Ethics, Rules of Conduct & Professionalism

Question 1

What is the mission statement of the RICS

Answer 1

• To qualify and equip their members to offer the highest standards of professional services.
• To promote and enforce standards.
• To lead solutions to the major challenges facing the built environment through professional expertise.

Question 2

When was the RICS founded?

Answer 2

1868

Question 3

How is the RICS Structured?

Answer 3

• The RICS was founded in 1868 with the Royal Charter being granted by the Privy Council in 1881.
• The RICS is self-regulated and internally monitored. (Not regulated by the Government or external parties)
• The Bye-Laws determine how the RICS is regulated
• The Governing council manage and agree the strategy for the RICS.
• The Regulatory board, audit committee and management board are beneath the governing council and execute the strategy set by them.

Question 4

What are the RICS 5 principles of better regulation

Answer 4

• Proportionality
• Accountability
• Consistency
• Targeting
• Transparency

Question 5

What is the difference between RICS Ethics and Rules?

Answer 5

Ethics are a set of moral values.
Rules of conduct are a framework that we work to.

Question 6

How many Global Professional and Ethical standards are there?

Answer 6

Up until the 1st February 2022, there were 5.
From 2nd February 2022 onwards the Global Professional & Ethic Standards have been consolidated within the New Rules of Conduct 2022.

Question 7

What are the New Rules of Conduct?

Answer 7

Rule 1: Members and firms must be honest, act with integrity and comply with their professional obligations, including 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 god-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.

Question 8

Why did the previous Rules of Conduct change?

Answer 8

• The previous rules had been in place since 2007
• Following research and consultation with RICS Members, Firms and Members of the Public, the majority voted in favour or replacing the existing Rules of Conduct and separate Global Professional and Ethics Standards.
• This was to provide a single document, to enable greater clarity.

Question 9

What is your understanding of the Rules of Conduct changes?

Answer 9

The Rules of Conduct October 2021 Global Practice statement will overhaul the previous documents:
- Rules of conduct for members
- Rules of conduct for firms
- Global professional and ethics standards
Appendix A of the Rules of Conduct now contains the professional obligations of Members and Firms.

Question 10

What are the professional obligations for members?

Answer 10

1. Members must comply with the CPD requirements of 20 hours of CPD each calender year, 10 hours must be formal.
2. Members must cooperate with RICS
3. Members must promptly provide all information reasonably requested by the Standards and Regulation Board, or those exercising delegated authority on their behalf.

Question 11

What are the professional obligations of firms?

Answer 11

1. Firms must publish a complaints-handling procedure, which includes an alternative dispute resolution provider approved by RICS, and maintain a complaints log.
2. Firms must ensure that all previous and current professional work is covered by adequate and appropriate profession indemnity cover that meets the standards approved by the RICS.
3. Firms with a sole principal must make appropriate arrangement for their professional work to continue in the event of their incapacity, death, absence from or inability to work.
4. Firms must cooperate with RICS
5. Firms must promptly provide all information reasonably requested the Standards and Regulation Board, or those exercising delegated authority on its behalf.
6. Firms must display on their business literature, in accordance with RICS published policy on designations, a designation to denote that they are regulated by RICS
7. Firms must report to RICS any matter that they are required to report under the Rules for the Registration of Firms.

Question 12

Explain the steps of the RICS Ethics Decision Tree?

Answer 12

Do you have sufficient facts on the issue?
Is it legal? (if unsure can you get more information or seek legal advice)
Is it in line with the RICS Rules of Conduct?
Have you consulted with appropriate people to make an informed decision?
Do you have clear reasoning in reaching your decision?
Is your decision informed?
Would you consent for your actions to be made public in the newspapers or on the internet?
Decide on what action to take? - Act and then reflect on outcome. Record the decision and the reasoning for it.

Question 13

Why does the RICS have Rules of Conduct?

Answer 13

• To provide a framework that we can all work to and so the Client knows they are getting a set level of service.
• As well as being an important tool for the Institution, the Rules of Conduct are also a useful professional guidance for individual institution members.

Question 14

EXAMPLE QUESTION:
Your brother in law is Chartered, you find out he is working outside the RICS Rules of Conduct, what do you do?

Answer 14

• I verify the facts and confront him reminding him of his duties as a member of the RICS
• I inform the RICS specifying my relationship to the person and any corrective action which I believe my brother-in-law is committed to put in place.

Question 15

EXAMPLE QUESTION
In case of a breach of a rule of conduct, what is the procedure?

