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RICS APC 2022 > Ethics, rules of conduct & professionalism > Flashcards

Ethics, rules of conduct & professionalism Flashcards

1
Q

What is the background of the RICS?

A
  • Founded in 1868
  • Incorporated by Royal Charter granted by the Privy Council in 1881
  • First President was John Clutton
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2
Q

How is RICS governed?

A

Under terms of Royal Charter, by various internal councils, boards and associations

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3
Q

How many qualified members are there currently?

A

130,000

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4
Q

Who runs the RICS?

A

Governing council runs RICS, providing management and strategic direction. There are 25 members

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5
Q

Who reports to the Governing Council?

A

There Regulatory Board, Management Board, and various committees

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6
Q

How many specialist professional groups are there?

A

17 groups covering property, land and construction. Each group has an elected board.

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7
Q

Who is the current president of the RICS?

A

Clement Lau FRICS

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8
Q

Who is the president-elect of the RICS?

A

Ann Gray FRICS

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9
Q

Who is the Chair of the Governing Council?

A

Nick Maclean FRICS

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10
Q

Who is the current Chief Executive Officer?

A

Richard Collins

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11
Q

What is the Levitt Review 2021?

A

A public review into the lack of clarity, structure and purpose of the RICS governance arrangements. Levitt called for a full independent review of these matters. RICS Governing Council approved - Lord Michael Bichard is conducting this review currently

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12
Q

What are the main roles of the RICS?

A
  1. To maintain the highest standards of education and training
  2. To protect consumers through strict regulation of professional standards
  3. To be the leading source of information and independent advice on land, property, construction and associated environment issues
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13
Q

What is the key function of the RICS?

A

Promote and enforce the highest professional standards and qualifications

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14
Q

What are the benefits of being an RICS member?

A
  1. Status - credentials provide unrivalled client confidence
  2. Recognition - promotion of professional excellence to governments and markets
  3. Market advantage - RICS status and standards gives competitive advantage
  4. Knowledge - international practice standards, professional guidance, CPD & knowledge sharing
  5. Network - access to 130,000 professional globally
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15
Q

What are the benefits of regulation for firms?

A
  1. Confidence - for clients as regulated firms are monitored by the RICS
  2. Professionalism - firms will have to provide clear, impartial and expert advice
  3. Security - firms have to have a recognised complaints procedure, access to free independent redress and PII cover
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16
Q

How often must firms confirm compliance with obligations to RICS?

A

Annual return

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17
Q

What percentage of RICS members within a firm are required to apply for RICS regulation?

A

At least 25%

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18
Q

When MUST a firm be RICS regulated?

A

If 50% of Principals providing surveying services are RICS members

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19
Q

What is a Principal?

A

Sole practitioners, directors, partners or board members, or someone that acts without supervision

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20
Q

What is a Responsible Principal?

A

Nominated member of a firm that is obliged to ensure compliance with regulatory and RICS requirements

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21
Q

Where are disputes regarding registration of firms heard / taken?

A

RICS Standards & Regulation Board

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22
Q

Who can use the RICS logo?

A

Only RICS members and registered firms

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23
Q

What information is required by RICS for registration in firms annual return?

A
  1. Type of business and staffing details
  2. Statutory regulated activities (such as for financial services)
  3. Nature of clients
  4. Complaints handling procedure details and records
  5. Professional indemnity insurance details
  6. Whether the firm holds clients’ money
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24
Q

When were the new Rules of Conduct drafted?

A

Draft rules were published October 2021

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25
Q

What did the new Rules of Conduct replace?

A

Previous rules of conduct for members and firms, and the 5 global professional and ethical standards

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26
Q

When did the new Rules of Conduct become effective?

A

2nd February 2022

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27
Q

What is Rule 1?

A
  1. Members and firms must be honest, act with integrity and comply with their professional obligations, including their obligations to the RICS
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28
Q

What is Rule 2?

A
  1. Members and firms must maintain their professional competency and ensure that services are provided by competent individuals who have the necessary expertise
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29
Q

What is Rule 3?

