Ethics, Rules of Conduct & Professionalism

Question 1

Tell me what you understand about conflicts of interest?

Answer 1

L1 - Where someone in a position of trust has competing personal or professional interests making it difficult for them to fulfil their duties impartially

OR

AN existing relationship will result in reduced impartiality and Chartered Surveyors have an obligation to make clients aware of this and if necessary decline work opportunities where a conflict of interest occurs

Question 2

How could the conflict of interest be managed internally if two separate departments were working for the same client?

Answer 2

L2 - Ensure exclusivity of staff to each department

Separate communication lines into the client

Separate geographical locations / secure office and data storage

Sign up to confidentiality / non disclosure agreements

Monitor the potential conflict and keep the client updated.

Question 3

In the scenario of you had two separate departments, managed internally, working for the same client but the client was insistent that you worked for them despite an existing conflict of interest, how would you proceed?

Answer 3

L3 - Check the clients understanding around the conflict of interest

Make them aware of the potential for reduced impartiality

Seek a letter of instruction from the client to continue

Talk through working procedures to manage the conflict of interest

Question 4

What are the minimum levels of indemnity?

Answer 4

L1 - this depends on the firm’s turnover:

If turnover is £100k or less, it is £250K

If turnover is £100 - £200k it is £500k.

Question 5

How do you determine the level of PI cover?

Answer 5

L1 - this depends on the firm’s turnover:

If turnover is £100k or less, it is £250K

If turnover is £100 - £200k it is £500k.

Question 6

What are the maximum levels of uninsured excess?

Answer 6

L1 - depends on the leve of indemnity

Up to £500k = greater of 2.5% of insured sum or £10,000

Over £500k = 2.5% of the insured sum

Question 7

What sort of insurances do Chartered Surveyors need to have?

Answer 7

L1 - Professional Indemnity Cover

Buildings Insurance

Contents Insurance

Employers Liability Insurance

Question 8

How many Rules of Conduct for Members are there? And what are they?

Answer 8

L1 - There are 9:

Interpretation

Communication

Ethical Behaviour

Competence

Service

Continuous Professional Development (CPD)

Solvency

Information to RICS

Co-operation

Question 9

How many Rules of Conduct for Firms are there? And what are they?

Answer 9

L1 - There are 14:
Interpretation

Communication

Professional Behaviour

Competence

Service

Training & CPD

Complaints Handling

Clients money

PI Insurance (professional Indemnity

Advertising

Solvency

Arrangements to cover incapacity / death of a sole practitioner

Use of designations

Information to RICS

Question 10

What are the Main Principles of the Bribery Act?

Answer 10

L1 - Offences:
Making a bribe, receiving a bribe, bribery of a foreign public official

Applies to all UK Entities

Includes Associated Persons

Six Principles of Prevention =
1. Proportionate Procedures,
2. Top Level Commitment,
3. Risk Assessments,
4. Due Diligence,
5. Communication,
6. Monitoring & Review.

Question 11

Under the Bribery Act, under what circumstance is a facilitation payment permitted?

Answer 11

L1 - The only circumstance in which it is OK to make a facilitation payment is when you are under duress

Ie there is a real and present risk or danger to “life, limb or liberty”.

If you or your companions are under immediate physical threat

You should put safety first, make the payment and report the matter immediately,

Or as soon as is practicable to your manager or your Ethics/Compliance/Legal contact.

Question 12

You are attending a Main Contractor organised business conference where it is announced that you have been randomly selected as the winner of this months prize draw. Its an iPad Air. How would you act in this scenario?

Answer 12

L2 - I would be extremely uncomfortable accepting the prize in this scenario

The prize is of a significant value and could be interpreted as a bribe

Furthermore, due to working on a project with the Main Contractor at the time of this scenario, accepting the prize would have been highly inappropriate and could be interpreted as having an affect on my business conduct during the project.

I would respectfully decline the prize and suggest that his is made as a charitable donation to a charity of the Main Contractor’s choice.

