Ethics Theory Flashcards
When was RICS founded?
1868
When was the Royal Charter Granted?
By the Privy Council in 1881
How many members are in the RICS
Over 140,000
What are the 4 levels of membership?
FRICS
MRICS
AssocRICS
Trainee / Student
How do you become a Fellowship Member?
Need to provide the following for the fellowship assessor to consider:
Evidence of at least 4 Fellowship characteristics:
- 5+ years at MRICS
- A leadership role
- Professional/technical achievement
- Academic achievement
- Raising the profile of the RICS
Need a profile of professional achievement to support the application which should include CPD record.
What is the current governance structure?
RICS governed under the terms of its Royal Charter by various internal councils and boards.
Governing council has over 20 members and runs the RICS providing management and strategic direction.
Who do the standards and regulation board and the management board report to?
Governing Council
How many Specialist groups are there?
17 - covering property, land and construction. Each group has an elected board and is responsible for outlining standards of competence and practice
Who is the current President?
Tina Paillet FRICS
She also chairs governing council.
Who is the current CEO
Justin Young
What is the role of the RICS?
R - Regulation - To protect members through strict regulation and professional standards.
A - Advice - To be the leading source of information and advice on land, property, construction and associated environmental issues.
T - Training - To maintain the highest standards of education and training.
When and what was the Levitt review?
Independent review of internal governance failings within the RICS in 2021.
Public exposure of lack of clarity, structure and purpose of Governance Arrangements.
When and what was the Bichard Review?
2022 - aimed to clarify the purpose of RICS, including its responsibility to act for the public advantage, make reccomendations on its governing structure to deliver that purpose and provide proposals for the incoming leadership and governing body on the future culture and strategy of the institution.
What were the 5 key outcomes of the Bichard Review
Public Interest - focus on public interest, creation of the public interest panel to advise Governing council.
Regulation - Maintain self regulation through greater independence for regulatory functions
Diversity - increased focus on D&I
Empowering and enabling members - Support from regional boards, increased member engagement, renewed focus on younger members.
Review - Independent review every 5 years
Governance - New, simplified clear accountable governance structure.
Leadership - on matters that matter to society such as climate change and sustainability
What were the 5 future foundations published in 2023 following the Bichard Review?
Vision - Natural built environmnet that is sustainable and resilient for all.
Mission - Inspire members, Advance knowledge, uphold standards.
Strategic Goals -
Lead on Stustainability
Attract Diverse next generation
Trust in the profession
Enhance member engagement
Values - Professional, collaborative, inclusive and ambitious.
World class organisation - Efficient and inspiring body that is easy to do business with.
What are the benefits of being an RICS member?
Status - your credentials provide client confidence
Recognition - promotion of your prof excellence to governments and markets
Market Advantage - RICS status and standards give you MA
Knowledge - Professional guidance, CPD and knowledge sharing.
Network - Access to professionals worldwide
What are the requirements of a firm for registration?
Firms must register for regulation and must have an RICS member.
Regulation provides a ‘gold standard’ of quality control for clients
Firms must annually make a return to the RICS confirming their compliance with their regulations
A practice can be a corporate body, a partnership, an LLP or a sole practitioner.
What do the RICS ‘Rules for the regulation of firms’ 2022 state?
If 50% of principles at a UK firm which provides surveying services are RICS members then it has to be regulated. If at least 25% then it can apply to be regulated.
Principles are sole practitioners, directors, partners or board members or someone who is able to act automatously/without supervision in a firm
Each firm must have a ‘Responsible Principle’ Who ensures all reasonable steps are taken to ensure compliance with regulatory and RICS requirements.
Disputes concerning the registration of a firm will be heard by the RICS Standards & Regulation Board.
Strict rules around the logo. Only RICS members and registered firms can use the logo.
What is required by RICS for registration?
Type of business and staffing costs
Name of the responsible principle
Statutory regulated activities
Nature of clients
CHP details and records
PII details
Whether the firm holds client money
What are the RICS rules of conduct 2021?
Effective Feb 2022
Honesty and Integrity - Be honest, act with integrity and comply with their personal obligations including those to the RICS
Competence - Maintain their professional competence and ensure services are provided by competent individuals
Service - Must provide good quality and diligent service
Respect - Treat each other with respect and encourage D&I
Responsibility - Act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession
What does Appendix A to the Rules of conduct set out?
Professional obligations
Under Appendix A of the Rules of Conduct - what must Members do?
Comply with CPD requirements
Cooperate with RICS
Promptly provide all information reasonably requested by the Standards and Regulations Board or those exercising delegated authority on its behalf
Under Appendix A of the Rules of Conduct - what must regulated Firms do?
