Ethics, Rules of Conduct & Professionalism Flashcards
Why do you want to become a member of RICS?
Status, Recognition, Market Advantage, Knowledge, Network
What is the role of RICS?
(3 roles)
The RICS has 3 main roles:
* Maintain the highest standards of education & training.
* Protect consumers through strict regulation of professional standards.
* To be the leading source of information & independent advice on land, property, construction and associated environmental issues.
What are the key functions of RICS?
(Qualifications & Standards)
To promote & enforce the highest professional qualifications & standards in the development & management of land, real estate, construction, and infrastructure.
What is a Royal Charter?
An instrument of incorporation, granted by The King, which confers independent legal personality on an organization & defined its objectives, constitution and powers to govern its own affairs.
Who is the current RICS president?
Ann Gray FRICS
Who is the CEO of the RICS?
Justin Young
What do you understand by the term self-regulation?
Regulating itself without intervention from external bodies.
Can you tell me what you understand by the principles of better regulation?
(5 principles) - ‘offside’
T
T
C
A
P
5 principles; Transparency, targeting, consistency, accountability, and proportionality
What is a Bye-Law?
Give an example of one of the RICS Bye-Laws.
Rules or laws established by an organization as to regulate itself.
- ‘Client confidentiality must be maintained for all client affairs’
Explain to me the new RICS Rules of Conduct - what do they replace?
When do they take effect?
Who do they relate to?
New rules effective from Feb 2022 on a global basis & replace previous (2007) rules of Conduct for Members & Firms and the 5 Global Professional & Ethical Standards
2nd Feb 2022
Members & Firms
What are the 6 ethical principles that the Rules of Conduct are based on?
1.Honesty, 2. Integrity, 3. Competence, 4. Service, 5. Respect, 6. Responsibility
What are the 5 Rules of Conduct?
- Members & firms must be honest, act with integrity and comply with their personal obligations, including obligations to RICS.
- Members & firms must maintain their professional competency & ensure that their services are provided by competent individuals who have the necessary expertise.
- Members & firms must provide good quality & diligent service.
- Members & firms must treat each other with respect & encourage diversity and inclusion.
- Members & firms must act in the public interest, take responsibility for their actions and act to prevent harm & maintain public confidence in their profession.
What are the 5 Rules of Conduct.
- Members & firms must be honest, act with integrity & comply with their personal obligations, including obligations to the RICS.
- Members & firms must maintain their professional competency and ensure that services are provided by competent individuals who have the necessary expertise.
- Members & firms must provide good-quality & diligent service.
- Members & firms must treat others with respect & encourage diversity & inclusion.
- Members & firms must act in the public interest, take responsibility for their actions and act to prevent harm & maintain public confidence in their profession.
What are the core professional obligations of firms and members to RICS?
RICS members must:
1. Comply with CPD requirements
2. Cooperate with RICS
3. Promptly provide all information reasonably requested by the Standards & Regulation Board, or those exercising delegated authority on its behalf
RICS-regulated firms must:
1. Publish a complaints-handling procedure, which includes an alternative dispute resolution provider approved by RICS, and maintain a complaints log.
2. Ensure all previous & current professional work is covered by adequate and appropriate professional indemnity cover that meets the standard approved by RICS.
3. All firms with a sole principal must make appropriate arrangements for their professional work to continue in the event of their incapacity, death, absence from or inability to work.
4. Cooperate with the RICS
5. Promptly provide all information reasonably requested by the Standards & Regulation Board, or those exercising delegated authority on its behalf.
6. Display on their business literature, in accordance with RICS’ published policy on designations, a designation to denote that they are regulated by RICS.
7. Report to RICS any matter that they are required to report under the Rules for the Registration of Firms.
What disciplinary procedures can the RICS impose?
Regulatory Compliance Orders (RCO)
Regulatory Tribunal against Regulated Members (Disciplinary Panel or Single Member of the Regulatory Tribunal)
In what circumstances can disciplinary procedures be imposed?
- Fixed Penalty – breach of rules relating to the supply of information to the RICS by firms & members.
- Regulatory Compliance Order – Low level breaches which can be easily corrected.
- Single member of the Regulatory Tribunal – Member does not admit but case does not warrant a hearing.
- Disciplinary Panel drawn from the Independent Regulatory Tribunal – Most serious breaches where the Head of Regulation considers a hearing is required.
When did RICS last update their disciplinary panel rules?
2 March 2020
What are the different levels of action within the disciplinary procedures?
- Serve a fixed penalty notice
- Make a Regulatory Compliance Order (RCO) – Fine & publication
- Referred to a single member of the Regulatory Tribunal
- Refer the matter to the Disciplinary Panel for consideration under the discipline rules. Outcome from the hearing include; Compliance Order, Fine in proportion to offence, conditions upon future membership, expulsion, require publication of hearing into RICS Modus magazine, website or local newspaper where firm is based.
What do you understand by the term professional practice?