A
  1. Members and firms must provide good-quality and diligent service
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30
Q

What is Rule 4?

A
  1. Members and firms must treat others with respect and encourage diversity and inclusion
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31
Q

What is Rule 5?

A
  1. Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession
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32
Q

Can you give an example of a time you followed Rule 1?

A
  1. I always protect confidential information and only use it for the purposes it was provided

During a client call for a valuation, my client discussed details of other properties in their portfolio, information that I kept confidential

2 .I am also transparent with clients about fees and services

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33
Q

Can you give an example of a time you followed Rule 2?

A
  1. I carried my CPD requirements as a candidate amounting to 100 hours over my 24 month structured training
  2. I always reflect on work I have undertaken to learn from my experience, for example my case study
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34
Q

Can you give an example of a time you followed Rule 3?

A
  1. I ensure that I fully understand my clients’ needs and objectives before accepting any instruction
  2. I ensure that I communicate the material information that my advice is based upon

Example for both - my case study

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35
Q

Can you give an example of a time you followed Rule 4?

A
  1. I ensure that I respect the rights of other and treat others with courtesy.

For example, I am always courteous towards tenants when I am inspecting their workspaces, which may include sensitive information

  1. I always seek to work cooperatively with others, especially during negotiations
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36
Q

Can you give an example of a time you followed Rule 5?

A
  1. I acted to prevent harm during the pandemic, following government guidelines by wearing a face mask, using hand sanitiser, and keeping a social distant when visiting site premises
  2. I ensure that all of my posts on LinkedIn are professional in order to promote public confidence in the profession
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37
Q

Why were the new rules introduced?

A
  • Simpler structure with clear examples
  • Focus on respect, diversity and inclusion
  • Understanding evolving technology
  • Tackling global challenges
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38
Q

What are the professional obligations of members?

A
  1. Comply with CPD requirements
  2. Cooperate with the RICS
  3. Promptly provide all information reasonably requested by Standards and Regulation Board
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39
Q

What are the professional obligations of firms?

A
  1. Complaints handling procedures (with complaints log)
  2. PII cover
  3. Sole practitioner future arrangement
  4. Cooperate with RICS
  5. Promptly provide all information reasonably requested by Standards and Regulation Board
  6. Display RICS designation on business literature
  7. Report to RICS any matters required under Rules for Registration of Firms
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40
Q

What is the Ethics Decision Tree?

A

RICS guidance that provides a framework for members to follow when facing a potentially unethical situation

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41
Q

Who regulates the RICS?

A

RICS is self-regulated

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42
Q

What can trigger a disciplinary procedure?

A
  • Complaint to the RICS
  • Allegations by client or third party
  • Information received or established by the RICS
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43
Q

What are the 3 levels of disciplinary action?

A
  1. Action by Head of Regulation
  2. Disciplinary Panel
  3. Appeal panel
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44
Q

What is the first step of the disciplinary procedure?

A

Formal investigation by the Head of Regulation of RICS

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45
Q

What actions can the Head of Regulation take in a disciplinary procedure?

A
  1. Service a fixed penalty notice
  2. Make a Regulatory Compliance Order
  3. CPD sanctions
  4. Refer the matter to the Disciplinary Panel for consideration under the discipline rules
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46
Q

What are fixed penalties?

A

Disciplinary action used for breaches of the Rules in relation to supply of information to the RICS

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47
Q

What are Regulatory Compliance Orders?

A

Disciplinary action consisting of a written document which states the terms upon which the member or firm must take or desist from taking certain actions in a specified time period. Used for low level breaches of the Rules, that can be corrected

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48
Q

What are CPD sanctions?

A

Disciplinary action that place obligation on a member to follow CPD requirement

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49
Q

When are matters referred to the Disciplinary Panel?

A

Serious breaches of conduct

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50
Q

What percentage of Disciplinary Panel are RICS members?

A

50%

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51
Q

What are the penalties under the Disciplinary Panel?

