Ethics, Rules of Conduct & Professionalism Flashcards
What is the meaning of the RICS Motto?
The motto is ‘Est Modus in Rebus’ which in Latin translates to ‘There is measure in all things’.
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.
When was the RICS founded?
It was founded in 1868.
How is the RICS Structured?
- The RICS was founded in 1868 with the Royal Charter being granted by the Privy Council in1881.
- 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
What are the RICS’ 5 principles of better regulation?
• Proportionality.
• Accountability.
• Consistency.
• Targeting.
• Transparency.
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.
What are the New Rules of Conduct?
- 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 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 the profession.
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.
- I also understand there is now a greater focus on clearer example behaviors, understanding evolving technology and tackling climate change.
What are the professional obligations of members?
- Members must comply with the CPD requirements set by the RICS which requires 20 hours of CPD for each calendar year, 10 hours of which must be formal CPD.
- Members must cooperate with RICS.
- Members must promptly provide all information reasonably requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf
What are the professional obligations of firms?
- Firms must publish a complaints-handling procedure, which includes an alternative dispute resolution provider approved by RICS, and maintain a complaints log.
- 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.
- 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.
- Firms must cooperate with RICS.
- Firms must promptly provide all information reasonably requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf.
- 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.
- Firms must report to RICS any matter that they are required to report under the Rules for the Registration of Firms.
Why does the RICS have Rules of Conduct?
- To provide a framework that we can all work to and so the client knows he is 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 guide for individual institution members.
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.
In the case of a breach of a rule of conduct what is the procedure?
- Not every shortcoming will necessarily 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.
What three actions can be imposed after the end of the investigation stage?
- Fixed penalty.
- Consent order.
- Disciplinary panel.
What are consent orders?
- 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.
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.
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 Professional indemnity insurance cover.
- Abide by the Rules of Conduct for Firms.
- Use the designation ‘Regulated by RICS’ on all practice material.
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.
What insurances would you need if you were starting up your own firm?
- Professional Indemnity Insurance.
- Employer’s Liability.
- Public Liability.
- Building’s insurance of an office premises.
What sort of information do registered firms have to send to the RICS
annually?
- It is called annual return and carried out on-line.
- Failure to do so leads to a fixed penalty.
- It includes:-
o Type of business and staffing.
o Nature of clients.
o Training provision.
o Complaints handling procedures details and records.
o PI insurance details.
o Whether the firm holds clients’ money
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:-
o Set clear segregation of duties for employees.
o A Principal oversees the client money accounting functions.
o Principles cannot override controls.
o Competent and knowledgeable staff are to process clients’ money with cover provided for long
term absence.
o Accounting systems and data must be secure.
o Client money must be kept separate and clearly identifiable with the word ‘client’ included in
the bank account name.
o Clients must always have access to funds.
o We must agree the terms and advise the client on bank details.
o The account must not be overdrawn.
o We must maintain client ledgers and provide a running balance.
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.
What is meant by the term Negligence?
- 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 the client.
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.
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 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 note the need to advise PI insurers of a complaint immediately.
- The process must have two stages as a minimum:-
o Stage 1 is where there needs to be consideration of the complaint by a senior member of the firm or the complaints handling officer.
o 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.
What do you do if you receive a letter of complaint?
- I would acknowledge 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 Professional Indemnity insurance providers immediately.
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.
What are the continuous professional development (CPD) requirements?
- Members must undertake and record appropriate lifelong learning.
- On request by the RICS they must provide evidence that they have carried out the CPD to maintain and improve their levels of professional competence.
- A minimum of 20 hours CPD must be achieved per calendar year, of which a minimum 10 hours must
be formal.
What is the purpose of Professional Indemnity Insurance?
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
What are the requirements regarding Professional Indemnity Insurance 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.
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 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.
What are the main elements included within a fee proposal?
- Terms and conditions.
- Scope of services.
- Exclusions.
- Assumptions.
Once you and your client agreed the services that are to be provided verbally what would you do next?
Follow up with a formal letter which includes the terms and conditions, fees and scope of services that are to be provided.
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.
Tell me what you understand about conflicts of interest?
- 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.
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.
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
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.
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 / are under immediate physical threat.
- You should put safety first, make the payment and report the matter immediately
You are attending a Main Contractor 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.
- I would respectfully decline the prize.
- 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.
You receive an invite to attend the Theatre with some members of your Project Team but they dropped out due to illness at the last minute, would you still attend?
- In the first instance I would declare this hospitality on my companies’ gifts and hospitality register.
- Assuming the invite was approved and I was authorised to attend, I would need to decline the invite due to the Project Team dropping out.
- Since they won’t be present, this will not be a genuine business event.
- Consequently, I would decline this hospitality at the Project Team’s expense
A contractor invites you to lunch to a restaurant and advises they’ve got two Michelin stars and a wine list second to none. They say they are keen to discuss the details of their tender they are about to submit for the project you are working on. How would you respond?
- Going to what sounds like a lavish lunch paid for by a bidder in the middle of a tender process is against Company policy and could be an offence under the UK Bribery Act.
- If this were the first time, it would be OK just to decline and explain that such an invitation is inappropriate.
- However if this supplier is persistent, there is a red flag in that he wants to discuss things that he cannot put in writing, so we should report this infringement
What are the minimum levels of indemnity?
- Turnover up to 100k = £250k
- £100k - £200k = £500k
- £200k and over = £1m
What are the PII Requirements set out by the RICS?
- Policy cover must be made on an each and every claim basis
- RICS set out the minimum levels of indemnity
- RICS set out the maximum levels of uninsured excess
- Run off cover must be in place for at least 6 years
- Policy should include cover for past and present employees, directors and partners.
What are the procedures for setting up in practice?
- Contact RICS for guidance and obtain the company start up pack
- Inform the RICS and register for regulation
- Appoint a contact officer for RICS communication
- Prepare a complaints handling procedure
- Obtain PII Cover
*Abide by the Rules of Conduct
*Include ‘Regulated by the RICS’ on all practice material
