiate upon completion of their investigation if they consider that disciplinary action is required
- Fixed Penalty Notice
- Make a Regulatory Compliance Order
- Refer matter to a member of the Regulatory Tribunal
- Refer matter to a Disciplinary Panel
What are Fixed Penalties
Procedure used for breaches relating to the supply of information to RICS by firms and members
Consist of a fine and/or caution
What is a Regulatory Compliance Order
- For low level breaches, which could be easily corrected
- A written document stating the actions one must take in a specified period and an agreement to pay a fine
Example of when RCO could be issued
Non compliance with RICS Rules eg not completed CPD requirements
What is action by a Disciplinary Panel
Procedure used for more serious breaches of conduct
Who is part of a Disciplinary Panel
Lay members (not RICS members)
What are the penalties available to a Disciplinary Panel
- RCO - regulatory compliance order
- Reprimand
- Fine
- Unlimited fine per breach (must be proportionate)
- Impose conditions upon continued RICS registration
- Expulsion
- Publication of results of hearing in RICS Modus, RICS website, and local newspaper
What is a Appeal Panel
Panel that considers an appeal against review of a decision relating to disciplinary action. They have the ability to vary the penalty previously imposed
Who makes up an Appeal Panel
Membership of this Panel includes lay members
When is RICS likely to investigate concerns about social media posts (2021)
- Discrimination
- Dishonesty
- Abusive/ threatening behaviour
- Bullying/ harassment/ victimisation
- pattern/ large number of concerning communications
- ignoring previous warmings about concerns
What is replacing Professional Statements and Guidance Notes
Professional Standard
RICS is in the process of reviewing and recategorising all current Professional Statements/ Guidance Notes to become Professional Standards
What are Professional Standards
Set requirements of expectations for RICS members and regulated firms about hoe they provide services or the outcomes of their actions
What do Professional Standards contain
- Mandatory requirements
- Recommendations of best practice
Practice Information
Information to support the practice, knowledge and performance of RICS members and regulated firms
Practice Alerts
In Aug 2023 RICS published a web page to collect Practice Alerts
= key tools for alerting the profession to emerging areas of risk over which the RICS has concerns
Example of a recent Practice Alert
2023 - In respect of commercial property management and the new legislative requirements for fire risk assessments and fire management plans
Feb 2024 - Practice Alert on Expert Witnesses
Fee Negotiation requirements
- Avoid price fixing, aggressive cutting/ undercutting or collusion.
- Market-based and agreed on an ad-hoc basis.
- You can enter further fee negotiations after initial fee proposal
- Consider level of time/ resource/ service when negotiating.
- Be completely transparent (e.g., if a referral fee is involved).
!!! Consider the Bribery Act 2010 and the RICS Rules of Conduct.
What should you adhere to when conducting fee negotiations
The Bribery Act 2010
The RICS Rules of Conduct.
What are terms of engagement
State in writing the clients agreement to the proposed fee basis, payment of expenses (how these are calculated) and that a copy of the firms complaints handling procedure is available upon request
3 steps BEFORE accepting/ working on an instruction
- Check professionally competent
- No conflicts of interest/ personal interests
- Confirm TOE in writing and written approval
What legislation must you comply with for agency work
- S18 of the Estate Agents Act 1979
- AML - Money Laundering Regulations 2017
- Consumer Rights Act 2015
What does the Consumer Rights Act 2015 allow
Cooling off period of 14 days from the date of agreement
When might you decline an instruction
- Not competent
- Don’t have sufficient facts
- Client wont sign TOE/ do AML
- Conflict of interest/ personal interest
- Cant agree PII liability cap
- PII wont cover work carries out on a personal basis
- Client is on the UK Gov’s sanctions list
8! ULTIMATE TEST - would you want your actions made public
What does the Ethics Decision Tree set out
A framework for considering whether to act for a client
When does a Conflict of interest arise
When a member or firm’s independence and impartiality is threatened due to the existence of a conflict between two clients
List the examples of conflict of interests
- Financial interest
- Personal interest
- Commercial relationships
- Acting on both sides of a transaction
What is conflict avoidance
When you do not accept the instruction
What is conflict management
When the instruction is accepted and steps are agreed and emplaced to manage the conflict.
