Ethics, Rules of Conduct and Professionalism Flashcards
Give me an example of when you have acted with integrity?
We were approached by a developer regarding the management of a building they were developing in Wimbledon. The building was nearing completion and we were asked to prepare a service charge budget so after a review of the draft lease and plans and an inspection of the building and discussion with the developer, we compiled what we thought was a realistic budget taking into account the needs of the building. The developer said that they wanted the service charge to be lower and asked us to see if the budget could be reduced. They said the agent selling the flats for them had said the service charge needed to be at a lower level in order that the flats would be attractive to buyers. We reviewed the budget. We felt that it was realistic and the resulting service charge was in line with other similar buildings we managed in the area. We explained to the developer that we did not consider it was possible to make further reductions and we explained why that was. The developer said the budget needed to be lower so we advised them that we thought it would be better if we withdrew from managing the building as we were not willing to make further reductions they were looking for.
Tell me about when you have provided a high standard of service.
Tell me about how you have promoted trust in the profession.
Explain how you have taken responsibility in your current role.
I am ultimately responsible for everything that happens in my company so I regularly take the time to talk to my staff about what they are doing and any concerns they might have. I always tell my staff they can come to me at any time if they have any concerns about anything.
Tell me about how you treat clients with respect.
I am polite, I respond to them in a timely fashion, I return calls and reply to emails. I take the time to explain things to them in more detail if that is required.
Tell me about how you treat other surveyors with respect.
Explain the key steps you would take to register your firm for Regulated by RICS status.
Provide information in the prescribed form to the Standards and Regulations Board including, company details, staff details, PI and CHP procedures.
Agree that RICS may share information about the firm with government or other regulatory bodies.
Pay annual fee.
If a prospective purchaser offered you a financial incentive to accept their offer, explain how you dealt with this.
It would not be treating other potential purchasers with respect or acting with integrity.
It would not be acting in the best interests of our client, the seller.
Could be interpreted as a bribe because the purchaser has offered an incentive.
Ultimately we would need to decline this offer.
What would you do if you were asked by a client to reduce a fee proposal to win new work?
Need to be careful - we have gained an insight from the client which our competitors may not be aware of so this has now become an unfair competition. That is not treating other bidders with respect and potentially not acting with integrity.
Reducing fees by a significant amount is not sustainable and is essentially devaluing the profession.
If fee is reduced, we may potentially need to reduce scope of services to achieve the same margin - would that still provide a high standard of service to the client?
Could be interpreted as a bribe because the client has offered an incentive.
Ultimately we would need to decline this offer from the client.
What would you do if you became suspicious that a client was involved in money laundering?
Submit a SAR (Suspicious Activity Report to the NCA (National Crime Agency).
What would you do if you became suspicious that a client was involved in terrorist activities?
Submit a SAR (Suspicious Activity Report to the NCA (National Crime Agency).
If you were to set up in practice on your own, tell me about the types of insurance you would need.
What are the 5 Principles of better regulation?
Proportionality
Accountability
Consistency
Targeting
Transparency
What is the purpose of the 5 Principles of Regulation?
The RICS is a self-regulated professional body that has a duty to the public interest.
The 5 Principles of Regulation set out how the RICS regulates itself internally to maintain the highest standards of professionalism and integrity in the benefit of the public interest.
Pick two of the 5 principles of better regulation and explain what they mean to you.
Proportionality - meaning RICS should only intervene when necessary and any remedies imposed should be proportionate. For example, lets payment of RICS fees by a member may be dealt with by a verbal warning whereas continued failure to pay fees would result in expulsion.
Accountability - regulators must be able to justify their actions under public scrutiny to promote complete fairness - clearly explain why decisions have been taken.
Consistency - complete fair and level playing field, treat everybody the same.
Targeting - focussed on the problem and minimise side effects from a scattergun approach, also be unambiguous on any regulations that are introduced.
Transparent - making sure regulations are kept clear and user friendly, to be effectively communicated - assist back in line with regulation rather than tasking a heavy handed approach.
Name some topics on which the RICS publishes help sheets and policy documents.
Policy documents on:
CPD
Handling clients’ money
PI insurance requirements
Complaints handling procedure
Maintaining professional and ethical standards
Procurement and tendering
Cashflow forecasting
Why does RICS have Rules of Conduct?
