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
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)
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
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
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)
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
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
8
Q
Example of Rule 5 - public confidence
A
- respond to complaints promptly and professionally
- complaints handling procedure must have 3rd party dispute resolution
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
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
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)
12
Q
How long does professional indemnity insurance run off cover need to last?
A
Minimum of 6 years
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
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)
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
16
Q
Complaints Handling Procedure
A
- every firm must have this
- company specific (no template)
- must maintain complaints log
- Complaints Handling Officer
- They come back within 7 days
- Claim dealt with within 28 days
- If cannot resolve, go to third party
Note: third party can be:
- Ombudsman
- Centre for Effective Dispute Resolution (CEDR)
- RICS Dispute Resolution Service
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
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
19
Q
Continuing Professional Development
A
- minimum 20 hours (10 formal)
- greater range available once qualified
- charity work, mock interviews etc
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)
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
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
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
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!
25
Bribery Act 2010
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
26
RICS President and CEO
- President: Ann Gray
- CEO: Richard Collins
27
Current RICS challenges
Climate change and sustainability
28
Recent initiatives for RICS
Use more technology in valuation
29
3 main roles of RICS
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
30
Benefits of being RICS member
- status
- recognition
- market advantage
- knowledge
- network
31
Benefit of RICS regulation for firms
- confidence for clients
- professionalism when giving advice
- security (CHP, PII cover)
32
Ethics Decision Tree
framework of questions RICS members can ask themselves when facing a situation where they are being asked to potentially act unethically
33
Three levels of disciplinary action
1. Action by Head of Regulation
2. Regulatory Tribunal
3. Appeal Panel
34
4 options after formal investigation by Head of Regulation of RICS
- 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
Appeal Panel
- if RICS member appeals disciplinary action then Appeal Board can vary penalty previously imposed
- 50% of panel are lay members
36
Social Media
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
Fee Negotiations
- 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
Reasons to decline a client instruction
- 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
Conflict Avoidance v Conflict Management
Avoidance - instruction not accepted
Management - instruction accepted but written agreement in place to manage
40
Global Professional Statement on Conflicts of Interest (2017)
- 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
Information / Ethical Barrier
- 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
Conflicts of Interest - U.K. Commercial Property Market Investment Agency 2017
-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
Confidentiality
- 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
What happens if you receive confidential information in error?
- notify Compliance Officer
- notify sender of error
- securely dispose of information
45
RICS Risk, Liability and Insurance - U.K. Guidance Note 2021
- 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
PII ‘Claims Made’ basis
- 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
What needs to be sent to RICS annually?
- type of business / staffing details
- financial services
- nature of clients
- Professional Indemnity Insurance
- Complaints Handling details
- whether firm holds clients money
48
RICS Run Off Pool
use this if unable to get run off cover from incumbent insurer or open market
49
Limitation Act 1980
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
How can negligence be avoided?
- 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
RICS Clients Money Protection Scheme
- last resort protection if RICS firm cannot pay back client money
- 2 parts to scheme:
1. For surveying services
2. For residential agencies
52
How would you start a new surveying practice?
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
How would you close a RICS practice?
- 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
Penalty for not complying with Bribery Act 2010
- policed by Serious Fraud Office
- maximum penalty of 10 years imprisonment and unlimited fine
55
Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2019
- 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
When are AML checks carried out?
- 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
What information is needed to complete money laundering check?
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
Politically Exposed Person
- may present higher risk for bribery/corruption
- carry out additional due diligence checks to establish purpose of transaction
59
Money Laundering Reporting Officer
nominated by every firm to report suspicious activity to National Crime Agency
60
How regularly does firm need to to register with HMRC?
Annually
61
Money Laundering Penalties
- 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
Red Flags associated with money laundering
- 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
Proceeds of Crime Act 2002
- 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
RICS Professional Statement - Countering Bribery, Corruption, Money Laundering and Terrorist Financing 2019
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
Bichard Review
aims to clarify purpose of RICS following The Levitt Review that stated RICS lacked clarity structure and purpose
66
What do RICS Rules of Conduct replace?
- rules of conduct for members and firms
- 5 global professional and ethical standards
67
When would RICS get involved in a complaint?
- member failed to respond to complainant
- member prevents party gaining access to independent redress mechanism
68
Who should sole practitioner nominate as their complaints handling officer?
A surveyor in another firm
69
Formal CPD
structured learning with clear objectives and outcomes
EG online training, courses, seminars
70
Informal CPD
Self managed learning that is related to your professional role
Note: check decision tree if not sure whether formal or informal
71
Where can you find detail on PII?
RICS Professional Indemnity Insurance Requirements
72
Pro-Bono work
Unpaid work to charities/friends
Note: still need PII cover for this
73
6 values of RICS
1. Honesty
2. Integrity
3. Competence
4. Service
5. Respect
6. Responsibility
74
RICS Royal Charter
- Royal Charters are granted by King
- RICS granted in 1881
- required RICS to promote usefulness of profession for public advantage