Example; information barrier, with the written agreement of all parties
When was RICS Global Professional Standard: Conflicts of Interest published
2017, came into effect 1st Jan 2018
Key requirement of RICS Global Professional Standard: Conflicts 2017
A Member must not advise or represent a client where doing so would involve a conflict of interest or a significant risk of a conflict of interest, other than where all those, or may be affected have provided their informed consent
When can informed consent be sought
- Satisfied that proceeding despite COI is in the best interest of all those who are involved
- Legal
What are the 3 types of conflict of interest
- A Party Conflict
- An Own Interests Conflict
- A Confidential Information Conflict
What is a Party Conflict
Work on the same or related instruction for two different parties
What is an Own Interests Conflict
Conflict relating to a personal interest
What is a Confidential Information Conflict
Work between two parties that is confidential
Requirement for obtaining informed consent
- In writing
- Transparency of material factors
- All parties best served by proceeding
Requirements for members and firms regarding RICS Global Professional Standard: Conflicts 2017
- Conflicts managed in accordance with the PS
- RICS firms have effective systems and controls in place propositional to the size/ complexity of business
- Kept records to show compliance
Steps of handling a conflict of interest
- Conflict Avoidance - consider if irresolvable or could be managed
- Written advice to both parties - informed consent
- Conflict Management - Information barrier
Things to include when writing to clients to seek informed consent
- Disclose nature of conflict and circumstances.
- Set out proposal for how you intend to deal with the conflict - eg. information barrier
- Be clear, recommended them to seek independent advice if needed
- Request written confirmation from both clients of their informed consent on the basis of the proposal
Information barrier requirements (6)
- Robust - prevent information passing between parties
- Take reasonable steps to operate effective barrier
- Surveyors acting on the 2 sides must be different and physically separated
- Virtual IT barrier
- Securely store instruction information
- Clear audit trail of conflict check process/ all written/oral communications; Compliance officer must oversee
What mandatory professional standard relates only to UK commercial investment agency work where a specific risk has been identified
RICS Professional Statement: Conflicts of interest - UK commercial property market investment agency 2017
What does the RICS Professional Statement: Conflicts of interest - UK commercial property market investment agency 2017 state with regard to Dual agency
This practice must not be undertaken in any circumstances from 1st Jan 2018 by any RICS members
What is Dual Agency
Where an agent has a contractual agency relationship with both the seller and buyer at the same time - NOT ALLOWED
What are multiple introductions
Where an agent has competing contractual relationship’s simultaneously with several buyers for commercial real estate investment opportunities
Scenario of multiple introductions - Appointment on exclusive basis (TOE signed)
Other prospective buyers with whom the agent was in contact with must be informed the agent is no longer able to advise them
Scenario of multiple introductions - Appointment on non-exclusive basis
The agent must obtain informed consent from the client(s) subject to the necessary information barriers being in place.
Incremental Advice
Where an agent is approached by another party to provide advice, to include valuation, building surveying or planning, related to a purchase or disposal that is incremental to an existing instruction
Example of incremental advice
An agent is acting for the seller in relation to a disposal but is approached by the buyer or its lender to provide a valuation
Conditions for incremental advice
- Consent is given
- Information barrier
When does Personal Interest/Own Interest Conflict arise
When acting for a:
1. Family member
2. Close business associate
3. Connected Person - financial or personal interest/benefit
What must you do when a Personal Interest/ Own Interest Conflict arises
- Full transparency
- Declare facts promptly and in writing PRIOR to accepting instruction
3!!! Remember S21 of Estate Agents Act 1979 declaration required for agency work
What to RICS Bye laws state regarding Confidentiality
‘Client confidentiality must be maintained for all client affairs’
including historic information and information provided prior to instruction
What must you do if a third party wants access to you files
Must get client’s approval first unless subject to a statutory duty overring the clients confidentiality rights e.g. Police/ HMRC
What is the minimum period in which old files should be held before disposal and being destroyed securely
6 years
What should you do if you receive confidential information regarding a party who is not your client
- Client and sender should be advised of this
- Matter should be recorded in a note to the firms compliance officer
- Securely dispose of confidential material received in error
It is a requirement for RICS Regulated Firms to have a published complaints handling procedure that meets the requirements of ….