To provide a framework we can all work to and so the client knows he is getting a set level of service.
As well as being an important tool for the institution, the Rules of Conduct are also a useful professional guide for individual members.
What steps must you take for the handling of clients money?
Client must always have access to the funds
Client money must be kept separate and clearly identifiable
Account name must include ‘Client’
Treatment of interest must be agreed with the client
Maintain client ledger of all transactions
Agree the terms and advise the client of bank details
Must never be overdrawn
What is the ‘Clients’ Money Protection Scheme?
Run by RICS.
It provides for any member of the public to be reimbursed directly for their loss of funds.
This is provided by the RICS insurance policy.
If a client was prepared to pay you in advance for services you were providing, how would you ensure this was dealt with?
Set up a separate client account that is properly named and clearly identifiable.
Provide the client with a statement of account.
Inform them and agree any drawdowns.
Prior to drawing money send a statement of how much is to be withdrawn and what services and associated fees are made up of.
Once complete, provide final statement showing everything is complete and transparent.
What sort of information do registered firms have to send to the RICS annually?
The submission is called an annual return and is submitted online. Failure to do so leads to a fixed penalty.
Type of business and staffing levels.
Nature of clients.
Training provisions.
Complaints handling procedure details and records.
PI insurance details.
Whether the firm holds client money.
What are the RICS Bye-Laws?
Very much like the Memorandum & Articles of Association for a limited company:
1. APPLICATION AND DEFINITIONS
2. MEMBERSHIP AND REGISTRATION
3. DESIGNATIONS
4. CONTRIBUTIONS TO FUNDS
5. CONDUCT
6. GOVERNING COUNCIL, OFFICERS AND STAFF
7. SUBORDINATE BOARDS, COMMITTEES AND GROUPS
8. PROCEDURE FOR GENERAL MEETINGS
9. ACCOUNTS AND AUDIT
10. GENERAL
The RICS Bye-Laws provide the power for Head of Regulation and Regulatory Tribunal to make disciplinary and regulatory decisions including issuing disciplinary penalties and costs.
What is GDPR?
The EU General Data Protection Regulation replaces the Data Protection Directive and is designed to harmonise data privacy laws across Europe.
This is intended to protect and empower all EU citizens data privacy and reshape the way organisations across the region approach data privacy.
Like its predecessor, the GDPR is designed to protect personally identifiable information (personal data).
How will GDPR affect surveying practices?
All of these can fall under the remit of regulation:
Data we hold about our clients
Data about the properties
Data on accounts, bookkeeping, payroll
HR data
Any working papers that support our compliance
Emails and correspondence, internal and external
How do you comply with GDPR?
We must have knowledge of the data we store and the process.
Its geography (where it resides).
We must be able to provide information on how the data is used and on the rights of individuals regarding their data.
We must demonstrate that we are managing personal data in a manner compliant with the regulations and be able to supply, on request, the details of the data we hold and how it has been used.
We have to be able to delete every instance of an individual’s data in compliance with their right to be forgotten.
Tell me what you understand about conflicts of interest
A conflict of interest is where someone in a position of trust has competing personal or professional interests making it difficult for them to act impartially.
An existing relationship will result in reduced impartiality and we have an obligation to make clients aware of this and if necessary decline work opportunities where conflicts of interest occur.
How would you manage a conflict of interest internally if two separate departments are dealing with the same client?
Ensure exclusivity of staff.
Separate communication lines into the client.
Monitor the potential conflict and keep the clients updated.
If a client was insistent that you worked for them despite a conflict of interest, how would you proceed?
Check the client’s understanding around the conflict of interest.
Make them aware of the potential for reduced impartiality.
Seek their informed consent - a letter instructing us to continue.
Providing that is in place, we can then proceed and talk through working procedures to manage the conflict with the client and agree it all in writing.
Are you aware of any guidance from RICS about the level of Professional Indemnity insurance a regulated firm requires?
RICS Professional Indemnity Insurance Requirements (version 10, effective 1 July 2024) which sets out minimum levels of indemnity cover.