Publish a complaints handling procedure, an ADR provider approved by the RICS and maintain a complaints log
Ensure all previous and current professional work is covered by PII cover
If having a sole principal, take steps for their professional work to continue in the case of death
Cooperate with the RICS
Promptly provide all information reasonably requested by the Standards and Regulations Board or those exercising delegated authority on its behalf
Display on business literature that the firm is regulated by the RICS
Report any matter required to report under the Rules for the Registration of firms
What is the Decision Tree?
Provides a framework of questions which members should ask themselves when facing a situation in which they are asked to act in a potentially unethical manner or situation.
Encourages considering the legality of ones actions and their consistency with the ROC. Ultimate test is whether members would be happy for their decision to be made public.
What are the steps for the decision tree?
Do you have sufficient facts on the issue?
Is it legal?
Is it in line with the RICS ROC?
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 be content for your actions to be made public?
If so Act and Record
What should you ensure when entering into Fee Negotiations
Avoid Price Fixing, aggressive fee cutting or collussion with competitors.
Fees should be market based and agreed on an ad-hoc basis with clients
Healthy competition encouraged but fee cutting not allowed
Can enter into fee negotiations but must act in a professional manner
Consider the service and amount of time and competence when deciding a fee
May wish to vary proposed level of service when renegotiating but ensure you are still able to provide a high quality service
Should not be seen to be undercutting another firm
Should be completely transparent in terms of referral fees etc
Granting and acceptance of referral fees should be considered in the context of the Bribery Act 2010 and the ROC 2021
What must the Terms of Engagement include?
Fee basis
Payment of expenses
Complaints handling procedures
What are the three steps to follow for Terms of Engagement?
Check Professional Competence
No conflicts of interest
Confirm terms of engagement in writing and get written approval from the client before you start the work.
What must the terms of engagement be complaint with?
Section 18 of the Estate Agents Act 1979 and money laundering checks (Money laundering Regulations 2017)
Consumer Rights Act 2015 - Allows a cooling off period of 14 days from the date of the agreement
When would it be appropriate to decline an instruction?
Not competent - outside of your limitations
Don’t have sufficient facts on the issue
TOE not signed or AML checks not complete
COI or personal interest
PII cap cant be agreed
Advice is for a friend or on a pro bono basis and your PII cover wont cover this
Client is on the Governments sanctions list
Would you be content for your actions to be made public?
When does a Conflict of Interest arise?
When a member of a firms independence and impartiality is threatened due to the existence of a conflict between two clients. eg..
Any financial interest
A personal interest
Commercial relationships
Acting on both sides of a transactions
What is the difference between Conflict Avoidance and Conflict Management?
Conflict avoidance is when you do not accept the instruction.
CM is when the instruction is accepted and steps are agreed and put in place to manage the conflict such as information/ethical barriers with the written agreement of all parties.
If both parties give written agreement that an instruction can go ahead, should you always accept an instruction?
NO - always have to stand back and make your own judgement
What does the RICS Global Professional Standard: Conflict of Interest 2017 state?
A member must not advise or represent a client where doing so would involve a COI or a significant risk of a COI other than where all those who are, or may be affected have provided formal consent.
Informed consent may only be sought where the RICS member or regulated firm is satisfied that proceeding despite a COI is in the interests of all those who are or may be affected and it is not prohibited by the law
What are the three main types of conflict?
Party - Relating to work on the same or related instruction for two different parties
Own Interest - personal interest
Confidential Information - Work between two parties that is confidential
What is informed consent?
Can only be given in writing by the party if the person explaining the position to them is entirely transparent about any material factors and sure that the party affected understands what they are doing.
Only seek IC if satisfied that all relevant parties are best served by doing so
How can firms show their compliance with Conflict of Interest checks?
All firms must keep records to show their compliance
How do you handle a conflict?
- Conflict avoidance - Upon recipt of the full facts, consider whether the conflict is irresolvable bevause your impartiality is comprimised and should be avoided or whether it can be properly managed maintaining transparency and openness.
- Written advice to both parties - Set out in writing the following three points
1 - Disclose the nature of the conflict and the circumstances surrounding it and how your firm intends to deal with it (information barriers)
2- Be clear to ensure both parties can make their own informed decisions.
3 - Request written confirmation from both parties of the informed consent that your firm can continue with the instruction
- Conflict management - Once you have informed consent ensure information barriers are set up
How are information barriers set up?
The barrier must be robust enough to ensure no information passes between the two parties
Take reasonable steps to operate an effective barrier
Surveyors on either side must be physically seperated
Virtual IT barrier
All information should be securely stored
Keep a clear documentation of the conflict check process. The firms compliance officer must oversee the proceedings.
What does RICS Professional Statement: Conflict of Interest - UK commercial property market investment agency, 2017 say about Dual Agency?
