Ethics, Rules of Conduct & Professional Practice Flashcards
What is the central purpose of the RICS?
- To maintain the highest standards of education and training
- To protect consumers through strict regulation of professional standards
- To be the leading source of information and independent advice on land, property, construction and associated environmental issues
How does the RICS ensure members abide by the Rules of Conduct for Members?
Head of Regulation at the RICS investigates claims of misconduct. They have the power to:
1. Serve a Fixed Penalty notice
2. Make a Regulatory Compliance Order
3. CPD sanctions
4. Refer to a Disciplinary Panel
Member has right to appeal decision made at a Disciplinary Panel by going to an Appeal Panel
How does the RICS ensure firms abide by the Rules of Conduct for Firms?
RICS ensures firms comply by conducting audits
Firms have to provide information when registering with the RICS and in an annual return
Why must a Chartered Surveyor do CPD?
It is one of the Rules of Conduct for Members
Ensures you remain up to date with relevant legislation and any changes in the industry
Why must a Chartered Surveyor main solvent?
It is one of the Rules of Conduct for Members
May impair your decision making and mean that you’re more likely to take bribes and not act in the best interest of the client
If you’re unable to manage your own finances, it does not reflect well on you being able to manage your client’s finances
Give me an example of when you have acted with integrity in your work.
I have been in confidential meetings whereby the Client has shared confidential information about projects. Post meetings i have had colleagues ask me for information following the meeting which i have advised that i am unable to discuss the details.
Give me an example of when you have provided a high standard of service.
Always maintaining that i am delivering to my scope of services. There was a period of time where the client wanted more site presence over the weekend period. I explained to the Client that an enhanced site supervision role wasn’t within our scope of services
Give me an example of when you have acted in a way that promotes trust in the profession.
In the UK i attended the RICS Matrix social events often and sometimes these would involve the consumption of alcohol. There was one instance where my work friends were set for a night out and i chose to not attend as i had a client commitment the following afternoon which i knew i had a duty to be fresh for.
Give me an example of when you have treated others with respect.
I always give my contractor notice when i am due to be on site so that i dont catch them by surprise. This helps me form a relationship with the contractor through trust.
Give me an example of when you have taken responsibility.
My graduate PM had not followed instruction correctly and had issued out incomplete minutes. The Client required the set of minutes for a meeting. This was unfair of me to blame the graduate as it may have been my instruction that wasn’t clear. I took responsibility for the issue and worked on developing the skillset of the graduate.
What would you do if you were asked to do something unethical?
I would speak to someone more senior, such as a supervisor or line manager
I would whistleblow if required e.g. I would report suspected Money Laundering to the MLRO
What has the RICS produced to help surveyors make ethical decisions?
The RICS has created the Ethics Decision Tree, which members can refer to if they are asked to do something they are unsure about
When you taken on a new client, what checks do you make?
Will need to undertake Customer Due Diligence (CDD) to identify the client and verify their identity
If the client is a politically exposed person (PEP), a PEP family member/business associate or from a high-risk third country then you should undertake Enhanced Due Diligence (EDD)
How do you undertake a conflict of interest check?
I use my firm’s internal system, which is a Microsoft Dynamics database to check the client name and the address of the property again all known jobs.
How would you approach a conflict of interest?
Follow the guidance set out in the RICS Global Professional Statement on Conflicts of Interest, 2017:
- Conflict avoidance - decide whether the conflict is manageable and whether proceeding is in the best interest of all parties
- Written advice to both parties - disclose the nature of the conflict, explain how you will manage it and request written confirmation of informed consent
- Conflict management - set up an information in accordance with provisions agreed with the clients
What is money laundering?
Money laundering is legitimising the proceeds of crime.
Why does you firm have Terms of Engagement? What should be included in Terms of Engagement?
Creates a contract with the client
Sets out the proposed fee basis, payment of expenses and that a copy of 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
What is the structure of the RICS?
Governing Council (33 members) runs the RICS Regulatory Board, Management Board and various committees report to the Governing Council 17 specialist professional groups covering property, land and construction
Why would you like to be a Chartered Surveyor?
- Status - professional credentials provide client confidence
- Recognition - promotion of your professional excellence
- Market advantage - RICS status gives you a competitive advantage
- Knowledge - International practice standards and professional guidance
- Network - access to over 130,000 members worldwide
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
How many hours of CPD do you have to undertake? What are the rules?
Minimum of 20 hours of CPD per year, of which at least 10 hours must be formal
Member must maintain an understanding of RICS Professional and Ethical standards every 3 years
Members must record their CPD using the RICS CPD Management System on the RICS website by the 31st December
What are the Rules of Conduct for Members?