I am aware that bribes are commonly distributed as random prizes and due to the seriousness of the incident, I would report this to my line manager.

Question 13

You receive an invite to attend the Theatre with some members of your Project Team but they dropped out due to illness at the last minute, would you still attend?

Answer 13

L2 - In the first instance I would declare this hospitality on my companies gifts and hospitality register

Assuming the invite was approved and I was authorised to attend

I would need to decline the invite due to the Project Team dropping out

Since they won’t be present, this will not be a genuine business event.

Consequently, I would decline this hospitality at the Project Team’s expense.

Question 14

You are bidding for a project and the client advises that if you reduce your fee bid by £3,000 you will be first place and win the tender, how would you advise the client?

Answer 14

L3 - Unfair competition

Not treating others with respect

Not acting with integrity

Unsustainable to undertake business in this manner

Avoid Dutch auctions as devaluing the proffesion

You would need to reduce scope to achieve same margin, would this provide high standard of service

This could be interpreted as a bribe.

Question 15

A client takes you out for lunch after a business meeting, where they continue to discuss business. The bill for the lunch comes to £200. What should you do now?

Answer 15

L2 - This lunch had a legitimate business purpose, so it’s fine to accept the hospitality

But the client should have considered how a £200 bill for a lunch could be perceived and have chosen a more modest restaurant

Given the size of the bill, it must be declared on the Hospitality Register and I would make my line manager aware immediately afterwards

I would offer to reciprocate but ensure this is carried out in a more modest manner as the lavishness of the restaurant could be interpreted as inappropriate and disproportionate.

Question 16

Tell me about Merrett v Babb case law?

Answer 16

L1 - Court case in 2001

Babb had carried out a valuation as an employee of a company for a house purchased by Merrett

Valuation later found to be negligent

The original company no longer existed

Court ruled Merrett could pursue the individual - Babb - for the losses

Question 17

What is the significance of the Merrett v Babb Case Law?

Answer 17

L1 - considered if a professional employer was vulnerable to claims brought directly against them for advice given on behalf of their employers

Highlights importance of run off cover

Professional individuals and firms must ensure that run off cover is in place after they leave their firm’s employment or a firm ceases trading

Individuals should ensure that their ex company keeps up this cover on their behalf.

Question 18

How long should runoff cover be in place?

Answer 18

L1 - Depends on the type of contracts the professional has been involved with

Usually 6 years if contract executed under hand

12 years if executed as a deed.

Question 19

Can you tell me the five Global Professional & Ethical Standards?

Answer 19

L1 - Act with integrity

Always provide a high standard of service

Act in a way that promotes trust in the profession

Treat others with respect

Take responsibility

Question 20

Can you tell me which two of the five Glocal Professional & Ethical Standards resonate with you the most?

Answer 20

L2 - Act with integrity

Always provide a high standard of service

Act in a way that promotes trust in the profession

Treat others with respect

Take responsibility

Question 21

What are the requirements regarding PI by the RICS?

Answer 21

L1 - Must be made on an ‘each and every’ claim basis

Gives min wording

Sets out minimum levels of indemnity

Sets out maximum levels of uninsured excess

Run off cover must be in place for at least 6 years

Should include cover for past and present employees, directors and partners.

Question 22

What if the loss exceeds the cover provided by the PI insurance?

Answer 22

L1 - The professional / firm is liable for the difference - in assets etc.

Question 23

What measures should be taken to try and avoid PI Claims?

Answer 23

L1 - Keep full and detailed records of meetings, conversations, etc.

Record recommendations and advice given

Use proper letters of engagement, scope of services and terms of engagement

Don’t advise on a specialism outside your field of experience

Use RICS guidelines

Avoid poor management and excessive workloads

Question 24

A newly appointed project manager working for your Client’s organisation advises that they are concerned about the terms their predecessors agreed with you. They state not to expect the same terms and advise that if you give a 20% discount they won’t renew your contract. How would you respond?