Where an agent has a contractual agency relationship with both the seller and the buyer at the same time. This must not be undertaken at any time from 01/01/2018
What does RICS Professional Statement: Conflict of Interest - UK commercial property market investment agency, 2017 say about Multiple Introductions?
Where an agent has competing contractual relationships simultaneously with several buyers for commercial real estate opportunities - exclusive vs no exclusive buying agent. If non exclusive agent must obtain informed consent from the client subject to the necessary barriers being put in place.
What does RICS Professional Statement: Conflict of Interest - UK commercial property market investment agency, 2017 say about Incremental Advice?
Where an agent is approached by another party to provide advice, to the valuation, building surveying or planning, related to a purchase or disposal that is incremental to an existing instruction.
Eg Selling agent approached by buyer to provide a valuation
ONLY provide such incremental advice if consent is given and an information barrier is put in place before providing any incremental advice to the buyer
What does RICS Professional Statement: Conflict of Interest - UK commercial property market investment agency, 2017 say about Personal Interest / Own Interest Conflict?
When acting for a family member or close friend or a ‘connected person’
DO NOT let a personal interest interfere with or influence your personal judgement - full transparency required.
Remember Section 21 of Estate Agents Act 1979 declaration for agency work
What do the RICS Bye laws state about confidentiality?
Client confidentiality must be maintained for all client affairs - this includes historic information and information provided by a client prior to instruction
If a third party wants to access clients files what must you do?
Get client approval first unless you are subject to a statutory duty overriding the clients confidentiality rights, such as a police or HMRC investigation
How long should old client files be held for?
Minimum of 6 years before being disposed and destroyed securely
What should you do if you overhear confidential information?
This cannot be used for your own purposes. If an email for example, the client and sender should be advised of the error. The matter should be recorded in a note to the firms compliance officer.
Any confidential material received in error should be disposed of securely.
Which firms must have a complaints handling procedures?
All RICS regulated firms must have a CHP which meets the requirements of the RICS Rules of Conduct 2021
When should you notify your PII provider about a complaint?
As soon as the complaint is logged as it could lead to a claim for negligence
Why should you log complaints?
To show the details, progress and outcome of any complaints
What reference to ADR should firms make in the CHP?
Must include an RICS approved ADR mechanism in the CHP
What is an ADR?
Alternative Disputes Resolution
What is step 1 of the standard minimum procedures for handling a complaint?
In house -
Details of the CHP should be issued to the client and request the complaint in writing.
Procedure must be quick, clear and transparent
Details of the Complaints handling officer who will deal with the claim
Procedures and strict timescales for the investigation of the complaint. Acknowledged within 7 days and investigated within 28
What is step 2 of the standard minimum procedures for handling a complaint?
ADR
If the complainant is not happy with the review, an independent redress scheme should be used
The name of the IRS must be provided to the complainant, such as The centre for Effective Dispute Resolution, The Property Redress Scheme and the RICS Dispute Resolution Service
When does the RICS become involved in a complaint?
If a member fails to respond to the complaint or prevents the party gaining access to an independent redress mechanism
What should a sole-practitioner do in regards to complaints handling procedures?
Nominate a surveyor in another firm to act as their complaints handling officer
What are the requirements for surveyors in terms of CPD?
20 hours a year, 10 formal CPD
Maintain an understanding of the RICS Rules of Conduct during a rolling 3 year period
Record CPD activity using the RICS CPD management System on the 31st of January every year
What is Formal CPD?
Structured learning that has clear learning objectives and outcomes
Eg.. online training, seminars, professional courses
What is Informal CPD?
Self managed learning that is relevant or related to your professional role.
eg… private study, on the job learning or informal seminars and events
Regarding negligence, where does the duty of care exist?
To clients and third parties, using a ‘reasonable care and skill’. When breached and there is a loss, a claim for damages arises.
Yianni v Edwin Evans (1981)
Established that a residential valuer instructed by a mortgagor lending institution could owe a duty of care in tort to a mortgagee purchaser relying on a valuation
What does the Limitation Act 1980 state?
The current limitation periods for negligence:
Contract - 6 years from the date of the negligent act, breach of contract or omission. Also Section 14A provides an alternative information period of 3 years from the date of knowledge of the damage subject to the 15 years long stop from the negligent act or omission.
Tort - 6 years from the date the claimant suffered the loss
How can you avoid negligence claims?
Clearly understand the clients objetives and confirm precise instructions in the TOE
Ensure competence
Undertake the work in accordance with RICS guidance
Make detailed file notes and take pictures
Keep up to date with market knowledge and legislation through CPD
Cap and professional liability excess on your PII policy in terms of engagement
What is Professional Indemnity Insurance?
Mandatory for surveyors in the workplace
Protects clients surveyors and third parties against negligence claims when there is a duty of care breached and a claim for damages arises
Details set out in the RICS ‘PII Requirements’ April 2022
All policies must be underwritten by an RICS approved insurer
What are the minimum requirements for PII?
