Ethics, Rules of Conduct & Professionalism Flashcards
1
Q
What is a conflict of interest
A
A conflict of interest is anything that impedes or might be perceived to impede an individual’s or firm’s ability to act impartially. A conflict of interest can cast doubt on your integrity; it can also have a damaging effect on your firm and the profession as a whole.
2
Q
Are the international ethical standards RICS?
A
No – they do not originate from the RICS but they are promoted by the RICS
3
Q
Who were the International Ethical Standards published by?
A
The International Ethics Standards Coalition
4
Q
When was the RICS founded?
A
1868
5
Q
When was the RICS granted a Royal Charter, and whom by?
A
Granted by Privy Council in 1881
6
Q
How many RICS qualified members are there?
A
Approximately 140,000
7
Q
What are the benefits of being an RICS member?
A
Status - Your professional credentials provide unrivalled client and market confidence
Recognition - Promotion of your professional excellence to governments and markets
Market advantage - RICS status and standards give you a competitive advantage
Knowledge - International practice standards, professional guidance, CPD and knowledge sharing
Network - Access to 140,000 RICS professionals worldwide
8
Q
What are the four different levels of RICS membership?
A
FRICS, MRICS, AssocRICS and trainee
9
Q
What do you have to have been / done to become a fellow?
A
Be MRICS for 5+ years and have a leadership role, professional / academic achievement raising the profile of RICS
10
Q
What is the global governance structure of the RICS?
A
25 members in the Governing Council, who run the RICS and provide management and strategic direction. The Regulatory Board, Management Board and various committees report to the Governing Council. There are 17 specialist groups covering a variety of specialisms.
*Note need to check this prior to APC as constantly changing
11
Q
Who is the CEO of RICS?
A
Justin Young
12
Q
Who is the RICS Chair of Governing Council?
A
Nicholas Maclean
13
Q
Who is the RICS President?
A
*Change closer to APC date as been changes following issues with Justin Sullivan and his involvement with Expert Witness
14
Q
Who is the RICS President Elect?
A
*Change closer to APC date as been changes following issues with Justin Sullivan and his involvement with Expert Witness that Nicholas Maclean has changed from RICS President Elect to President
15
Q
What is the RICS UK Structure?
A
The RICS is governed by a council, which is supported by numerous boards such as the Standards and Regulations Board. The governing council is responsible for approving and overseeing the RICS’ strategy, standards and regulation.
16
Q
What are the three main roles of the RICS?
A
To maintain the highest standards; to protect consumers through strict regulation of standards; to be the leading source of information and independent advice on land, property, construction and associated environmental issues
17
Q
What are the 5 rules of conduct?
A
- Members and firms must be honest, act with integrity and comply their professional obligations, including obligations to RICS.
- Members and firms must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary
- Members and firms must provide good-quality and diligent service
- Members and firms must treat others with respect and encourage diversity and inclusion
- Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession
18
Q
What are some example behaviours of rule 1?
A
- Not to be influenced improperly by others
- Open and transparent with clients about fees and services
- Keep client money safe
- Provide advice in a professional context, transparently and based on reliable evidence
- Providing factual information in reports
- Understanding when work is beyond my scope of capabilities and seeking guidance from an experienced colleague or declining the work
- recgonising and informing all relevant parties of any conflicts of interest
19
Q
What are some example behaviours of Rule 2?
A
- Only undertake work that they have knowledge, skills and resources to carry out competently
- Maintain and develop their knowledge and skills throughout their careers
- Stay up to date with relevant legislation, codes of practice and standards
20
Q
What are some example behaviours of Rule 3?
A
- Understand client needs
- Agree a scope of service to be provided and its limitations / timescales
- Uphold good levels of communication
- Encourage solutions that are sustainable in economic, social and environmental benefits
21
Q
What are some example behaviours of Rule 4?
A
- Respect the rights of others
- Not to discriminate
- Develop an inclusive culture
22
Q
What are some example behaviours of Rule 5?
A
- Question unethical practices
- Respond to complaints promptly and professionally
- Manage professional finances
23
Q
Why were the 5 rules of Conduct introduced?
