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RICS APC > Ethics, Rules Of Conduct & Professionalism > Flashcards

Ethics, Rules Of Conduct & Professionalism Flashcards

1
Q

Why do you want to become a member of RICS?

A
  • gain status and reputation
  • gain recognition under the RICS title
  • give me a competitive edge
  • enhance my knowledge locally and internationally through CPD
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2
Q

What is the role of RICS?

A
  • highest ethical and technical standards in land, property and built environment
  • protecting and providing benefits to consumers through best practice
  • providing excellent impartial advice to govt, businesses and the public
  • equipping RICS members with advice and professional training
  • promoting RICS status
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3
Q

What are the key functions of RICS?

A

CISAQ
- Consumer protection
- Influence policy
- Set standards
- Accredit professionals
- Quality assurance

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4
Q

What is a Royal Charter?

A

Document signed by a monarch

Royal Charter for RICS was signed by Privy Council in 1881

The original purpose of a charter was to create and define privileges and purpose of a corporation.

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5
Q

Who is the current RICS President?

A

Ann Gray since January 2023

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6
Q

What do you understand by the term self-regulation?

A

RICS is self- regulated, internally monitored and inspection and not regulated by the government

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7
Q

What are the 5 principles of better regulation?

A

TPACT
Transparent
Proportional
Accountable
Consistent
Targeted

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8
Q

What is a Bye-law?

A

Set of rules to ensure conduct of members and firms

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9
Q

Give me an example of one of the RICS Bye-laws

A

There are 10 Bye-laws altogether

Example is Bye-law 5: Conduct

a) conduct himself in a manner that is befitting of RICS
b) comply with rules and regulations
c) disclose promptly if 5.2.1 (b) has been breached
d) disclose promptly any information about a member, non-regulated member or firm who has been charged or convicted for criminal offence

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10
Q

What is the difference between RICS ethics and rules?

A

Ethics are a set of moral values

Rules of conduct are a framework to work to

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11
Q

Explain the new Rules of Conduct, what do they replace?

A

The new Rules of Conduct replace the Rules of Conduct for firms and members and the Global professional and ethical standards

There are 5 new rules

Each rule has example behaviours

Appendix A provides a list of core obligations for members and firms

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12
Q

When did the new Rules of Conduct come out?

A

2 February 2022

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13
Q

Who do the new rules apply to?

A

Both Members and Firms

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14
Q

What are the 6 key principles that the Rules of Conduct are based on?

A

HICSRR

Honesty
Integrity
Competence
Service
Respect
Responsibility

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15
Q

What are the five Rules of Conduct?

A

Rule 1 - Members and Firms must be honest, act with integrity and comply with professional obligations and obligations to RICS

Rule 2 - Members and Firms must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise

Rule 3 - Members and Firms must provide good quality and diligent service

Rule 4 - Members and Firms must treat others with respect and encourage diversity and inclusion

Rule 5 - Members and Firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in their profession

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16
Q

Give an example behaviour for each Rule

A

Rule 1 example - Members and Firms are open and transparent about fees and services

Rule 2 example - Members and Firms only carry out work they have knowledge, skills and resources to carry out competently

Rule 3 example - Members and Firms understand client’s needs and objectives before accepting professional work

Rule 4 example - Members and Firms respect the rights of others and treat others with courtesy

Rule 5 example - Members and Firms respond to complaints made against them promptly and professionally

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17
Q

What are the core professional obligations of firms and members to RICS

A

In Appendix A of Rules of Conduct

3 for member and 7 for firms

Members MUST:
- Comply with CPD requirement
- cooperate with RICS
- promptly provide information to Standards and Regulation Board

Firms MUST:
- establish a complaints handling procedure
- all work is covered by Professional Indemnity cover
- where sole principal, must make arrangement in the event of incapacity, death, illness, unable to work
- cooperate with RICS
- promptly provide all information requested by the Standards and Regulation Board
- business literature to denote they are regulated by RICS
- Report any matter under the Rules for Registration of Firms

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18
Q

What disciplinary procedures can the RICS impose?

A
  1. Fixed penalty - where a breach of:
    - Rule 2 re. CPD requirements
    - Professional obligations re. providing info to RICS
    - Rule 13 of the Rules for the Registration of Firms re. payment of fees

First breach attracts a caution
Second breach if within 10 years attracts fixed penalty and fine

  1. Consent Order before Oct 2019, Regulatory Compliance Order after Oct 2019
  2. Disciplinary Panel - if member does not admit to allegations, case can be deferred to Disciplinary Panel
  3. Expulsion from the Institution - if member has carried out gross, misconduct or wilful failure by not adhering to the Rules of Conduct, fraud, dishonesty or lack of integrity or conviction of a serious crime
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19
Q

When did RICS last update their disciplinary panel?

A

2nd March 2020

Now renamed Regulatory Tribunal Rules

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20
Q

What are the different levels of action with the Disciplinary Procedures?

A
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21
Q

What do you understand by the term Professional Practice?