Answer 15

A formal investigation by the Head of Regulation of the RICS is the first step.
The RICS can request information and/or visit and inspect to investigate compliance.
Members must cooperate fully all enquiries.

Question 16

How can a disciplinary proceeding be triggered?

Answer 16

• Someone complaining to the RICS
• An allegation by the Client or third party
• Information received or established by the RICS

Question 17

What three actions can be imposed after the end of the investigation stage?

Answer 17

• Fixed penalty
• Consent order
• Disciplinary order

Question 18

What are fixed penalties?

Answer 18

A fine by the RICS

Question 19

What are consent orders?

Answer 19

• It is a written agreement between the RICS and a member or firm concerning a disciplinary issue on a breach of the RICS rules
• It can require the member to take certain corrective actions, or restrain them from taking certain actions for a specified period of time and may require them to pay a fine or costs.

Question 20

When is disciplinary panel applicable?

Answer 20

• They are used for more serious breaches of conduct
• The panel will usually be held in public
• The burden of proof is on the RICS
• A balance of probabilities approach will be adopted

Question 21

What sort of breach would expulsion be suitable for?

Answer 21

• Gross, persistent or wilful failure to comply with an RICS rule of conduct
• Fraud, dishonesty, conviction of a serious criminal offence, gross incompetence, deliberate discrimination, misappropriation of client’s money

Question 22

What procedures must you follow if you are starting up a new practice?

Answer 22

• Contact the RICS for guidance and obtain a company start up pack
• Inform the RICS and register for regulation
• Appoint a contact officer for all RICS communication
• Prepare a complaints handling procedure
• Obtain Professional Indemnity Insurance cover
• Abide by the Rules of Conduct for Firms
• Use the designation ‘Regulated by RICS’ on all practice material

Question 23

Would you advertise your new company in the press?

Answer 23

Yes, as long as it is in a trustful and responsible manner in line with the Rules of Conduct for Firms

Question 24

What insurances would you need if you were starting up your own firm?

Answer 24

• Professional Indemnity Insurance
• Employers Liability
• Public Liability
• Builders Insurance of an office premise

Question 25

What sort of information do registered firms have to send to the RICS annually?

Answer 25

Annual return. Failure to do so leads to a fixed penalty.
It includes;
- Type of business and staffing
- Nature of Clients
- Training provision
- Complaints handling procedures details and records
- PI Insurance details
- Whether the firms holds Clients money

Question 26

What processes do regulated firms need to put in place when handling Clients money?

Answer 26

Preserve the security of Clients money which does not belong wholly to the company.
RICS regulated firms that operate a Client account must;
- Set clear segregation of duties for employees
- A principal oversees the Clients money accounting functions
- Principles cannot override controls
- Competent and knowledgeable staff are to process Clients money with cover provided for long term absence
- Accounting systems and data must be secure
- Clients money must be kept separate and clearly identifiable with the word ‘Client’ included in the bank account name
- Client must always have access to funds
- We must agree the terms and advise the Client on bank details
- The account must not be overdrawn
- We must maintain Client ledgers and provide a running balance

Question 27

What are the different types of Clients money accounts?

Answer 27

• General accounts hold money for more than one Client
• Discrete accounts reference a single named Client

Question 28

What is meant by the term negligence?

Answer 28

• A duty of care is owed to all Clients and 3rd parties using reasonable skill and care
• If it is breached due to Negligence a claim may arise resulting in damages being paid or a Professional Indemnity Insurance claim
  -Negligence is a failure to provide the duty of care that is owed to a Client

Question 29

What is the Merrit V Babb case law?

Answer 29

Dated in 2001, and highlights the importance of having run-off cover in place.
A quantity surveyor was sued for negligence by a former Client.
Because the surveying firm was no longer in existence therefore the individual was perused for damages successfully.
This caused a shock to the industry, highlighting the importance of run off cover for all previous employees

Question 30

What limitation period are associated with underhand and deed forms of contract?

Answer 30

6 years executed under hand
12 years executed as a deed

Question 31

What must a complaints handling procedure include?

Answer 31

• RICS provides a model form.
• The process must include a redress mechanism
• Details of the policy should be issued to the Client with the Terms of Business
• It must be clear, quick, transparent and impartial and free of charge within the first stage
• Names and contact details of the nominated investigating person must be stated.
• The complaint must be investigated within 28 days.
• All complaints, their progress and outcomes must be recorded.
• We must notes the need to advise PI insurers of a complaint immediately.
  The process must have two stages as a minimum:
• Stage 1 is where there needs to be consideration of the complaint by a senior member of the firm or the complaints handling officer
• Stage 2 if the issue is not resolved, the complaint is referred to an independent third party with the authority to award redress. The complainant may be expected to contribute towards costs at this stage.