A
- A simpler structure bringing ethical standards into one clear framework
- Provides clearer examples
- Focus on respect, diversity and inclusion
- To understand evolving technology
- Tackles global challenges, including sustainability and climate change
24
Q
What is the Professional Statement regarding bribery and corruption? When was it effective?
A
Countering bribery and corruption, money laundering and terrorist financing, 1st edition.
Effective 1st February 2019.
25
What must RICS regulated firms and members do to prevent bribery and corruption?
* Not offer or accept anything that could constitute a bribe
* Have plans in place to comply with applicable laws governing bribery and corruption
* Report any activity that they are aware of that breaches anti bribery and corruption laws to the relevant authorities
* Act with due diligence to perform periodic written evaluations of risk
26
What must RICS regulated firms and members do to prevent money laundering and terrorist financing?
* Not to facilitate or be complicit
* Have systems and training in place
* Report any suspicions to relevant authorities
* Verify identity of their client and purpose of transaction
27
Why are ethical standards important?
Create a clear and streamlined guide to members to ensure that clients and anyone else who deals with the RICS has confidence in the profession
28
What is the RICS Decision Tree?
Flowchart to help members decide how to act in difficult situations where their professional ethics may be at stake
29
What factors does the RICS Decision Tree consider?
Sufficient facts, legality, ethical standards, consultation of appropriate people, clear reasoning, impact if actions made public
30
Give some examples of where conflicts of interest may arise?
* Acting for two different parties with competing interests at the same time
* Financial interests (e.g., gaining over and above your normal fee)
* Personal relationship
* Commercial relationship
* Interests of your firm conflict with that of your client
31
What should a surveyor do if a conflict of interest arises?
* Should be dealt with by implementing openness and transparency
* Declare any conflicts of interest clearly to all parties ASAP and offer to stand down from acting for any party
* All parties can then decide how they wish to proceed and if there are any objections you must stand down
32
What is a ‘Chinese Wall’?
An information barrier within an organisation used in order to prevent exchanges or communication that could lead to a conflict of interest
33
Can one part of a chartered surveying practice work for a client, whilst another part of the practice is working for a different client who has conflicting interests to the first?
* Yes, providing a Chinese Wall is effectively implemented
* Teams should be physically separated in different parts of the building (or in different buildings)
* Requires a compliance officer to monitor the ‘wall’ – education and training must be made available to those managing the wall
34
You are acting on behalf of a client and you realise you know the other party personally – what should you do?
Declare any conflicts of interest clearly to all parties ASAP and offer to stand down from acting for any party. All parties can then decide how they wish to proceed and if there are any objections you must stand down
35
What is a bribe?
The exchange of something of value in return for some doing or agreeing to do something improper in a business context
Bribery also covers the offer or request for a bribe, even if it is not completed
36
What legislation exists in relation to bribery in the UK?
Bribery Act 2010
37
What is the purpose of the current UK legislation on bribery?
Criminalises bribery in the UK, making it a criminal offence to directly or indirectly:
* Offer, promise or give a bribe
* Request, agree or receive or accept a bribe
38
What are the penalties under the current bribery legislation?
A maximum 10 years’ imprisonment and/or an unlimited fine
39
Who does the current bribery legislation affect?
Near-universal jurisdiction, allowing for prosecution of UK individuals or companies doing business overseas, as well as overseas individuals or companies doing business overseas, as well as overseas individuals or companies doing business in the UK
40
What standard are judgements under the current bribery legislation based upon?
* Judgements are decided based on the ‘reasonable person’ test
What are facilitation payments and what is their legal status?
* Also known as ‘grease’ or ‘speed’ payments
* Unofficial payments made to public officials in order to secure or expedite the performance of a routine government action
* Illegal under the Bribery Act 2010
41
How can bribes affect surveyors?
Can be vulnerable to bribes because of the role they play in facilitating transactions, checking owners/contractors are complying with legislation and awarding construction contractors are complying with legislation and awarding construction contracts
42
Would the offer or acceptance of gifts or hospitality amount to a bribe?
Could amount to a bribe if they are intended to induce someone to behave in a manner that breaches an expectation that they will act in good faith and impartially
However, bona fide hospitality and promotion intended to improve the image of an organisation better present products and services or establish cordial relations is seen as an established and important part of doing business and is not criminalised under the Act
43
What considerations should RICS members have in relation to offering or accepting gifts and hospitality?