A
  1. Issue a Compliance Order
  2. Unlimited fines (proportionate to breach)
  3. Impose conditions on future RICS registration
  4. Expulsion from membership / remove a firm
  5. Publication of result on Modus / RICS website
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52
Q

What happens at the Appeal Panel stage?

A
  • Consider member/firms appeal against Disciplinary Panel outcome
  • Review decision regarding existing and new evidence
  • Can allow appeal, and vary penalty previous imposed
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53
Q

What percentage of the Appeal Panel are RICS members?

A

50%

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54
Q

When is the RICS likely to investigate social media posts?

A
  • Discrimination
  • Dishonesty
  • Abusive threatening behaviour
  • Bullying / harassment
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55
Q

What is a professional statement?

A

Mandatory RICS guidance

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56
Q

What is a guidance note?

A

Voluntary RICs guidance

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57
Q

How do you determine your fees?

A
  • Scope of work
  • Number of those involved
  • Market-based
58
Q

What must all terms of engagement include?

A
  • Proposed fee basis
  • Payment of expenses
  • Complaints Handling Procedure available upon request
59
Q

What steps do you take before accepting an instruction?

A
  • Check competence
  • Check for conflicts / personal interests
  • Confirm terms of engagement in writing
60
Q

What is a cooling off period?

A

14 day period after terms have been signed that they can be cancelled

Statutory right under The Consumer Rights Act 2015

61
Q

Why might you decline an instruction?

A
  1. Not competent
  2. Do not have sufficient facts on the issue
  3. Terms of Engagement not signed
  4. AML checks refused
62
Q

What is a conflict of interest?

A

Situation where independent and impartial action may be threated by the interests of the parties involved

63
Q

What are some examples of a conflict?

A
  • Financial interest
  • Personal interest
  • Commercial relationships
  • Acting on both sides of a transaction
64
Q

What is conflict avoidance?

A

When the instruction is not accepted

65
Q

What is conflict management?

A

When the instruction is accepted, but steps are put in place to manage the conflict, such as an information barrier, with written agreement of all parties

66
Q

What guidance does the RICS provide on conflicts?

A

RICS Global Professional Statement on Conflicts of Interest 2017
- Informed consent

RICS Professional Statement: Conflicts of Interest - UK commercial property market investment agency 2017

  • Dual agency
  • Multiple introductions
  • Incremental advice
67
Q

What are the 3 types of conflicts of interest as defined by the RICS?

A
  • Party Conflict (work for two parties on the same instruction)
  • Own Interest Conflict (personal interest)
  • Confidential Information Conflict (work between two parties that is confidential)
68
Q

What is informed consent?

A

Written consent of parties involved where there is a conflict, after full information has been provided

69
Q

When should you seek informed consent?

A

Only if it is in the best interests of all parties involved to proceed with the conflict

70
Q

What steps do you take if a conflict arises?

A
  1. Conflict avoidance - decide if conflict needs to be avoided
  2. Written advice to both parties - if you want to proceed with the conflict
  3. Conflict management - one consent is received, set up information barrier
71
Q

When writing to disclose a conflict, what points must you cover?

A
  1. Disclose nature of the conflict, and my proposal to manage it
  2. Be as clear as possible, and advise the parties to seek specialist advice if necessary
  3. Request written confirmation from both parties of their informed consent
72
Q

What does an information barrier involve?

A
  • Surveyors for both sides must be different, and physically separated
  • All information must be stored securely
  • Audit trail of the conflict check, and all communications must be recorded
  • Compliance officer must oversee all actions
73
Q

What guidance does the RICS provide on conflicts within investment agency?

A

RICS Professional Statement: Conflicts of interest - UK commercial property market investment agency 2017

74
Q

What is covered in RICS Professional Statement: Conflicts of interest - UK commercial property market investment agency 2017?

A
  • Dual agency
  • Multiple introductions
  • Incremental advice
75
Q

What is dual agency?

A

Where an agency represents both the buyer and the seller - banned as of January 2018

76
Q

What must agents do when making multiple introductions?