RICS Rules of Conduct 2021
Why should you notify your PII insurer when you receive a complaint
A complaint could lead to a claim for negligence
When should details of the CHP be issues to a client
At the same time as Terms of Business
What does a complaints log detail
- Details of the complaints
- Progress of complaint
- Outcome of complaint
What must be included in a CHP
An RICS approved Alternative Dispute Resolution mechanism
Does the CHP need to be approved by the RICS
YES
Stage One of a standard minimum procedure for the handling of a complaint
IN HOUSE
CHP details issued, clear procedure recorded, impartially implemented, complaints handling officer details, submitted in writing.
Acknowledged within 7 DAYS and Investigated within 28 DAYS.
CBRE CHP
Acknowledged within 5 DAYS and Investigated within 20 DAYS.
Stage Two of a standard minimum procedure for the handling of a complaint
ADR - Third Party Resolution
If unresolved in Stage One, an appropriate redress mechanism must be provided
Examples of redress mechanisms
- The Centre for Effective Dispute Resolution (CEDR)
- The Property Redress Scheme
- RICS Dispute Resolution Service
When does the RICS become involved in CHP
When a member fails to respond to the complaint or prevents the party gaining access to an independent redress mechanism
Who is a sole practitioner advised to nominate as their complaints handling officer
A surveyor in another firm
CPD Requirements
20 hours per year, minimum of 10 hours formal (RICS decision tree to help decide which it is)
- Maintain Rules of Conduct knowledge and understanding
- Log CPD onto the portal by 31st January each year
Formal CPD
All forms of structured learning with clear learning objectives and outcomes
online training, professional courses, seminars
Informal CPD
Self managed learning that is relevant or related to your professional role
What needs to have occurred in order for a negligence claim to be made
- Duty of care breached
- Losses
= Damages (Negligence claim)
Who do you have a duty of care to
Clients and third parties, using reasonable care and skill
Yianni Vs Edwin Evans (1981)
A residential valuer instructed by a mortgagor lending institution could owe a duty of care in tort to a morgagee purchaser relying on a valuation
Scullion Vs Bank of Scotland plc (t/a Colleys) (2010)
Related to valuation report prepared for a flat in surrey.
The Court of Appeal held that a surveyor who provides advice on value to a lender in respect of a buy to let purchase doesn’t 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
Burgess Vs Lejonvam (2020)
Professionals providing services pro bono + without a contract owe a duty of care in tort to act with reasonable care and skill in respect of the services they provide
Hope Capital Ltd Vs Alexander Reece Thompson LLP (2023)
The High Court confirmed that the purpose of the valuer’s option/advice will define the extent of the duty
Limitation Act 1980 - Negligence limitation periods for CONTRACT
6 years from date of negligent act
(S14A) 3 years from date of knowledge
15 years long stop date.
