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PS - APC Commercial > Ethics, Rules Of Conduct & Professionalism > Flashcards

Ethics, Rules Of Conduct & Professionalism Flashcards

1
Q

Why do we need RICS Rules of Conduct?

A
  • gives client and public comfort
  • they know surveyors would face disciplinary action if rules are breached
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2
Q

What is the importance of professional ethics?

A
  • acts as anchor for appropriate behaviours
  • ensures consistency and clarity irrespective of changing factors (different markets, state of economy)
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3
Q

Reasons for changes to RICS Rules of Conduct

A
  • changed 2nd February 2022
  • provide simpler structure
  • gives clearer examples
  • focus on respect, diversity and inclusion
  • respond to and understand evolving technology
  • emphasise the role of members expertise in tackling global challenges
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4
Q

RICS Rules of Conduct

A

1 - honesty and integrity
2 - act with competence
3 - provide good quality service
4 - respect, diversity and inclusion
5 - responsibility and public confidence

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5
Q

Example of Rule 1 - honesty and integrity

A
  • don’t accept bribes if likely to skew opinion
  • avoid conflicts of interest even if it costs the firm (don’t take instruction)
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6
Q

Example of Rule 2 - competence

A
  • onus on employee and whole business
  • ensure sub contractors are also competent
  • undertake CPD to ensure compliant with RICS requirements
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7
Q

Example of Rule 3 - good quality service

A
  • AML checks (RICS, HMRC and legal requirement)
  • all information must be request from the start
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8
Q

Example of Rule 5 - public confidence

A
  • respond to complaints promptly and professionally
  • complaints handling procedure must have 3rd party dispute resolution
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9
Q

Members obligations to RICS (noted in ROC Appendices)

A
  • comply with CPD requirements
  • cooperate with RICS
  • promptly provide information requested by Standards and Regulation Board
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10
Q

Firms obligations to RICS (noted in ROC Appendices)

A
  • have complaints handling procedure
  • have professional indemnity insurance
  • have locum if sole principle
  • cooperate with RICS
  • promptly provide all information requested by Standards and Regulation Board
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11
Q

What does Professional Indemnity Insurance do?

A
  • protects member/firm against financial loss
  • protects against consequences of it’s liability to pay damages to 3rd parties
  • mandatory for surveyors
  • protects clients, surveyors and third parties against negligence claims (where claim for damages arises)
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12
Q

How long does professional indemnity insurance run off cover need to last?

A

Minimum of 6 years

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13
Q

Minimum level of indemnity insurance

A

£250k if firm turnover in previous year was £100,000 or less

£500k if firm turnover in previous year was £100,001 - £200,000

£1,000,000 if firm turnover in previous year was over £200,001

Note: if new firm, estimate turnover and adjust accordingly

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14
Q

Maximum level of uninsured excess

A

If previous year turnover is £10 million or less, then greater of 2.5% of sum insured or £10k

If previous year turnover is over £10 million then no limit (used to be 2.5% of sum insured but this updated April 2022)

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15
Q

What is run off cover?

A

Insurance cover required after a member stops practicing (EG they leave)

Must have it for at least 6 years but RICS recommend 15 years

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16
Q

Complaints Handling Procedure

A
  • every firm must have this
  • company specific (no template)
  • must maintain complaints log
  1. Complaints Handling Officer
  2. They come back within 7 days
  3. Claim dealt with within 28 days
  4. If cannot resolve, go to third party

Note: third party can be:
- Ombudsman
- Centre for Effective Dispute Resolution (CEDR)
- RICS Dispute Resolution Service

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17
Q

Workman Complaints Handling Procedure

A
  • located on The Hub
  • aim to resolve with Workman staff member
  • write to Head Office setting out details of complaint
  • contacted within 7 days to confirm receipt and allocated person dealing
  • contacted within 28 days to provide final response or update (provide within 8 weeks of initial complaint)
  • if dissatisfied, contact Independent Property Redress Scheme
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18
Q

How should clients money be handled?

A
  • systems should be controlled and protected
  • account name should have ‘client’ in
  • client money should be available on demand
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19
Q

Continuing Professional Development

A
  • minimum 20 hours (10 formal)
  • greater range available once qualified
  • charity work, mock interviews etc
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20
Q

Conflicts of Interest

A

This is where an individuals judgement could be impaired
- may occur if advising seller/buyer simultaneously
- may be acting for two or more parties competing for an opportunity
- one Workman client selling to another Workman client (EG Norges to Blackrock)

Note: in latter, would declare conflict, request consent from both parties and work in different offices (info barrier)

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21
Q

Workman Conflict of Interest Check

A
  • search TRAMPS to see if property already on there
  • if not, reasonable to assume no previous involvement
  • if on there, contact partners of relevant properties and they decide how to proceed

Note: if conflict, refer matter to Advisory Board and they confirm - either decline or accept on ‘informed consent’ basis. Information Barriers on EFS may need to be put in place by IT

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22
Q

Different types of Conflict of Interest

A
  • Financial EG might gain/lose money depending on advice you give
  • Personal EG relationship with the the third party
  • Commercial EG obligations to commercial entity affects advice
  • Firm EG financial interests of firm conflict with interests of client
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23
Q

Can you act for a family member or is this a conflict of interest?