Answer 24

L2 - Although this client manager is asking for a steep discount, it’s more a matter of him trying to renegotiate contract terms with us. So this can’t be classes as a bribe.

I would advise that we would consider offering the saving but the level of service and resource would need to be reviewed inline with the reduction.

Were the original fees considered as good value and a fair and reasonable sum / is this devaluing the profession

It may not be sustainable and in the clients interests if I cannot provide a high standard of service

A fee profile and resource schedule would need to be prepared to determine if the saving and adequate level of service can be offered

May need to decline if unable to offer required service.

Question 25

Are you familiar with the term limit of liability and where would it be used?

Answer 25

L1 - 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 after so assets could be at risk

As such, companies may try and place a limit of exposure.

Question 26

Assuming you were successful in getting chartered, how would you deal with a situation such as a friend who asks you to provide them with QS advice?

Answer 26

L1 - I could not offer advice on my own without PI insurance

If I did have my own PI insurance, I would ensure that the information given was subject ot the thorough checking process given to all information prior to issue regardless of who it was to.

Inform them they can contact you 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”

Adhere to rules of conduct

Question 27

Tell me how you have demonstrated two of the five Global Professional & Ethical Standards on your case study project?

Answer 27

L2 - On my project I aimed to exceed the clients expectations by agreeing the final account ahead of the agreed deadline - High Standard of Service

When undertaking a valuation I approached the project manager after witnessing an unsafe working procedure - Taking Responsibility

Treat others with respect

Acting with integrity

Acting in a way that promotes trust in the profession.

Question 28

A tender is in progress for which you have submitted a bid. You get a call from the client who advises that they are involved as a parent in a junior theatre group. The client says they have read about your firm’s community initiatives and ask you to sponsor their annual performance. They say they are desperately short of funds and that they have donated money themselves. How would you advise the client in this scenario?

Answer 28

L2 - The client may not be soliciting a bribe here

Nevertheless, as a tender is in progress, any sponsorship made could be perceived as an undue influence and a bribe.

In the first instance, you would explain this to the client and decline to make a donation

To ensure transparency, you would also report the request to your line manager.

Depending on advise from Senior Management it may be appropriate to escalate this to our firms whistleblowing policy.

Question 29

A contractor invites you to lunch to a restaurant and advises they’ve got two Michelin stars and a wine list second to none. They say they are keen to discuss the details of their tender they are about to submit for the project you are working on. How would you respond?

Answer 29

L2 - Going to what sounds like a lavish lunch paid for by a bidder in the middle of a tende rprocess is against company policy and could be an offence under the UK Bribery Act.

If this were the first time, it would be OK just to decline and explain that such an invitation is inappropriate.

However, this supplier is persistent, and there is a red flag in that he wants to discuss things that he cannot put in writing, so we should report for infringement/

Unfair competition

Not acting with integrity or respect to fellow contractors.

Question 30

What was the Carsberg Report, 2005?

Answer 30

L1 - This was a thorough internal and external review of the regulations of RICS

A response to members’ general dissatisfaction with aspects of RICS regulation.

Question 31

What were some of the key recommendations of the Carsberg report?

Answer 31

L1 - A conduct board should be established to operate the disciplinary structures

The RICS should regulate firms as well as members

A review of existing CDP requirements and compliance should be initiated.

Question 32

What are the five Principles of Better Regulation?

Answer 32

L1 - Proportionality

Accountability

Consistency

Targeting

Transparency

Question 33

What is the purpose of the five Principles of Better Regulation?

Answer 33

L1 - The RICS is a self regulated professional body that has a duty to the public interest

The five principles of Better 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.

Question 34

Pick two of the five Principles of Better Regulation and explain what they mean to you?

Answer 34

L2 - Proportionality - Means RICS should only intervene when necessary and any remedies imposed should be proportionate. For example late 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 decision 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 - keep regulations simply and user friendly, to be effectively communicated - assist back in line with regulation rather than a heavy handed approach