Limitation Act 1980 - Negligence limitation periods for TORT
6 years from the date the claimant suffered the loss
Avoidance of negligence steps
- Understand client objectives and confirm instruction in TOE
- Competence
- Adhere to RICS Professional Statements/ Practice info
- Detailed file notes/photos
- Up to date market knowledge/ legislation
- CPD
- Cap the professional liability excess on your PII Policy in TOE
Is PII mandatory
YES for all surveyors working in practice
Why do we require PII
To protect clients, surveyors and third parties against negligence claims when there is a duty of care breached and a claim for damages arises
What does PII stand for
Professional Indemnity Insurance
PII RICS Professional Standard
Professional Indemnity Insurance Requirements w.e.f 1st April 2022
What must all members ensure with regard to PII
Appropriate level of insurance is in place for each instruction having considered potential liabilities which may exist
All policies must be underwritten by RICS approved issuer
Current minimum indemnity requirement for a Firm with a turn over of £100,000 or less in the preceding year
£250,000 (for each/every claim)
Current minimum indemnity requirement for a Firm with a turn over of £100,001 - £200,000 in the preceding year
£500,000 (for each/every claim)
Current minimum indemnity requirement for a Firm with a turn over of £200,001 and more in the preceding year
£1million (for each/every claim)
How to calculate the minimum PII cover for a new business
Estimate the turnover and adjust in due course accordingly
What is the maximum level of uninsured excess required by RICS is the firms turnover in the preceding year is £10million or less
Greater of 2.5% of the sum insured or £10k
What is the maximum level of uninsured excess required by RICS is the firms turnover in the preceding year is over £10million
No set limit
What does it mean by PII policies work on a claims made basis (fully retroactive)
Policies cover claims that are made during the period of insurance regardless of when the negligent act occurred
How often should the PII certificate be sent to RICS
On annual basis as part of the firms annual return to RICS
What cover is required following cessation of trading
Adequate and appropriate run off cover
Run off cover requirement for consumer claims
Minimum of £1million of aggregate cover over 6 years
Run off cover requirement for commercial claims
Firms must consider what is adequate + appropriate for minimum of 6 years
What to do if the Firm is unable to obtain run-off cover from their incumbent insurer or the open market
Apply for coverage to the RICS Run-off Pool
Is PII cover required for pro bono work
YES
What service is provided by RICS for members facing claims for work carried out by an employer who has gone in to administration
Members Support Service (MMS)
What is the RICS Assigned Risk Pool for
Members who cannot arrange PII cover
RICS Guidance Note Risk, Liability, and Insurance (2021) guidance
Liability caps on each instruction to mitigate risk and be wary of 3rd party reliance on instructions
What are the six main areas of good practice set out in the RICS Professional Standard: Client Money Handling 2019
- Holding client money
- Providing information to clients
- Receipts of client money
- Payments from client accounts
- Accounting records and controls
- Compliance
Money handling procedures
- Keep accounts separate / identifiable (use word “client”).
- Client must be able to have monies on demand.
- Payment of interest is agreed with client/ accounts kept in credit
- Regular bank reconciliation
- Money only to be withdrawn if properly required.
- Keep accurate records.
- Annual audit/ reporting obligations are met
(transactions must be agreed with authorized staff + 2 signatories)
What is the RICS run Client’s Money Protection Scheme for
Claims from clients which provides last resort protection in instances where a RICS regulated firm is not able to repay client’s money.
Starting a New Practice RICS compliance requirements
- Inform RICS, appoint ‘Responsible Principal’.
- Register with RICS regulatory board.
- PII and CHP details to RICS.
- Register for Valuer Registration Scheme if undertaking Red Book Global val work
- Procedures for client money handling.
- Complaints Handling Officer and log.
- Comply with use of RICS logo.
- Succession plan.
- CPD logged and RICS annual return completed.
Starting a New Practice Statutory compliance requirements
- Disclose business name.
- Equality Act 2010, Financial services Act 2012, Bribery Act 2010 compliance
- Money Laundering Regulation 2007 – appoint ML Reporting Officer.
- Health & Safety Act 1974, Asbestos register - Control of Asbestos Regulations 2012.
- Fire Safety Act 2021 compliance
- Estate Agents Act 1979.
- Register for data protection - GDPR 2016 and Data Protection Act 2018 compliance.
- Inform HMRC – VAT threshold = £90k per annum.
- Compliance with current employment law
- Insurance compliance for employer/public lability
Act for Disability discrimination protection
Equality Act 2010
Acts relevant for financial services
Financial Services and Markets Act 2000
Financial Services Act 2012
Act/ regulations for Bribery and Money Laundering
Bribery Act 2010
Money Laundering Regulations 2017
Act for Health and Safety
Health and Safety Act 1974
Regulations for Asbestos
Control of Asbestos Regulations 2012
Act for Fire Safety
Fire Safety Act 2021
Data protection Acts
General Data Protection Regulation and Data Protection Act 2018
Acts concerning Estate Agency
Estate Agents Act 1979
Consumer Protection Regulations 2008
Misrepresentation Act 1967
Closing a Practice RICS compliance requirements
- Inform RICS and clients.
- Client hand over arrangements made
- Return any money held.
- Inform insurers and procure ‘run-off cover’ for a minimum of 6 years from expiry of the policy in force at point of closure.
- Retain a copy of client’s files for a minimum of 6 years.