The conduct & work of someone from a professional profession.
What money laundering regulations or legislation are you aware of?
- Money Laundering, Terrorist Financing and Transfer of Funds Regulations, 2017 – as amended 2022
What is a red flag of money laundering?
- Inability or unwillingness of parties to provide identity documents.
- Changes to parties involved in transactions.
- Unusual transaction features, such as unexpected urgency required by parties, potential loss-making or an unusual transaction for a client.
- Payment of fees, purchase or rental monies in unusual currencies.
What bribery legislation are you aware of?
Bribery Act 2010 and Proceeds of Crime Act 2002
What is a bribe?
Giving, offering, promising or receiving of an advantage such as a payment, gift or a service for an action which is illegal or a breach of trust.
What are the penalties for accepting a bribe?
Bribery Act is policed by the Serious Fraud Office - Maximum of 10 years imprisonment and or an unlimited fine for individuals; companies face an unlimited fine.
What are the penalties for being involved in money laundering?
- Maximum 14 years in prison and/or unlimited fine for assisting.
- Maximum 5 years in prison and/or unlimited fine for tipping off a person by informing them that they are under suspicion for money laundering or for failing to report suspicion.
What constitutes an offence under the Bribery Act 2010?
- Bribing
- Receiving a bribe
- Bribing a foreign public official; and
- Failing to prevent bribery.
What constitutes an offence under the current money laundering regulations?
In the proceeds of crime act
- Concealing criminal property: if a person conceals, disguises, converts or transfers criminal property.
- Arrangements: if a person enters into or becomes concerned in an arrangement which they know or suspect facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person.
- Acquisition use and possession: if a person acquire, uses, or has possession of criminal property.
How long should you keep anti money laundering records for?
Minimum of 5 yrs.
What is Professional Indemnity Insurance (PII)?
Protects against claims for loss or damage made by clients or third parties as a result of negligent services you provided or negligent advice you offered.
Can you tell me about the RICS requirements in relation to PII?
It is mandatory. All members must insure that an adequate and appropriate level of insurance is in place for each instruction.
All policies must be underwritten by an RICS approved insurer.
based on turnover as to the minimum level of indemnity required for each & every claim.
£100,000 or less = £250k
£100,001 to £200k = £500k
£200,001 and above = £1m
The maximum level of uninsured excess required by RICS is:
Liability of up to £500k = The greater of 2.5% of the sum insured or £10k
Liability of over £500k = 2.5% of the sum insured.
What is a PII aggregation clause?
Where a number of claims arise from the same originating source or cause, such as a repeated error or omission, then all claims will be treated as one, attracting only one limit of indemnity, which may be insufficient.
What does ‘claims made’ mean in terms of PII?
The policy covers claims that are first made against the insured during the period of insurance regardless of when the negligent act occurred.
Is a PII excess usually paid for per claim?
Yes
In a negligence claim, what would help to show that you acted with consideration and due process?
Having undertaken the work in accordance with the relevant RICS Standards & Guidelines.
Making detailed file notes and taking photographs.
Cap the professional liability excess on your PII policy in the Terms of Engagement
Can good record keeping help to provide a defence in a PII claim?
Yes – take detailed notes & photographs.
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?
Cap the professional liability excess in the Terms of Engagement
What is run off cover?
A professional indemnity insurance for claims made against a firm after it has stopped doing business.
What RICS requirements are there relating to run off cover?
For consumer claims: A minimum of £1,000,000 of aggregate cover over a minimum of 6 years
For commercial claims: Firms must consider what is adequate and appropriate for at least 6 years. The RICS recommends longer as claims can be made up to 15 years after work is undertaken.
Firms unable to obtain run off cover will be able to apply for run-off coverage to the RICS Run-off Pool.
Explain PII requirements relating to fire safety cover and cyber cover.
Fire: The minimum terms now state any exclusions from PII ‘will not apply to professional work relating to buildings of 4 stories or under’
Cyber: The minimum claims now exclude claims from Cyber Acts
How long can a PII claim arise after the work is undertaken?
Clients – 6 years
15 years if there was damage that was hidden which they could not reasonably be expected to have discovered at the time.
What is the Assigned Risks Pool (ARP)?
Who might need to access the ARP?
A market facility open to all RICS accredited firms who are unable to obtain PII.
If a firm is unable to obtain terms in the insurance market.
Explain your understanding of the RICS Guidance Note Risk, Liability and Insurance (1st Edition) 2021.
Fire
3rd party
Liability caps
- RICS have secured new insurance terms, lifting the 12-month fire safety exclusion form PII.
- Insurers must now provide cover for fire safety claims on a property of 5 story’s or less.
- RICS recommends the use of liability caps to manage risks associated with professional work.
- RICS advises parties to be aware of third-party reliance and make it clear that advice can only be relied upon by the client named in the terms of engagement.
What are the three key terms that should be considered from a risk perspective in the context of every instruction you undertake?