Based on turnover
£100K or less = £250,000
£100,001 to £200,000 = £500,000
£200,001 + = £1,000,000
Firms must consider their likely risk profile to negligence, above is only minimum levels
If you are a new business how to you judge your PII cover?
Estimate the turnover and adjust in due course accordingly
What are the maximum levels of uninsured excess required by the RICS?
Relates to the firms turnover in the preceding year
Up to £10m = The greater of 2.5% of the sum insured or £10,000
Over £10m = No set limit. The policy should be fully retroactive. PII policies work on a claims made basis… ie policies cover claims that are made during the period of insurance regardless of when the negligent act occurred.
PII certificate should be sent to the RICS on an annual basis as part of the firms annual return to RICS.
Early notification to firms insurers is required when a potential claim arises
What is run-off cover?
Adequate and appropriate run-off cover is required following cessation of trading:
For consumer claims, minimum of £1,000,000 of aggregate cover over a period of 6 years
For commercial claims, must consider what is adequate and appropriate for a minimum of 6 years
If firms are unable to source run off cover from their incumbent insurer then can apply for coverage to the RICS Run-off Pool
What does the RICS Practice Information - Risk, Liability and Insurance, 2021 include?
Recommends the use of liability caps to manage risks associated with professional work
Be aware of third party resilience and make it clear that advice can only be relied upon by the client named in their terms of engagement
What are the 6 main areas of good practice as set out in the RICS Professional Standard: Client Money Handling, 2019
Hold Client Money
Providing information to clients
Recipts of client money
Payments from client accounts
Accounting records and controls
Compliance
Anyone in teams with access to client money must be familiar with the above
What should surveyors be aware of when handling client money?
Client accounts must be kept separate and clearly identifiable
The word ‘client’ is on the bank account and cheque book
A client must be able to have their monies on demand
Payment of interest is agreed with the client and accounts must be kept in credit
Regular bank reconciliation checking that payments are received and transferred to the bank account
Accurate records are kept with a running balance
Annual audit and reporting obligations by certified accountant
Money can only be withdrawn from a client account if properly required
Keep receipts of all transactions
What does the RICS Client Money Protection Scheme relate to?
For claims from clients which provides last resort protection in instances where an RICS regulated firm is unable to repay a clients money.
There are no limits and exceptions set out in the scheme rules. Scheme split into commercial and residential surveying firms
What steps should you take before opening your own practice to ensure RICS Compliance?
Inform RICS by completing a Firm Details Form
Appoint a Responsible Principle for all RICS communication
Register with RICS
Arrange PII
Set up CMH procedures
Register with the RICS Valuer Registration Scheme if undertaking Redbook Global Valuations
Complaints log
Appoint a Complaint handling officer
Use a logo kit from the RICS for all practice material
Plan for succession if sole practitioner
Ensure all CPD logged and staff training organised
Complete an online RICS Annual Return at the end of each year
What steps should you take before opening your own practice to ensure Statutory Compliance?
Disclose business name
Compliance with Equality Act 2010, Financial Services Act 2012, Bribery Act 2010
Appoint a Money Laundering Reporting Officer (Money Laundering Regulations 2017)
Health and Safety Compliant (Health and safety act 1974)
Asbestos Register
Fire Safety compliance (Fire Safety Act, 2021)
Compliance with Current Law
Register for Data Protection - GDPR and Data protection act 2018
What steps should you take before closing a practice?
Inform the RICS of closure and deregister
Ensure clients are notified and hand over arrangements made to new firm
Inform Insurers and ensure 6 years of run-off cover
Retain a copy of client documents for 6 years
Why was the Rules of Conduct Updated?
Simpler
Clear examples
Diversity Focus
Understanding Tech
ESG focus
What does the Bribery Act 2010 aim to do?
Reduce Bribery in business in the UK and abroad
What is a Bribe?
The 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 6 principles of the Bribery Act 2010?
Proportionality
Top Level Commitment
Risk assessment
Due Diligence
Communication
Monitoring and Review
What are the four offences under the Bribery Act 2010?
Bribing
Receiving a bribe
Bribing a foreign public official
Failing to prevent bribery
Are companies responsible for employees corrupt acts?
Yes, unless they can show that they had adequate policies and procedures in place to combat bribery
Is hospitality prohibited by the Bribery Act?
Certain forms of lavish entertainment could be classified as bribery. BUT hospitality is not prohibited by the ACT. If the gift is reasonable and proportionate it will not constitute an offence as long as it is recorded on the gift register.
Who polices the Bribery Act?
The Serious Fraud Office
What are the fees for breaching the Bribery Act 2010?
Maximum penalty of 10 years imprisonment and / or unlimited fine for individuals
Companies face an unlimited fine