* Only offer or accept gifts and hospitality that are customary, proportionate and reasonable in terms if value and frequency
* Never offer or accept any gift or hospitality if it may improperly influence your decisions/judgement or give the appearance of doing so (e.g. consider the timing of the gift)
* Only offer or accept gifts and hospitality that you would be happy for others to know about
* Follow the policies and procedures of your employer in relation to gifts, hospitality and promotional expenditure – e.g., record in company’s gifts and hospitality register
* Report any concerns about bribery to your employer or to RICS Regulation
44
What would you do if a contractor offers you a gift such as a scale ruler with the contractors name on it?
Accept is, as it is a bona fide promotion intended to improve the image of an organisation
45
What factors does the RICS decision tree include?
1. Sufficient facts
2. Legality
3. Ethical standards
4. Consultation of appropriate people
5. Clear reasoning
6. Impact if actions are made public
46
What is money laundering?
Money laundering is the process through with criminals disguise the criminal origin of money and assets they earned through criminal activity
47
What is the case law for negligence?
Hart v Large
Duty of care extends beyond client to 3rd party
48
What are the RICS CPD requirements?
Minimum 20 hours per annum, with at least 10 hours being formal Ethics CPD every 3 years
Must record and submit entries by year end
49
What is the meaning of the RICS moto?
The motto is 'est modus in rebus' which in Latin translates to 'there is measure in all things'
50
What is the mission statement of the RICS?
To qualify and equip their members to offer the highest standards of professional service
To promote and enforce standards
To lead solutions to the major challenges facing the built environment through professional expertise
51
How is the RICS structured?
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 meaning that it is 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
52
What are the RICS' 5 principles of better regulation?
Proportionality
Accountability
Consistency
Targeting
Transparency
53
What is the difference between RICS ethics and rules?
Ethics are a set of moral values
Rules of conduct are a framework that we work to
54
Why did the previous Rules of Conduct change?
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 of replacing the existing Rules of Conduct and separate Global Professional and Ethical Standards
This was to provide a single document to enable greater clarity for RICS members and firms
It provides a greater focus on clearer example behaviours, understanding evolving technology and tackling climate change
55
Talk us through your understanding of the Rules of Conduct changes?
The Rules of Conduct October 2021 Global Practice Statement overhauls the previous documents
Appendix A of the rules of conduct contains the professional obligations of members and firms
56
What are the professional obligations of members?
1. Members must comply with the CPD requirements set by the RICS which requires 20 hours of CPD in a calendar year (10 hours of which 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 its behalf
57
What are the professional obligations of firms?
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 professional indemnity cover that meets the standards approved by RICS.
3. 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. Firms must cooperate with RICS.
5. Firms must promptly provide all information reasonably requested by 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
58
Please explain the steps of the RICS Ethics Decision Tree?
Do you have sufficient facts on the issue?
Is it legal?
Is it in line with RICS Rules of Conduct?
Have you consulted with appropriate people to make an informed decision? (Have you assessed the risks involved? Have you considered what the options are?)
Do you have clear reasoning in reaching your decision?
Is your decision informed?
Would you be content for your actions to be made public - in the newspapers/ internet?
59
Why does the RICS have Rules of Conduct?
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, Rules of Conduct are also a useful professional guide for individual institution members
60
Your brother-in-law is a chartered surveyor. You find out that he is working outside the RICS Rules of Conduct. What do you do?
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
61
In the case of a breach of a rule of conduct what is the procedure?
Not every shortcoming will necessary give rise to proceedings
A formal investigation by the Head of Regulation of the RICS is the first step in the process
The RICS can request information and/or visit and inspect to investigate compliance
Members must cooperate fully with all enquiries
62
How can a disciplinary proceeding be triggered?
Someone complaining to the RICS
An allegation by a client or third party
Information received or established by the RICS
63
What three actions can be imposed after the end of an investigation?
Fixed penalty (fine by RICS)
Consent order
Disciplinary panel
64
What are consent orders?
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 some 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
65
When is a disciplinary panel applicable?
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
66
What sort of breaches would expulsion be suitable for?