- The scope of the work
- The basis on which the fee shall be calculated.
- The liability cap
What is an annual return?
(6 areas)
Six areas of an annual return:
* Type of business and staffing details
* Statutory regulated activities – such as for financial services
* Nature of clients
* Complaints handling procedure details and records
* Professional indemnity insurance details
* Whether the firm holds clients’ money
Tell me what you understand about Complaints Handling Procedures (CHP).
- A firms written CHP must be approved by the RICS
- Always notify PII insurers if there is a complaint that could lead to negligence
- A firms CHP should be issued at the same time as a firms Terms of Business
- A complaints log must be maintained to show details, progress and outcomes
- Firms must include a Alternative Disputes Resolution (ADR) mechanism in their complaints handling procedure
2 stages of handling a complaint; In house & ADR – Third Party Resolution
When and how can the RICS be involved in a complaint about a firm or member?
If a member fails to respond to a complaint or prevents the party gaining access to an independent redress mechanism.
Can you tell me about the CPD requirements for members of RICS?
Minimum of 20 hours p.a. Of this 10 must be formal
All members must maintain a relevant & current understanding of the RICS rules of conduct during a rolling 3-year period
All members must record their CPD online on the RICS website.
Why is CPD important?
Helps avoid negligence.
It is a mandatory professional obligation by the RICS
Tell me about the RICS’ guidance on dealing with Conflicts of Interest.
Undertake the 3 step process:
* Conflict avoidance – decide if appropriate
* Written advice to both parties – assuming you wish to proceed inform client A & B of the following 3 points; Disclose the nature of the conflict the circumstances and how the firm intends to deal with the conflict, be clear and ensure parties make their own decisions, request written conformation of the clients informed consent
What is double dipping (dual agency)?
Where an agent has a contractual relationship with both the seller and buyer at the same time.
Why is double dipping (dual agency) an unacceptable practice?
Unethical. Conflict of interest between both parties.
How would you close down a regulated firm?
Follow the closing down checklist:
* Agree closure date.
* Is the firm insolvent? Seek advice.
* Inform staff and take steps to make them redundant.
* Inform the clients.
* Deal with outstanding client money in accordance with the Client Money Handling professional statement
* Notify Professional Indemnity Insurers and arrange run-off cover.
* Make arrangements for digital files.
* Notify clients for whom you are holding documents.
* Confidentially destroy documents you do not need to keep.
* Inform RICS to de-register your firm.
* When closed ensure anyone trying to contact you will be notified and consider who else should be contacted.
What can you tell me about RICS Professional Statement relating to bribery, corruption or money laundering?
(3 Parts)
RICS Professional Statement: Countering bribery, corruption, money laundering & terrorist financing 2019’
Divided into 3 parts
1. Mandatory requirements
Bribery & Corruption - RICS Regulated forms must;
* Not offer or accept anything that could be considered a bribe.
* Have procedures in place to comply with the law.
* Report suspicion to the relevant authority
* Act with due diligence to perform written evaluations of the risk the firm faces.
* Retain records to show the firm has met the requirements of this Professional Statement
Money Laundering & Terrorist Financing (ML & TF) - RICS Regulated forms must;
* Not facilitate or be complicit in ML & TF
* Have a system in place to comply with the laws
* Report suspicion
* Evaluate & review risks presented to the firm
* Use third party reliance for checks only when confidence in the quality of info from third party.
* Take appropriate measures to understand the client and purpose of instruction
* Verify the client by undertaking basic ID checks
* Retain records to show the firm has met the requirements of this Professional Statement
- Guidance setting out good practice for the above (gifts register, written policy & transparency)
- Supplementary guidance on some of the concepts set out in part 1 & 2 (Risk based approach, 3 W;s; who, what, why, and dealing with PEP’s)
What must/should firms/members do to comply with the RICS guidance relating to bribery, corruption or money laundering?
- Written policy in place of the procedures.
- Publish a code of behavior for staff and encourage guidance.
- Encourage transparency.
- Set up a gift register.
- Keep up to date with the legislation.
What are the current RICS rules for registration of firms?
When did these last change?
There must be a RICS member at the firm to register.
Firms must annually make a return confirming their compliance with their obligations.
RICS ‘Rules for the regulation of firms’ 2019 (effective 1st April 2022) state:
* If 50% of principals of a UK firm which provides surveying services are RICS members then it has to be regulated, and if at least 25% it can apply to be regulated, must be providing surveying services to to the public , acting in regulated area A (UK)
* Principals are sole practitioners, directors, partners or board members or someone who is able to act autonomously / without supervision.
* Each firm must nominate a ‘Responsible Principal’ who is obliged to ensure all steps are taken and systems in place to comply
New rules became effective from 1st April 2022
Who is a ‘qualified member’ of RICS?
Someone who has completed their Chartered qualification.
Need relevant experience & a RICS accredited degree or 5 years relevant experience and a bachelor’s degree