Ethical behaviour Competence Service Continuing Professional Development (CPD) Solvency Information to the RICS Co-operation
What are the Part II - Conduct of Business Rules of Conduct for Firms?
Professional behaviour Competence Service Continuing Professional Development (CPD) Complaints handling Clients' money Indemnity insurance
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
If you are conflicted, can you still undertake an instruction if you’ve got informed consent?
Depends whether you would be able to act impartially, whether you believe that you undertaking the instruction would be in the best interest of all those who are or may be affected and whether its prohibited by law
What forms of conflict of interest are there?
Party Conflict - acting on both sides of a transaction
Own Interest Conflict - relating to a personal interest
Confidential Information Conflict - relating to work between two parties which is confidential
What would you do if you had a personal conflict of interest and how would you manage this?
Ensure that all parties were aware and provided informed consent
Would refer the instruction instruction internally and ensure that the appropriate information barriers were setup
What information barriers does your firm have in place?
Restricted access to files
Clear desk policy
Private meeting rooms
Physical barriers e.g. restricted floor access
What would you have to do if you were required to hold clients’ money?
RICS has issued a Professional Statement on Client Money Handling, 2019:
• Client account must be kept separate and clearly identifiable
• Word client is on the bank account and cheque book
• A client must be able to have their monies on demand
• Payment of interest is agreed with a client and accounts must be kept in credit
• Regular bank reconciliation
• Accurate records are kept with a running balance available
• Annual audit and reporting obligations by certified accountant employed by RICS
• If cash receipts are used to settle transactions, make sure records show all cash transactions
• Signatories must be agreed with authorised staff and two signatories should be required
• A discrete account is for a single named client account only
• RICS Regulatory Review Visits can be undertaken by RICS usually on a routine 3 yearly basis
• Firms handling client money need to display their procedure on their website
How many Principals in a firm have to be RICS members for a firm to be regulated?
Until April 2020: a regulated firm is a practice that has 50% or more principals who are RICS members
From April 2020: if a practice provides surveying services and 50% of principals are RICS members, then it has to be regulated. If firms want to apply to be registered then they must now have more than 25% of Principals as RICS members (previously they only required one Principal to be an RICS member)
Why are the RICS requiring 25% of Principal to be members in order for firms to apply to be regulated?
Concerned that as the RICS profession and brand grows, having a single RICS qualified Principal does not provide sufficient assurance that RICS professional standards have adequate influence within the senior management of firms
Would you ever receive a gift from a client?
Would be inappropriate if you were doing a job for that client
Would consult the Ethics Decision Tree and my firms anti-bribery procedure
Would consider RICS Professional Statement Countering bribery, corruption, money laundering and terrorist financing, 2019
If you thought it was appropriate to accept a gift from a client, how would you proceed?
Record it on my firm’s Gifts and Hospitality Register
What is the law associated with gift giving and receiving?
Bribery Act 2010 and Proceeds of Crime Act 2002
What are the SIX principles of the Bribery Act 2010?
- Proportionality
- Top level commitment
- Risk assessment
- Due diligence
- Communication
- Monitoring and review
What are the FOUR offences under the Bribery Act 2010?
- Bribing
- Receiving a bribe
- Bribing a foreign public official
- Failing to prevent bribery
How would you define a bribe?
Bribe can be the giving, offering, promising or receiving of an advantage such as a payment, gift or a service for an action which is illegal or a breach of trust
What would you do if you were suspicious of a client?
Wouldn’t make them aware as that could be ‘tipping off’ which is an offence
Would report and escalate internally to a compliance manager
What does the Ethics Decision Tree include?
Framework of questions members should ask themselves
Encouraged members to consider the legality of their action and the consistency with the RICS Global and Professional Ethical Standards
Ultimate question is whether members would be content to have their decisions or actions made public
RICS Regulation Confidential Hotline offers further assistance to members with any ethical issue
What is considered an appropriate margin of error?
When valuing it depends on the availability of comparable evidence and the complexity of the valuation, as to what would be an acceptable margin of error
±10% is usually considered to be a reasonable margin of error but more likely ±5% for residential property
Case of Dunfermline Building Society and CBRE (2017) assumed an acceptable margin of error of ±15%
What is the background to the RICS?
Founded in 1868
RICS has a Royal Charter, granted by Privy Council in 1881
RICS Regulations and Bye-laws set out the governance of the institution
What are the FOUR levels of membership for the RICS?