Gross, persistent or willful failure to comply with an RICS rule of conduct
Fraud, dishonesty, conviction of a serious criminal offence, gross incompetence, deliberate discrimination, misappropriation of a client's money
67
What procedures must you follow if you are starting up a new practice?
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 PII cover
Use the designation 'Regulated by RICS' on all practice material
68
Would you advertise your new company in the press?
Yes as long as it is in a trustful and responsible manner in line with the Rules of Conduct for Firms
69
What insurances would you need if you were starting up your own firm?
PII
Employer's liability
Public liability
Building insurance of an office premises
70
What sort of information do registered firms have to send to the RICS annually?
It is called annual return and carried out online and it includes:
- Type of business and staffing
- Nature of clients
- Training provision
- Complaints handling procedures details and records
- PI insurance details
- Whether the firm holds clients' money
Failure to do so leads to a fixed penalty
71
What processes do regulated firms need to put in place when handling Clients' money?
Preserve the security of clients' money which does not belong wholly to the company.
RICS regulated firms that operate a client account must-
- accounting systems and data must be secure
- the account must not be overdrawn
- clients must always have access to funds
- client money must be kept separate and clearly identifiable with the word 'client' included in the bank account name
72
What are the different types of client money accounts?
General accounts that hold money for more than one client
Discrete accounts reference a single named client
73
Tell us about the Merrit v Babb case law?
This case dates back to 2001 and highlights the importance of having run-off cover in place.
A surveyor was sued for negligence by a former client.
Because the surveying firm was no longer in existence therefore the individual surveyor was pursued for damages successfully.
This caused a big shock in the industry and highlighted the need to ensure that run-off cover is in place for all previous employees.
73
What is meant by the term negligence?
Failure to provide the duty of care that is owed to the client / third parties
If it is breached a negligence claim may arise resulting in damages being paid or a PII claim
74
What limitation periods are associated with underhand and deed forms of contract?
6 years when executed under hand
12 years when executed as a deed
75
What must a complaints handling procedure include?
The RICS provides a model form
The process must include a redress mechanism
Details of the policy should be issues 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 note 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 complaint may be expected to contribute towards costs at this stage.
76
What is an independent redress scheme?
It is a consumer scheme designed to handle small issues that would be disproportionally expensive to take to court
If the scheme judges in favour of the complaint it is binding
If it judges in favour of the firm, the complainant can escalate the matter to the court
RICS firms must specify which redress scheme they want to use, it could be an ombudsman, arbitration or sometimes adjudication
If the complaint relates to a large amount of money or if the complainant wishes so, he can take the matter to court
77
What do you do if you receive a letter of complaint?
I would acknowledge the receipt and I would forward it to my firms designated complaint handler, as per our complaint handling procedure, providing additional information as required
I would also highlight the importance of informing our PII providers immediately
78
What is the 'Clients' Money Protection Scheme?
This 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
79
What is the purpose of the joint names on a client account?
For the purpose of dual authorisation
80
What is formal and informal CPD?
CPD must have a clear learning objective relevant to my role to count as CPD.
Formal CPD can be classed as web based training with structured assessments, formal seminar, 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.
81
What types of articles do you read?
Internally, I regularly read up on our company's agency department for their lettings and sales for comparable evidence.
I also keep up to date via the RICS website and Estates Gazette.
82
What recent article have you read from the RICS?
Need a couple of recent and relevant articles closer to the time
83
How do you keep up to date with topical issues?
I am on the mailing list for several CPD providers
I exchange industry articles and relevant information with colleagues
I follow updates on the RICS website
I undertake regular web research on key topics relevant to my field of surveying
84
What is your CPD strategy?
I meet up with my manager annually to review my career development plan and objectives.
I build my CPD strategy around these objectives, current topics and personal interests.
My personal objective is to become a chartered surveyor. Therefore, we discuss which rotations would be suitable to ensure I get the correct experience and knowledge.
85
What is the purpose of PII and what benefits does it provide for the professional and client?
Professional Indemnity Insurance provides financial cover in the event a client suffers a financial loss as a result of a breach of professional duty (e.g., neglect, errors or omissions). The benefits for a professional include protection from a financial loss and that a firm does not have to meet the claim from their own assets and resources. The benefits for the client is that they are able to recover their financial losses.