A

State clearly whether introductions are made on an exclusive, or non-exclusive basis

77
Q

What is incremental advice?

A

Where an agent is approached to provide advice that is incremental to an existing instruction

For example, a vendor’s agent being asked to provide a valuation by the purchaser

78
Q

What is a personal interest conflcit?

A

Arises when acting for a family member, a close business associate or someone with whom you have a financial or personal interest or benefit (known as a connected person)

79
Q

What overrides client confidentiality rights?

A

If you are subject to a statutory duty, such as police or HMRC investigation

80
Q

How long should old files be kept?

A

Minimum of 6 years before being disposed / destroyed properly

81
Q

What should you do if you receive confidential information that was not meant for you?

A
  • Do not use for own purposes
  • Advised the client and sender of the error
  • Record the error in a note to the firm’s compliance officer
  • Dispose of the information securely
82
Q

What guidance have the RICS provided on complaints handling?

A

RICS Guidance Note on Complaints Handling 2016

83
Q

Who should you inform if you receive a complaint?

A

PII insurer, as this could lead to a claim for negligence

84
Q

When should details of your CHP be issued?

A

In my firms Terms of Engagement

85
Q

How are complaints recorded?

A

Complaints log - must show details, progress and outcome of complaints

86
Q

What is your firms Complaints Handling Procedure?

A

Stage One

  • Details of Complaints Handling Officer (Malcolm Brackley)
  • Complaints must be made in writing
  • Complaint will be acknowledged in 7 days
  • Complaint will be investigated within 28 days, and solution proposed

Stage Two
- If complainant not satisfied with solution, they are referred to RICS Dispute Resolution Service (consumer clients) and Property Ombudsman (commercial clients)

87
Q

How does a sole practitioner appoint Complaints Handling Officer?

A

They must nominate a surveyor at another firm

88
Q

What are CPD requirements for members?

A
  1. 20 hours minimum
  2. At least 10 hours must be formal
  3. Must maintain relevant and current understanding of RICS Rules of Conduct during rolling 3 year period
  4. CPD must be recorded on RICS website (RICS CPD Management System)
89
Q

What is formal CPD?

A

Structured training that can be assessed by expert third party

90
Q

What is informal CPD?

A

Self-managed learning related to professional role

91
Q

What is PII?

A

Professional Indemnity Insurance - mandatory for all surveyors

92
Q

Why is PII important?

A

Protects clients, surveyors and third parties against negligence claims when there is a duty of care breached and claim for damages arises

93
Q

Who must unwrite PII cover?

A

RICS approved insurers

94
Q

What determines the minimum level of indemnity cover required?

A

Firm’s annual turnover

95
Q

What are the minimum levels of cover required?

A

Turnover Minimum cover
£100,000 or less = £250,000
£100,001 to £200,000 = £500,000
£200,001 or above = £1,000,000

96
Q

How do you determine appropriate PII cover for a new business?

A

Estimate turnover in the first year based on clients and projected fees

97
Q

What is the maximum level of uninsured excess required by RICS?

A

Limit of indemnity Maximum uninsured excess

  • Up to £500,000 Greater of 2.5% of sum insured or £10,000
  • Over £500,000 2.5% of the sum insured
98
Q

What is the minimum level of run off cover required?

A

Minimum of 6 years

RICS recommends 15 years

99
Q

What is negligence?

A

When a duty of care is breached

100
Q

What needs to happen for a negligence claim to be made

A

Duty of care breached - there is a loss - claim for damages arises

101
Q

How do you avoid negligence?

A
  • Understand client objectives and confirm instructions in terms of engagement
  • Ensure I am competent to undertake the instruction
  • Undertake the work in accordance with 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 CPD
  • Cap professional liability excess on PII policy in the Terms of Engagement
102
Q

What are current limitation periods for negligence claims?

A

Contract - 6 years from negligent act

Tort - 6 years from date of the loss

103
Q

What client money can surveyors hold?