Level of indemnity required depends on firm’s turnover:
If turnover is £100k or less it is £250k.
If turnover is £100k to £200k it is £500k.
If turnover is above £200k it is £1m.
What can you tell me about PI insurance?
Limit of indemnity should be as specified in RICS Professional Indemnity Insurance Requirements.
Policy should be on a ‘claims made’ basis - fully retroactive.
Should be underwritten by a RICS approved insurer - list on RICS website.
Should provide cover for past and present employees.
Ours is on an ‘each and every claim’ basis.
RICS’ minimum policy wording or more comprehensive wording written on a full civil liability basis.
Defence Costs should be in addition to the limit of indemnity other than in respect of Asbestos, Pollution and Fire Safety.
After ceasing to trade, a firm needs to have run-off cover for six years.
What are the maximum levels of uninsured excess for PI insurance?
Depends on firm’s turnover in preceding year.
If turnover is £10m or less, the maximum uninsured excess is the greater of 2.5% of the sum insured or £10,000.
If the firm’s turnover exceeds £10m, there is no limit set.
What types of insurances do Chartered Surveyors need to have in place?
PI Insurance.
Buildings & contents for offices.
Employers Liability cover.
Run-off cover if ceasing to trade.
Why did the previous Rules of Conduct change?
The previous rules had ben in place since 2007.
Following consultation with RICS members, firms and members of the public, the majority voted in favour of replacing the existing RoC and separate Global Professional and Ethical Standards.
This was to provide a single document to provide greater clarity for RICS members and firms.
There is also now a greater focus on clearer example behaviours, understanding evolving technology and tackling climate change.
What are the main principles of the Bribery Act?
The Bribery Act 2010 is the main anti-corruption legislation in UK.
Applies to UK companies operating in UK and abroad, and companies operating in UK.
Key offences are offering or making a bribe, accepting or agreeing to accept a bribe, and bribery of a foreign public official (facilitation payment).
Six Principles of Prevention:-
Proportionality
Top-level commitment
Risk assessment
Due diligence
Communication (training)
Monitoring and review.
Demonstrating you have sufficient principles of prevention in place is your only defence to a Section 7 offence.
Under the Bribery Act, under what circumstances is a facilitation payment permitted?
The only circumstance in which it is OK to make a facilitation payment is when you are under duress and you feel there is a real danger to life, limb or liberty.
You are attending a contractor organised business conference when it is announced you have been randomly selected as the winner of this month’s prize - an iPad Air. How would you act?
I would be extremely uncomfortable accepting the prize in this scenario.
The prize is of significant value and could be interpreted as a bribe.
Furthermore, accepting the prize could be interpreted as having an effect on my business conduct with the contractor.
I would respectfully decline the prize and suggest it is donated to a charity of the contractor’s choice.
I would keep a written note of my actions.
You receive an invite to attend the theatre with some members of your project team, but they drop out due to illness at the last minute. Would you still attend?
First, I would declare this hospitality on my firm’s Gifts and Hospitality register.
I would need to decline the invite due to the rest of the team dropping out. It would not be regarded as a genuine business event as they have dropped out.
You are bidding for a contract and the client advises you that if you reduce your fee by £3000 you will be in first place and win the tender. How would you advise the client?
Need to be careful - we have gained an insight from the client which our competitors may not be aware of so this has now become an unfair competition. That is not treating other bidders with respect and potentially not acting with integrity.
Reducing fees by a significant amount is not sustainable and is essentially devaluing the profession.
If fee is reduced, we may potentially need to reduce scope of services to achieve the same margin - would that still provide a high standard of service to the client?
Could be interpreted as a bribe because the client has offered an incentive.
Ultimately we would need to decline this offer from the client.
A client takes you out for lunch after a business meeting, where they continue to discuss business. The bill for lunch comes to £200. What should you do now?
The lunch had a legitimate purpose so is OK to accept.
But the client should have considered how a £200 lunch could have been perceived and perhaps considered a more modest restaurant.
Given the size of bill, it must be declared on our Gifts and Hospitality Register.
Offer to reciprocate but in a more modest manner as the lavishness of a £200 lunch could be interpreted as inappropriate and disproportionate.
Tell me about Merrett v Babb case law?