86
On what basis is PII underwritten in the UK and what does this mean?
On a claims made basis and this means that the insurance policy that is in place at the time the breach is discovered is responsible for providing the indemnity, not the insurance policy in place when the breach was made.
87
What are the requirements regarding PII set by the RICS?
The policy cover must be made on an '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
88
What are the minimum levels of indemnity and maximum levels of uninsured excess?
£100,000 or less turnover in proceeding year is £250,000 minimum limit of indemnity
£100,001 to £200,000 turnover in proceeding year is £500,000 minimum limit of indemnity
£200,001 or above turnover in proceeding year is £1,000,000 minimum limit of indemnity
£10,000,000 or less turnover in the proceeding year is a maximum uninsured excess of the greater of 2.5% of the sum insured or £10,000
£10,000,001 and above turnover in the proceeding year there is no maximum uninsured excess limit set
89
What measures should be taken to try and avoid PI claims
Keep full and detailed records of meetings and conversations
Record recommendations and advice given
Use proper terms of engagement
Don't advise on a specialism outside of your field of experience
Use RICS guidelines
Avoid poor management and excessive workloads
90
If you made a mistake in your cost plan what would your insurance company expect?
For you to notify them and comply with any conditions and procedures set out in the insurance policy
91
If an estimate prepared by a QS is incorrect can the client claim damages?
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 a lack of reasonable skill and care
It could have bene incorrect due to reasons outside their control for example market conditions or an item referred to in their exclusions
92
What are the main elements included within a fee proposal?
Terms and conditions
Scope of services
Exclusions
Assumptions
93
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?
If project requirements such as the services, scope or value of the project has increased then I would go back to client and request a fee increase.
If the scope of works had remained the same, this highlights a mistake within our fee bid and 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.
94
If the client gives you a lump sum fee before going on holiday, what would you do?
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
95
How could the conflict of interest be managed internally if two separate departments were working for the same client?
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.
96
If the client was insistent that you worked for them despite an existing conflict of interest, how would you proceed?
I would check the clients understanding around the conflict 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.
97
What are the Main Principles of the Bribery Act?
* The offences are:-
o Making a bribe.
o Receiving a bribe.
o Bribery of a foreign public official.
o Failure of a corporate entity to prevent bribery on its behalf.
* The legislation applies to all UK Entities and includes associated Persons for example sub-consultants and external advisors.
* There are six principles of prevention companies should put in place:-
o 1. Proportionate Procedures.
o 2. Top Level Commitment.
o 3. Risk Assessments.
o 4. Due Diligence.
o 5. Communication.
o 6. Monitoring & Review.
98
Under the Bribery Act, under what circumstance is a facilitation payment permitted?
The only circumstance in which it is OK to make a facilitation payment is when you are under duress.
For example if 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 contact.
99
You are attending a client organised business conference where it is announced the you have been randomly selected as the winner of this months prize draw. Its an i-pad air. How would you act in this scenario?
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 with the client 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 this is made as a charitable donation to a charity of the client’s choice.
I am aware that bribes are commonly distributed as random prizes and due to the seriousness of this incident I would report this to my line manager.
100
You’ve been offered a valuable gift and hospitality from a client just before finalising your Red Book valuation. How would you handle this situation, and what are your obligations under the Bribery Act 2010 and RICS standards?
In this situation, I would first apply the reasonable person test under the Bribery Act 2010 — would a reasonable person in the UK consider this gift and the client’s comments as an attempt to improperly influence the outcome of the valuation? Given the timing and the nature of the gift, I believe they would."
"I would immediately report this to my line manager in line with our internal policies and RICS guidance. I would also reflect personally on whether I’d feel comfortable accepting this, or explaining it to a colleague, client, or regulator — and in this case, I wouldn’t. That alone tells me it isn’t appropriate."
"I would politely but firmly decline the gift and explain to the client that, as an RICS member, I must remain impartial and cannot accept anything that could compromise — or appear to compromise — my objectivity."
"Bribery is a criminal offence under the Bribery Act 2010. It involves offering, giving, or receiving something of value in exchange for an improper advantage. In this case, the gift could be seen as an inducement to influence the valuation outcome, so it must be treated seriously and transparently.