A
  • Rent
  • Deposits
  • Service charges
  • Retentions
104
Q

What RICS guidance on client money is there?

A

RICS Professional Statement: Client Money Handling 2019

105
Q

What are the 6 areas of good practice under RICS Professional Statement: Client Money Handling 2019?

A
  1. Holding client money
  2. Providing information to clients
  3. Receipts of client money
  4. Payments from client accounts
  5. Accounting records and control
  6. Compliance
106
Q

What procedures must surveyors follow when handling client money?

A
  • Client accounts kept separately and clearly identifiable
  • Word ‘client’ must be on account / cheque book
  • Client must be able to have monies on demand
  • Payment of interest agreed and accounts kept in credit
  • Accurate records are kept with running balance available
  • Firm handling client money must display procedures document on their website
107
Q

How does the RICS protect client money?

A

Clients’ Money Protection Scheme - last resort protection if RICS firms cannot repay client money

108
Q

What RICS compliance do you follow when starting a new practice?

A
  • Inform the RICS (Firm Detail Form)
  • Appoint Responsible Principal
  • Register with RICS for regulation
  • PII cover
  • Set up RICS approved Complaints Handling Procedure
  • Set up complaints log
  • Register for RICS Valuer Registration Scheme (VRS) if provide Red Book valuations
  • Add RICS designation to business literature
  • Plan for succession if sole practitioner
  • Log CPD on RICS website
  • Complete online RICS Annual Return each year
109
Q

What statutory compliance do you follow when starting a new practice?

A
  • Disclose business name
  • Disability discrimination compliance (Equality Act 2010)
  • Financial services compliance
  • Bribery Act 2010 compliance
  • Appoint MLRO
  • Health and safety compliance
  • Asbestos register
  • Fire safety compliance
  • Register for data protection
  • Estate agency compliance
  • Inform HMRC for VAT and tax registration
  • Comply with employment law
  • Ensure insurance compliance for employer and public liability
110
Q

What must you do when you close a practice?

A
  • Inform RICS
  • Inform clients / arrange handover
  • Return any client money held
  • Inform insurers and procure run off cover (6 years minimum)
  • Retain records for minimum of 6 years
111
Q

What key legislation relates to gifts, bribery and corruption?

A

Bribery Act 2010
Proceeds of Crime Act 2002
Money Laundering, Terrorist Financing and Transfer of Funds 2017

112
Q

Is hospitality permitted under the Bribery Act 2010?

A

Yes - low value business expenditure which seeks to promote and improve the image of the firm is an acceptable and key part of doing business

113
Q

What is a bribe?

A

Giving, offering, promising or receiving of an advantage such as a payment, gift or service for an action which is illegal or a breach of trust

114
Q

What are the 6 principles of the Bribery Act 2010?

A
  1. Proportionality
  2. Top level commitment
  3. Risk assessment
  4. Communication
  5. Due diligence
  6. Monitoring and review
115
Q

What are the four offences under the Bribery Act 2010?

A
  1. Bribing
  2. Receiving a bribe
  3. Bribing a foreign public official
  4. Failing to prevent bribery
116
Q

Are companies responsible for actions of corrupt employees?

A

Yes - unless they can show that they had adequate policies and procedures in place to combat bribery

117
Q

If you were offered tickets to a sporting event, would you accept?

A

Yes - as long as they are proportionate to the work conducted, and this hospitality is recorded in a gift register

118
Q

What steps can companies take to prevent bribery?

A
  • Identify potential risks
  • Staff training
  • Provision of clear policies
  • Regular reviews
119
Q

Who policies the Bribery Act 2010?

A

Serious Fraud Office

120
Q

What is the penalty for breaches of Bribery Act 2010?

A

Maximum penalty of 10 years imprisonment and/or unlimited fines

Companies face unlimited fines

121
Q

What is money laundering?

A

When proceeds of criminal activities are converted to legitimised assets

122
Q

What type of work does Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 cover?

A

Agency work and ‘relevant financial business work’

123
Q

What are the key provisions of Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017?