Question 32

What is an independent redress scheme?

Answer 32

• It is a consumer scheme designed to handle small issues that would be disproprotionally expensive to take to court.
• If the judges in favour of the complainant, it is binding.
• If it judges in favour of the firm, the complainant can escalate the matter to court.
• RICS firms must specify which redress scheme they want to use, it could be an ombudsman, arbitration or adjudication
• If the complaint relates to a large amount of money or if the complainant wishes so, he can take the matter to court

Question 33

What do you do if you receive a letter of complaint?

Answer 33

• I would acknowledge receipt and I would forward it to my firms designated complaints handler, as per our complaint handling procedure, providing additional information as required.
• I would also highlight the importance of informing our Professional Indemnity Insurance providers immediately

Question 34

What is the Clients Money Protection Scheme?

Answer 34

• The is a money protection scheme operated by the RICS
• It contains provision for any member of the public to be reimbursed their direct loss of funds when using an RICS regulated firm
• This is provided through an RICS insurance policy

Question 35

What is the purpose of joint names on a clients account?

Answer 35

Dual authorisation

Question 36

What are the Continuous professional development requirements?

Answer 36

Members must undertake and record appropriate lifelong learning.
On request by the RICS that must provide evidence that have carried out the CPD to maintain and improve their levels of professional competence
A minimum of 20 hours per calender year, which 10 hours must be formal.

Question 37

How many hours of CPD is required?

Answer 37

Minimum of 20 hours per calender year, which 10 hours must be formal
Members must undertake learning on the standards expected around RICS ethics on a rolling 3-year period
All CPD must be recorded via the RICS online management system

Question 38

What sort of activities are included in CPD?

Answer 38

It must have a clear learning objective relevant to my role
Formal CPD can be classed as web based training with structural assessments, formal seminars, providing training to others where research and preparation is required
Informal CPD is classed as private reading, internal CPD’s and on the job shadowing.

Question 39

What types of articles do you read?

Question 40

What recent article have you read from the RICS?

Question 41

How do you keep up to date with topical issues?

Answer 41

My employers send out regular CPD’s relevant to my field of surveying
I also read industry articles and discuss relevant topics with my colleagues
I follow updates on the RICS website and Construction Journels
I undertake regular web research on key topics in my field

Question 42

What is your CPD strategy?

Answer 42

I meet with my manager quarterly to review my career development plan and objectives
I build my CPD strategy around these objectives, current topics, and personal interests
Explain own personal objectives goals

Question 43

What does PII stand for

Answer 43

Professional Indemnity Insurance

Question 44

What is the purpose of PII

Answer 44

To provide financial cover in the event a Client suffers financial loss as a result of a breach of professional duty e.g neglect, errors or omissions.

Question 45

What benefits does it provide for the professional?

Answer 45

The professional is protects from financial losses.
The firm does not have to meet the claim from their own assets and resources

Question 46

What benefits does it provide for the Client?

Answer 46

They are able to recover their financial loss

Question 47

What basis is PII underwritten in the UK?

Answer 47

On a claims made basis

Question 48

What does claims made basis for PII mean?

Answer 48

The insurance policy that is in place at the time the breach is discovered is responsible for providing the indemnity, not the insurance policy when the breach was made.

Question 49

What the requirements regarding the Professional Indemnity Insurance set by the RICS?

Answer 49

The policy cover must be made on ‘each and every’ claim basis
The RICS sets out the minimum levels of indemnity
The RICS sets out the maximum levels of uninsured excess
Run off cover must be in place for at least 6 years
The policy should include cover for past and present employees, directors and partners

Question 50

What are the RICS minimum levels of indemnity and maximum levels of uninsured excess?

Answer 50

Minimum Levels
Firms turnover in the preceding year
£100k or less – £250k of minimum limit of indemnity
£100,001 to 200k – £500k of minimum limit of indemnity
£200,001 and above – £1m of minimum limit of indemnity

Maximum Levels
£10m or less – The greater of 2.5% of the sum insured, or £10k of maximum uninsured excess
Above £10m – No limit set

Question 51

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

Answer 51

• Keep full and detailed records of meetings and conversations
• 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 52

If you make a mistake in your cost place what would your insurance company expect?

Answer 52

For you to notify them and comply with any conditions & procedures set out in the insurance policy

Question 53

If an estimate prepared by a QS is incorrect can the Client claim damages?