- FRICS
- MRICS
- AssocRICS
- Trainee/Student
What must you do to achieve FRICS status?
Provide evidence of achievement to the Fellowship assessor of FOUR Fellowship characteristics. They are grouped into the following categories:
- Champion
- Expert
- Influencer
- Role model
A personal statement on current role, practices and ambitions.
Who is the current CEO of the RICS?
Dr Sean Thompkins
Who is the current President and President-Elect for the RICS?
Tim Neale (President elected from November 2019) Kath Fontana (President-Elect)
What are the FIVE Principles of RICS Regulation for Members and Firms?
PACTT:
- Proportionality: making the penalty proportional to the breach
- Accountability: to all members and the public
- Consistency: treating all members the same
- Targeting: serious breaches
- Transparency: to all members, clients and the public
What are the International Ethics Standards, 2016?
Ethical framework for the global property market
Published by the International Ethics Standards Coalition
What relevance do the International Ethics Standards, 2016 have for the RICS?
- Did not originate from the RICS but are promoted by the RICS
- RICS are currently reviewing the Global Professional and Ethical Standards, 2015 and may extend them to reflect the International Ethics Standards more closely
In what circumstance will the RICS disciplinary procedure be triggered?
Someone complaining to the RICS
Allegation by a client or third party
Information received or established by the RICS
What are the THREE most common breaches of the Rule of Conduct for Firms?
- Professional behaviour
- CPD
- Protecting client’s money
What FOUR actions can the Head of Regulation of the RICS impose?
- Fixed Penalty notice
- Compliance Order
- CPD Sanctions
- Refer to disciplinary panel
What is a Compliance Order?
Written document which states the actions which the member or firm must take or desist from taking for a specified period of time
Used for minor breaches which can be easily corrected
What is an RICS International standard?
High-level, principle-based mandatory standard developed in collaboration with other relevant organisations e.g. RICS Valuation - Global Standards, 2019
Give an example of 3 pieces of RICS Core material that you have had reference to in your work?
Surveying Safely 2nd Edition
RICS communication Guidance
RICS Black Book Tendering Strategies
What is an RICS Practice Statement?
Document that provides members with mandatory requirements
What is an RICS Guidance Note?
Document provided by RICS to promote good practice. RICS strongly recommend that you have regard to the contents of any relevant guidance note
What is an RICS Code of Practice?
Document produced with other professional bodies and stakeholders to provide up-to-date research and advice to practitioners
What should you consider during fee negotiations?
Firms should avoid price fixing, aggressive fee cutting or collusion with competitors
Fees should be market-based and agreed on an ad-hoc basis with clients
Must consider the RICS Global Professional and Ethical Standards, 2015 and Rules of Conduct, 2007 as amended
What should you do if accepting or offering referral fees?
- Must be completely transparent with your clients and consumers, so they understand you are receiving or offering a referral fee
- State in you terms of engagement if applicable
- Consider your actions in context of the Bribery Act 2010 and the RICS Global Professional and Ethical Standards, 2015
What steps should you follow when you receive instructions from a client?
- Competence
- Conflicts of interest check
- Terms of Engagement
Why may it be appropriate to decline an instruction?
- You are not competent to undertake the work
- You do not have sufficient facts on the issue
- Proposed client will not sign the terms of engagement or complete the AML checks
- There is a conflict of interest
- Proposed client is on the UK Government’s sanctions lists
What would you do if a family member or friend asked you for some advice on a pro bono basis?
I would be unable to give them advice as my firm’s professional indemnity insurance would not cover work carried out on a personal basis
I would refer them to another surveyor who would be able to advise them appropriately
What is a conflict of interest?
Arises when a member or firm’s independence and impartiality is threatened due to the existence of a conflict between two parties
What does RICS Conflicts of Interest, 2017 require all firms to have?
Must have effective systems and controls in place appropriate to the size and complexity of their business, to ensure full compliance
Firms must keep records to show their compliance with the statement
How should your firm operate information barriers when Conflicts of Interest are being managed?
- “Reasonable steps” must be taken to operate an effective barrier to prevent information passing between the two parties
- Surveyors acting on the two sides must be different and be physically separated
- Information regarding the instruction should be securely stored
- Keep an audit trail of all actions taken. Firms Compliance Officer must oversee all actions
What guidance does the RICS provide on Conflicts of Interest for commercial investment agents?
RICS Conflicts of Interest – UK commercial property market investment agency, 2017
What is a personal interest / own interest conflict?
Arises when acting for a family member, a close business associate or someone with whom you have a financial / personal interest / benefit (known as a ‘connected person’)
What should you do if a personal interest / own interest conflict arises?