A
  1. Written risk assessment
  2. Implement systems, policies and procedures
  3. Internal controls
  4. Staff training
  5. Due diligence requirements (CDD, EDD)
  6. PEPs requirements
  7. Record keeping
  8. AML checks of purchasers by vendor agents before exchange
  9. Consider high-risk factors during EDD
124
Q

What money laundering obligations do estate agents have?

A
  • Letting agents must register with HMRC if individual property let for more than 10,000 EUR pcm
  • CDD checks on vendors, purchasers, landlords and tenants on new sales, lettings, or relettings
  • EDD checks if red flags occur
  • Firms must have policies to scrutinise complex / unusually large / unusual pattern / without economic or legal purpose transactions
  • Firms must have group-wide procedures and training
125
Q

What is Customer Due Diligence (CDD)?

A
  • Identify client (passport, utility bill, etc)
  • Identify beneficial owners
  • For company, its name, company number, and registered office address
  • If not listed company, directors names required
  • Identify purpose of business relationship, and proposed funding arrangements if appropriate
126
Q

What is Enhanced Due Diligence (EDD)?

A

Additional procedures for ‘high risk’ individials

  • From high risk country
  • Politically exposed person (PEP)
  • Connected to PEP (personal/business)
127
Q

What are some key requirements of Money Laundering Regulations 2017?

A
  • Firms must register with HMRC annually
  • Business relationships should be regularly monitored
  • Records of all AML procedures
  • Appoint MLRO
  • Firm must maintain records for minimum of 5 years
128
Q

Can firms accept cash payment?

A

Yes - but only up to 10,000 EUR

129
Q

What must MLRO do if they are suspicious of money laundering?

A

Send Suspicious Activity Report (SAR) to National Crime Agency

130
Q

What is the penalty for assisting money laundering under 2017 regulations?

A

Maximum 14 years imprisonment and/or unlimited fines

131
Q

What is the penalty for tipping off / failing to report suspicions under money laundering regulations 2017?

A

Maximum 5 year imprisonment and/or unlimited fine

132
Q

What are some Red Flags?

A
  • Refusal or inability to provide identification documents
  • Changes to parties involved in transactions
  • Unexpected urgency or loss-making in transactions
  • Payment of fees, purchase or rent monies in unusual currencies
133
Q

What is the Proceeds of Crime Act 2002?

A

Provides power for enforcement authorities in the UK to recover criminal and civil proceedings money and other assets deemed to be proceeds of a crime

134
Q

What are the three main offences under Proceeds of Crime Act 2002?

A
  1. Concealing criminal property
  2. Arrangements
  3. Acquisition use and possession
135
Q

What RICS guidance is there on money laundering, bribery and corruption?

A

RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing 2019

136
Q

What does RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing 2019 cover?

A
  1. Mandatory requirements
  2. Guidance and good practice
  3. Supplementary guidance
137
Q

What are RICS requirements of firms regarding bribery and corruption?

A

RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing 2019

Firms must:

  • Not offer / accept bribes
  • Have procedures to comply with law
  • Report suspicions
  • Assess risks in writing
  • Retain records
138
Q

What are RICS requirements of firms regarding bribery and corruption?

A

RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing 2019

Firms must (mandatory):

  • Not offer / accept bribes
  • Have procedures to comply with law
  • Report suspicions
  • Assess risks in writing
  • Retain records
139
Q

What are RICS requirements of firms regarding money laundering and terrorist financing?

A

RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing 2019

Firms must (mandatory):

  • Do not facilitate or be complicit to
  • Have procedures to comply with law
  • Report suspicions
  • Assess risks in writing
  • Use third parties to conduct checks
  • Understand new clients and purpose of instructions
  • Verify client ID
  • Retain records
140
Q

What guidance does RICS suggest to combat bribery, corruption, money laundering and terrorist financing?

A

RICS Professional Statement - Countering bribery, corruption, money laundering and terrorist financing 2019

Firms should (guidance):

RICS APC 2022 (7 decks)

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