Court case in 2001 which sets out the importance of having run off cover in place. In this case, Babb, a valuation surveyor, carried out a mortgage valuation for a lender. His firm subsequently closed due to bankruptcy with no run-off cover. The house purchaser, Merrett, successfully brought a negligence claim against the surveyor personally, even though the purchaser had not seen the valuation report and was unaware of the surveyor’s identity when they purchased the property.
The duty of care of the surveyor was established in the Hedley Byrne & Co Ltd v Heller & Partners Ltd case where if run-off cover is not in place, the surveyor could be held personally liable for negligence.
What is the significance of Merrett v Babb?
About whether employees can be liable for claims brought against them personally, even though they have acted on behalf of their employers.
Highlights the importance of having run-off cover.
Individuals should ensure their companies maintain run-off cover on their behalf.
How long should run-off cover be in place?
Depends on type of contracts the firm has been involved with.
Usually 6 years if contracts executed under hand or 12 years if executed as a deed.
Please explain the professional obligations of members.
Members must comply with RICS CPD requirements - 20 hours p.a., 10 of which must be formal.
Members must co-operate with the RICS.
Members must promptly provide all information reasonably requested by the SRB, or those exercising delegated authority on its behalf.
Can you tell which two of the five Rules of Conduct resonate with you most?
E.G.
Rule 3 - think of a time you provided good quality and diligent service to a client.
Rule 1 - when you acted with integrity and complied with your professional obligations, inc. obligations to RICS
What are the RICS requirements regarding Professional Indemnity cover?
Refer to knowledge of the RICS standard form RICS Professional Indemnity Insurance Requirements.
Policy should be on a ‘claims made’ basis - fully retroactive.
Should be underwritten by a RICS approved insurer - list on RICS website.
Should provide cover for past and present employees and directors.
Subject to minimum level of indemnity. Subject to maximum level of uninsured excess.
Must be on an ‘each and every claim’ basis.
Subject to RICS’ minimum policy wording.
Defence Costs should be in addition to the limit of indemnity other than in respect of Asbestos, Pollution and Fire Safety.
After ceasing to trade, a firm needs to have run-off cover for six years.
What if the loss exceeds the cover provided by your PI insurance?
What measures should be taken to try to avoid PI claims?
Keep full and detailed records of meetings, conversations etc.
Record recommendations and advice given.
Use proper scope of services and terms of engagement.
Don’t advise of outside your field of experience.
Use RICS guidelines.
Avoid poor management and excessive workloads.
How would you deal with a client who said they want a 20% fee discount?
They are trying to negotiate a discount/renegotiate terms, so this can’t be classed as a bribe.
Advise that we might consider offering the saving but the level of service and resource would need to be reviewed in line with the reduction.
Need to ask yourself - if the original fees were considered as good value, fair and reasonable, could this be considered as devaluing the profession?
Such a reduction may not be sustainable and is it in the clients interest if we cannot provide a high standard of service?
May need to decline if unable to provide the level of service required.
Are you familiar with the term limit of liability and where would it be used?
A limit of liability is used to place a cap on the level of exposure a business signs up to.
In the aggregate means as a maximum after many different claims.
If cover is for each and every claim, it is that level for each claim.
Anything not covered by PI insurance can be gone so assets could be at risk.
As such, companies would seek to try and limit their exposure by agreeing a liability cap.
Assuming you were successful in getting chartered, how would you deal with a situation where a friend asks you to provide them with advice?
Could not offer advice without PI insurance.
Would need to make sure all information given was subject to thorough checking.
Inform them they can contact me during working hours to discuss T&Cs of appointment.
If you are not comfortable acting for them, advise them to use the RICS ‘Find a Surveyor’ scheme.
Make sure you are adhering to RICS Rules of Conduct at all times.
Tell me how you have demonstrated two of the 5 Global Professional & Ethical Standards in your case study.
Taking on LEL with its myriad of issues and finding resolutions to them demonstrated we were providing a high standard of service.
Taking time to speak to owners in arrears, discuss their concerns and agree payment plans - acting with integrity and acting in a way that promotes trust in the profession.
On a visit to WWH, we noted a lack of suitable PPE which we raised with the site foreman - Taking Responsibility.