A

Professional practice refers to the ethical, conduct and competence expected of a professional

RICS develops and enforces international standards to protect consumers and businesses

Professional practice involves balancing personal interest and using values and ethical judgement to arrive at a decision

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22
Q

What money laundering regulations or legislation are you aware of?

A

Money Laundering and Terrorist Financing (Amendment) Regulations 2022

Came into force September 2022

Regulations were amended from the previous regulation in response to the Russian invasion in Ukraine and to risks like crypto assets

The aim with the Regulation is to be vigilant and make UK’s financial system difficult to exploit

23
Q

What is a red flag of money laundering?

A
  • secretive about who they are
  • avoids personal contact without good reason
  • refuses to provide information or documentation
  • has unusual knowledge about money laundering
  • large cash amounts including foreign currency
  • payment from a third party
  • use of multiple account or foreign accounts
24
Q

What bribery legislation are you aware of?

A

Bribery Act 2010

4 main offences:
1. Bribing another person
2. Being bribed
3. Bribing a foreign public official
4. Failure by a commercial organisation to prevent bribery

25
Q

What is a bribe?

A

The RICS professional statement: Countering bribery and corruption, money laundering and terrorist financing (1st Edition, Feb 2019) effective Sept 2019

The professional statement define bribery as -
The offer, promise, giving, demanding or acceptance of an advantage as an inducement for an action that is illegal, unethical or a breach of trust

26
Q

What are the penalties for accepting a bribe?

A

Under the bribery Act 2010:
- 10 years imprisonment and/or unlimited fine for individuals
- unlimited fine for companies

27
Q

What are the penalties with being involved in money laundering?

A
  • Max. 14 years prison sentence and/or unlimited fine for assisting with money laundering
  • Max. 5 year prison sentence and/or unlimited fine for tipping off a person by informing them that they are under suspicion or failing to report the suspicion
28
Q

What constitutes an offence under the current money laundering regulations?

A

Failure to disclose - when a person knows or suspects but doesn’t disclose

Tipping off - inform a suspect that they are under suspicion

Assisting - a person knowingly assists another person

29
Q

How long should you keep money laundering records for?

A

Five years after the end of a business relationship or after the date of transaction

These are documents obtained in satisfying CDD requirements such as passport, address, etc.

30
Q

What is Professional Indemnity Insurance (PII)?

A

Protects professionals from claims by client or third parties of negligence or breach of duty

31
Q

Can you tell me about the RICS requirements in relation to PII?

A
  • An ‘each and every’ claim basis - considered in its own right rather than in the aggregate
  • aggregate plus unlimited round the clock reinstatement (no limited layers)
  • RICS sets out minimum levels of indemnity based on turnover of previous year
  • must be fully retroactive (same as ‘claims made’) - doesn’t matter when the claim took place, the current policy will be called upon
  • RICS sets out max levels of uninsured excess
  • run off cover must be in place
  • fire safety exclusions
32
Q

What is PII aggregation clause?

A

Means that the indemnity limit is only payable once, regardless of how many claims are made

For example, can make 10 claims but if limit is £250,000, then just this will be paid once

Most claims are ‘each and every’ but things like contamination or asbestos cover is more aggregate

33
Q

In a negligence claim, what would help to show that you acted with consideration and due process?

A

For a defence in a claim of negligence I should have considered:
1. Duty of care - as set out in terms of agreement
2. Duty must have been breached to bring a claim
3. The breach must have cause a loss to asset or financially

To show I acted with consideration and due process:
- demonstrate that I took reasonable steps from the harm occurring through thorough inspection and details notes
- follow procedure
- documented actions - why something couldn’t be done
- be transparent

34
Q

Can good record keeping help to provide a defence in a PII claim?

A

Yes, can help enormously!

Case of Hart v Large - surveyor did not take notes or photographs
- didn’t say why he didn’t inspect some areas
- relied on third party notes rather than requesting Professional Consultant’s certificate to verify renovation works

35
Q

If you were providing services outside of your usual scope to a client, what might you need to do in relation to your PII cover?

A
  • I would first check that I was competent to carry out the work should I then accept it
  • I would have to increase the level of cover to allow me to carry out the work or kindly refuse it
36
Q

What is run off cover?

A

Provides cover for work done in the past by an individual or business and the policy still covers after firm ceases trading

Case law - Merritt v Babb
Here the company Mr Babb worked for became bankrupt and insurance policy cancelled.
Court held that Mr Babb could be sued for damages directly

This has led to run off cover

37
Q

What RICS requirements are there relating to run-off cover?

A
  • have ‘adequate and appropriate’ run off cover meaning minimum of 6 years for consumer cover and the end of a practice and cover for commercial claims.
  • can be arranged and paid for annually - where policy not renewed, a minimum limit of £1m in all 6 years from the expiry date of firm cessation is maintained
38
Q

What changes did RICS recently make to the minimum approved PII wording?

A

Updated under version 9 of the UK Professional Indemnity Insurance requirements, with effect from April 2022

Fire safety exclusion - insurers are not permitted to exclude fire safety for properties with four storeys or less.