Must not let it interfere with or influence your professional judgement. Full transparency is required
Facts must be declared in writing before the instruction is accepted
What is the aim of the Bribery Act 2010?
Reduce bribery in business in the UK and abroad
Who is responsible for an employees’ corrupt actions under the Bribery Act 2010?
Companies are responsible for an employees’ corrupt acts unless they can show that they had adequate policies and procedures in place to combat bribery
What are the details of your firms anti bribery procedure?
Gifts, hospitality and entertainment must be recorded on the Gifts Register
During red packets we can receive up to a maximum of 50 HKD
When should you undertake Enhanced Due Diligence?
If the client is a politically exposed person (PEP), a PEP family member/business associate or from a high-risk third country
Is your firm able to accept cash payments?
My firm has a policy not accept cash payments, although the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017 allows for a maximum of €10,000 to be accepted in cash.
How long must a firm maintain records for under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017?
5 years
What is the RICS guidance on bribery and corruption called?
RICS Countering bribery, corruption, money laundering and terrorist financing, 2019
What are the THREE parts of RICS Countering bribery, corruption, money laundering and terrorist financing, 2019?
- Mandatory requirements for anti-bribery and corruption and for anti-money laundering and terrorist financing
- Guidance setting out supporting good practice for the above
- Supplementary guidance on some of the concepts set out in Parts 1 and 2
What does RICS Countering bribery, corruption, money laundering and terrorist financing, 2019 say RICS regulated firms must do in relation to bribery and corruption (B&C)?
- 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 to perform periodic written evaluations of the risk the firm faces
- Retain records to show the firm has met the requirements of the Professional Statement
What practical guidance (Part 2) is contained within RICS Countering bribery, corruption, money laundering and terrorist financing, 2019?
- Have a written policy in place
- Publish a code of behaviour for staff
- Encourage transparency
- Set up a gifts register
- Provide staff training
- Senior management to take control of procedures
- Keep up to date with legislation
What is Formal CPD?
Includes structured learning that has clear learning objectives and outcomes e.g. seminars
What is Informal CPD?
Includes self-managed learning that is relevant or related to your professional role
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 should you do if a third parties requests access to your files?
Must get the client’s approval first unless you are subject to a statutory duty overriding the client’s confidentiality rights e.g. the police or HMRC investigation
What should a surveyor do if they find out a confidential piece of information in error about a party who is not their client?
- Cannot use the information for their own purposes
- Client and sender should be advised of the error
- Matter should be recorded in a note to the firm’s compliance officer
- Any confidential information received in error should be disposed of securely
How can you avoid negligence claims?
Understand client’s objectives and confirm precise instructions in writing in the Terms of Engagement
- Ensure you are competent to undertake the instruction
- Undertake the work in accordance with the relevant RICS Standards and Guidance Notes
- Make detailed file notes and take photographs
- Keep up to date with market knowledge and legislation and undertake and record your CPD
- Cap the professional liability excess on your PII policy in the Terms of Engagement
What is the regulatory document issued by the RICS on Professional Indemnity Insurance called?
RICS Professional Indemnity Insurance Requirements, 2019
What level of Professional Indemnity Insurance cover should a new business obtain?
Estimate their turnover and adjust in due course
Who can firms apply to if they are unable to obtain run-off Professional Indemnity Insurance cover?
RICS Run-off Pool
Who can retired/part-time members apply to for Professional Indemnity Insurance?
RICS Low Earners Scheme
Who can members apply to if they cannot arrange Professional Indemnity Insurance?
RICS Assigned Risk Pool
Who can members go to if they are facing personal negligence claims for work carried out by a former employer who they though had Professional Indemnity Insurance cover, but does not ?
RICS Member Support Service (MSS)
Why would a firm of surveyors handle clients’ money?
Holding deposits, rent, service charge and retentions
What are the SIX main area of good practice set out in the RICS Professional Statement Client Money Handling, 2019?
- Holding client money
- Providing information to clients
- Receipt of client money
- Payments from client accounts
- Accounting records and controls
- Compliance
What are some of the greatest challenges facing the RICS?
- Lack of diversity in the industry
* Keeping up with an ever-evolving industry
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
Why must a regulated firm have professional indemnity insurance?
Rules of Conduct for Firms, 2007 (as amended 2017) require firms to have PII
Protect clients and your company from negligence claims
What document has the RICS issued on the handling of client money?
Client money handling, 2019
When did Client money handling, 2019 become effective
1st January 2020