A
  • you can, not a conflict of interest
  • even if personal interest, can still do this but relevant facts must be disclosed to any perspective purchaser or lesser
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24
Q

What are bribes dependent on?

A
  • proportionality and common sense

EG client takes you to lunch for saying well done with RR - acceptable

EG gift offered to agents to say thanks for attending launch - acceptable

EG tickets to event during tender process - not acceptable! Bribe!

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25
Q

Bribery Act 2010

A

4 offences:
- bribing
- receiving bribe
- bribing foreign public official
- failing to prevent bribery

6 principles:
- proportionality
- top level commitment
- risk assessment
- due diligence
- communication
- monitoring and review

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26
Q

RICS President and CEO

A
  • President: Ann Gray
  • CEO: Richard Collins
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27
Q

Current RICS challenges

A

Climate change and sustainability

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28
Q

Recent initiatives for RICS

A

Use more technology in valuation

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29
Q

3 main roles of RICS

A
  1. Maintain highest standards of education and training
  2. Protect consumers through strict regulation of professional standards
  3. To be leading source of information and independent advice on property
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30
Q

Benefits of being RICS member

A
  • status
  • recognition
  • market advantage
  • knowledge
  • network
31
Q

Benefit of RICS regulation for firms

A
  • confidence for clients
  • professionalism when giving advice
  • security (CHP, PII cover)
32
Q

Ethics Decision Tree

A

framework of questions RICS members can ask themselves when facing a situation where they are being asked to potentially act unethically

33
Q

Three levels of disciplinary action

A
  1. Action by Head of Regulation
  2. Regulatory Tribunal
  3. Appeal Panel
34
Q

4 options after formal investigation by Head of Regulation of RICS

A
  • serve fixed penalty notice (if breached Rules)
  • make Regulatory Compliance Order (minor breach - member must take action within set time period)
  • CPD sanctions (complete CPD)
  • Disciplinary Panel (more serious breach, 50% panel lay members) which can lead to fine / expulsion etc
35
Q

Appeal Panel

A
  • if RICS member appeals disciplinary action then Appeal Board can vary penalty previously imposed
  • 50% of panel are lay members
36
Q

Social Media

A

RICS will investigate posts that include:
- discrimination
- dishonesty
- abusive behaviour
- bullying/harassment

RICS will NOT investigate if post:
- criticises organisation
- are removed upon request

37
Q

Fee Negotiations

A
  • market based and agreed on ad hoc basis with client
  • avoid undercutting other firms
  • avoid collusion with competitors
  • can negotiate further after submitting initial fee proposal as long as act professionally - be transparent
38
Q

Reasons to decline a client instruction

A
  • not competent
  • insufficient facts
  • conflict of interest
  • client won’t sign terms of engagement
  • client won’t complete AML checks
  • PII liability cap cannot be agreed
39
Q

Conflict Avoidance v Conflict Management

A

Avoidance - instruction not accepted
Management - instruction accepted but written agreement in place to manage

40
Q

Global Professional Statement on Conflicts of Interest (2017)

A
  • 1 January 2018
  • do not represent client if there is conflict, unless prior informed consent
  • only request prior informed consent if in all parties best interest
  • must keep records to show compliant
41
Q

Information / Ethical Barrier

A
  • ensure no chance of information passing between two parties
  • surveyors must be in separate buildings or on different floors
  • firm Compliance Officer must oversee and have record of all communication
42
Q

Conflicts of Interest - U.K. Commercial Property Market Investment Agency 2017

A

-sets principles for identifying and managing conflicts
- Dual Agency = if got contractual agency with buyer and seller at same time; must not do this
- Multiple Introductions = agent has contractual relationship with multiple buyers. If exclusive basis, then other prospective buyers must be informed that agent can no longer act for them
- Incremental Advice = agent approached by other party to give advice on valuation / planning relating to acquisition/disposal that is incremental to existing instruction

43
Q

Confidentiality

A
  • must be maintained for all client affairs
  • included historic information and information provided by client prior to instruction
  • always get client approval before giving information to third party (unless police or HMRC)
  • hold files for 6 years then securely destroy them
44
Q

What happens if you receive confidential information in error?

A
  • notify Compliance Officer
  • notify sender of error
  • securely dispose of information
45
Q

RICS Risk, Liability and Insurance - U.K. Guidance Note 2021

A
  • insurers must provide cover for fire safety claims on property with 4 storeys or less
  • RICS recommends use of liability caps
  • only client listed in terms of engagement can rely on advice
46
Q

PII ‘Claims Made’ basis

A
  • covers claims that are first made during period of insurance, regardless of when the negligent act occurred
  • popular for when there is delay between event occurring and claimant files the claim
47
Q

What needs to be sent to RICS annually?