Cyber cover - now includes new exclusionary language in respect of cyber related claims and losses (no mention before which led to ambiguity)

39
Q

Would a dictated report avoid the need to have any written notes?

A

I would use in conjunction with sites notes although can be useful in adverse weather

Essential to write up the notes immediately to avoid misinterpretation and also take photos

40
Q

Explain PII requirements relating to fire safety cover and cyber cover

A

Fire safety - insurers are not permitted to exclude cover for buildings with four storeys or less
Fire safety cover to be provided on an aggregate, defence cost inclusive basis

Cyber security cover- now explicitly mentions what is excluded such as:
- the use or inability to use computer systems arising from malware
- damage or destruction of programmes, software or stored data

41
Q

How long can a PII claim arise after the work is undertaken?

A

Depends on the individual case!

Breach of contract - 6 years from
When service was performed such as a surveying report

Tort of negligence - no limit as depends on the claim. Can’t bring a claim for negligence until a loss has occurred

The Limitation Act 1980 allows claim to be made 15 years after the act for negligence

42
Q

What is the Assigned Risks Pool (ARP)?

A

A facility by RICS to ensure the availability of PII for all UK regulated firms who are unable to obtain PII which meets minimum requirements

Only for firms currently trading, a firm
in run off not eligible

43
Q

Who might need to access Assigned Risk Pool?

A

Any RICS regulated firm who can’t get PII on the open market

A RICS regulated firm must have been regulated for 12 months

44
Q

Explain your understanding of the RICS guidance note: Risks, Liability and Insurance

A

1st Edition, April 2021

  • Aims to provide guidance on avoiding risks and liabilities with surveying work
  • Surveyor can face a claim for breach of contract or tort if negligence
  • breach of contract - client can bring a claim hence the need for clear Terms of Engagement
  • tort of negligence - third party (anyone) can bring a claim
  • Terms of Engagement very important here to highlight intended purpose
  • remedy is usually damages (financial loss)
  • claims should be brought against a firm not personal liability
45
Q

Explain when you might agree a liability cap?

A

A liability cap limits the amount that can be claimed even in a negligence claim

Agree liability cap at tim of writing Terms of Engagement

Difference between liability cap and PII-
- Liability cap is agreement between client and firm
- PII is what the insurer will pay out

46
Q

How would you set out third party reliance in Terms of Engagement?

A

Third party reliance refers to a situation where a third party relies on a advice/ information from a professional

Regulated firms must make it very clear in Terms of Engagement that advice is only to be for the named client

47
Q

What are the 3 keys terms that should be considered from a risk perspective in the context of every instruction you undertake?

A
  1. Scope of work - a clear outline of the work to be carried out
  2. Alternative dispute resolution to avoid court litigation
  3. Basis of fee calculation - avoid disputes later on
48
Q

Can you tell me CPD requirements for Members of RICS?

A

All members must complete 20 hours CPD activities in a calendar year, 10 of which must be formal

Can use CPD decision tree to work out

Also, professional and ethical standards during a rolling three year period - can count as formal CPD

49
Q

Why is CPD important?

A

Helps to update skills and knowledge

Helps members stay up to date on changes in practice, legislation, regulation, etc.

50
Q

Tell me what you understand about Complaints Handling Procedure

A

There are 2 stages:
1. Written complaint received and reviews, acknowledged within 7 days, respond within 28 days
2. Complaint reviewed by an independent redress provider

  • Redress provider must be approved by RICS
  • Notify PII as soon as possible in case could lead to a claim for negligence
  • details of CHP should be issued in Terms of Engagement
  • a complaints log must be maintained
  • firms must include ADR (RICS approved) in the CHP - common ones are negotiation, arbitration or mediation
  • Terms of Engagement hold value in CHP as they set out expectations
  • CHP falls under Rule 5
  • also under professional Obligations for firms in appendix A - must publish CHP
51
Q

When and how can RICS be involved in a complaint about a Firm or Member?

A
  • a client can complain directly to RICS
  • RICS will only investigate such a complaint if in the public interest
  • process take 6 months, no right of appeal
52
Q

How would you close down a regulated firm?

A

Should be planned and managed diligently - avoid non-compliance with the RICS rules of conduct or future negligence claim

List close down a firm:
- agree a closure date
- inform staff and deal with any redundancies
- inform clients and let them know of another firm can take over (CofI checks)
- deal with outstanding client money in client account
- notify PII to arrange run off cover
- keep hard copies and elec files as long as necessary (15 years re. Limitations Act)
- notify clients to return any leases
- inform RICS and complete deregistration form
- set up systems notifying of closure, ie. Notice of closure on office, voicemail, form’s website
- contact any other companies such as HMRC, accountant, bank

53
Q

What is a phoenix firm?

A

Where a RICS regulated firm closes in a disorderly way and then re-registers quickly as a new entity

Happens where firm becomes insolvent or closes without sufficient run off cover

RICS APC (3 decks)

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