Answer 53

• An estimate that is incorrect itself will not provide the Client with a right of redress
• The Client must demonstrate that the QS warranted the accuracy of the estimate or that it was incorrect due to lack of reasonable skill and care.
• It could have been incorrect due to reasons outside their control for example market conditions or an item referred to in their exclusions.

Question 54

How can you limit your liability when agreeing terms of appointment with a Client?

Answer 54

• Base the appointment on reasonable care and skill rather than fitness for purpose which is more onerous
• If the Clients requirements are performance based, this may imply fitness for purpose. It is advisable to request a clause limiting the appointment to reasonable skill and care only
• Run off cover must be in place
• Execution of the appointment under hand will result in a reduced liability period of 6 years instead of 12

Question 55

What are the main elements included within a fee proposal?

Answer 55

• Terms and conditions
• Scope of services
• Exclusions
• Assumptions

Question 56

If you put together a fee proposal, but a couple of months into the job you realise that you have under forecasted your resources, would you go back to the Client and ask for more money?

Answer 56

If the project requirements such as the services, scope, or value of the project has increased then I would go back to the Client and request a fee increase. If the scope had remained the same and that it was a mistake within our fee bid, the additional work would need to be carried out without reducing the level of service being offered and without requesting additional fees from the Client

Question 57

Once you and your Client agreed to services that are to be provided verbally what would you do next?

Answer 57

Follow up with a formal letter which includes the terms and conditions, fees and scope of services that are to be provided

Question 58

If the Client gives you a lump sum fee before going on holiday, what would you do?

Answer 58

I would place the funds in a separately identified Client account and agree a drawdown of monies against the services being provided with the Client

Question 59

What are conflicts of interest?

Answer 59

• A conflict of interest is where someone in a position of trust has competing personal or professional interests making it difficult for them to fulfil their duties impartially.
• 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 60

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

Answer 60

• I could put in place procedures to ensure exclusivity of staff
• This would avoid any cross over of information between the departments
• I would also ensure that there are separate communication lines into the Client
• Separate geographical locations and secure office and data storage would also need to be provided
• Staff could also sign up to confidentiality or Non disclosure agreements
• I would also need to monitor the potential conflict and keep the Client updated on progress

Question 61

If the Client was insistent that you worked for them despite an existing conflict of interest, how would you proceed?

Answer 61

• I would check the Clients understanding around the conflicts of interest
• I would then make the Client aware of the potential for reduced impartiality
• If they were still insistent on the appointment, I would seek a letter of instruction from the Client to continue
• Following the appointment, I would agree working procedures to manage the conflict of interest with the Client and the teams involved

Question 62

What are the main principles of the Bribery act?

Answer 62

The offences are;
- Making a bribe
- Receiving a bribe
- Bribery of a foreign public official
- Failure of a corporate entity to prevent bribery on its behalf
The legislation applies to all UK entities and includes associated Persons. such as sub-consultants and external advisors.
There are 6 principles of prevention companies should put in places
1. Proportionate procedures
2. Top Level Commitment
3. Risk Assessments
4. Due Diligence
5. Communication
6. Monitoring and review

Question 63

Under the Bribery act, under what circumstances is a facilitation payment permitted?

Answer 63

The only circumstance in which this is ok, is when you are under duress.
If you or your companions are under immediate physical threat.
Put safety first, make the payment and then report the matter immediately or as soon as is practicable to your manager or your ethics compliance contact.

Question 64

You are attending a Contractor event. And you win the randomly selected prize draw of an IPAD Air. How do you react?

Answer 64

I would be extremely uncomfortable accepting the prize, due to the significant value and could be interpreted as a bribe.
Furthermore, working on a live project would be highly inappropriate and could be interpreted as having an affect on the project.
I would respectively decline the prize and suggest making a charitable donation to a charity of the Contractors choice.
I am aware that bribes are commonly distributed as random prizes, and due to the seriousness I would report this to my line manager.

Question 65

You receive an invite to attend the Theatre with some members of your project team, but they drop out due to illness at the last minute, what do you do?

Answer 65

I would firstly declare this hospitality on my companies gifts and hospitality register.
Assumed the invite was approved and I was authorised to attend, I would need ot decline the invite due to the project team dropping out.
Since they won’t be present, this would not be classed as a genuine business event.
I would decline this hospitality at the project teams expense.

Question 66

A contractor invites you to lunch at a Michelin star restaurant, as they are keen to discuss the details of their tender they are about to submit for your project. How do you respond?

Answer 66

This would be against the company policy and could be an offence of the UK Bribery act.
If this was the first time, It would be okay to decline and explain this would be inappropriate.
However if the Contractor is persistent, I should report this.