A
  • type of business / staffing details
  • financial services
  • nature of clients
  • Professional Indemnity Insurance
  • Complaints Handling details
  • whether firm holds clients money
48
Q

RICS Run Off Pool

A

use this if unable to get run off cover from incumbent insurer or open market

49
Q

Limitation Act 1980

A

current limitation periods for negligence are:
- contract: 6 years from date of act / 3 years from date of knowledge of damage or 15 years from date of negligent act
- tort: 6 years from date claimant suffered loss

50
Q

How can negligence be avoided?

A
  • understand client objectives
  • agree terms of engagement in writing
  • ensure you are competent
  • work in accordance with RICS
  • make detailed file notes and take photos
  • keep up to date with industry and keep CPD up to date
  • cap professional liability on PII policy and note this in terms of engagement
51
Q

RICS Clients Money Protection Scheme

A
  • last resort protection if RICS firm cannot pay back client money
  • 2 parts to scheme:
    1. For surveying services
    2. For residential agencies
52
Q

How would you start a new surveying practice?

A
  1. Inform RICS by completing Firm Detail Form
  2. Register with RICS for Regulatory board
  3. Appoint Responsible Principle for RICS communication
  4. Arrange Professional Indemnity Insurance and send details to RICS
  5. Set up procedures for handling clients money
  6. Obtain RICS approval for Complaints Handling Procedure
  7. Appoint Complaints Handling Officer
  8. Ensure completion of online RICS annual return at end of each year
53
Q

How would you close a RICS practice?

A
  • inform RICS of closure/retirement
  • ensure clients are informed and handover arrangements are made with new firms
  • return clients their money
  • inform insurers and get PII run off cover for at least 6 years
  • retain copy of client files and records for at least 6 years
54
Q

Penalty for not complying with Bribery Act 2010

A
  • policed by Serious Fraud Office
  • maximum penalty of 10 years imprisonment and unlimited fine
55
Q

Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2019

A
  • covers agency work globally
  • need money laundering and terrorist financing risk assessment
  • need systems, policies and procedures in place
  • need internal controls
  • need staff training
  • comply with due diligence requirements
  • appropriate record keeping and procedures
56
Q

When are AML checks carried out?

A
  • before contracts are exchanged
  • confirm identity of proposed purchaser of property
  • check purchasers source of funds

Note: suspicious transactions are usually complex, very large, complex or without legal purpose

57
Q

What information is needed to complete money laundering check?

A

Company: certification of incorporation, name, register number, registered office, business address, directors name

Individual: passport/driving licence, bank statement, credit card bill showing address within last 3 months

58
Q

Politically Exposed Person

A
  • may present higher risk for bribery/corruption
  • carry out additional due diligence checks to establish purpose of transaction
59
Q

Money Laundering Reporting Officer

A

nominated by every firm to report suspicious activity to National Crime Agency

60
Q

How regularly does firm need to to register with HMRC?

A

Annually

61
Q

Money Laundering Penalties

A
  • maximum 14 years prison and/or fine for assisting with money laundering
  • maximum 5 years prison and/or fine for tipping off person by telling them they are suspect
62
Q

Red Flags associated with money laundering

A
  • inability / unwillingness to provide identity documents
  • changes to parties involved in transactions
  • unusual features EG unexpected urgency from parties, or unusual transaction for client
  • payment in unusual currency
63
Q

Proceeds of Crime Act 2002

A
  • provides power for enforcement authorities to recover money/assets in criminal proceedings
  • set of criminal offences to combat money laundering
    1. Concealing criminal property (disguise the property)
    2. Arrangements (person facilitates use of criminal property)
    3. Acquisition, use and possession (of criminal property)
64
Q

RICS Professional Statement - Countering Bribery, Corruption, Money Laundering and Terrorist Financing 2019

A

mandatory requirements in 3 parts
1. Mandatory requirements for anti bribery, corruption, anti money laundering and terrorist financing
2. Guidance setting out good practice
3. Additional guidance

65
Q

Bichard Review

A

aims to clarify purpose of RICS following The Levitt Review that stated RICS lacked clarity structure and purpose

66
Q

What do RICS Rules of Conduct replace?

A
  • rules of conduct for members and firms
  • 5 global professional and ethical standards
67
Q

When would RICS get involved in a complaint?

A
  • member failed to respond to complainant
  • member prevents party gaining access to independent redress mechanism
68
Q

Who should sole practitioner nominate as their complaints handling officer?

A

A surveyor in another firm

69
Q

Formal CPD

A

structured learning with clear objectives and outcomes

EG online training, courses, seminars

70
Q

Informal CPD

A

Self managed learning that is related to your professional role

Note: check decision tree if not sure whether formal or informal

71
Q

Where can you find detail on PII?

A

RICS Professional Indemnity Insurance Requirements

72
Q

Pro-Bono work

A

Unpaid work to charities/friends

Note: still need PII cover for this

73
Q

6 values of RICS

A
  1. Honesty
  2. Integrity
  3. Competence
  4. Service
  5. Respect
  6. Responsibility
74
Q

RICS Royal Charter

A
  • Royal Charters are granted by King
  • RICS granted in 1881
  • required RICS to promote usefulness of profession for public advantage

PS - APC Commercial (17 decks)

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