Fee/TOE/COI/Confidentiality/CHP/CPD Flashcards
1
Q
What are the RICS rules for fee negotiation?
A
- Avoid price fixing, aggressive fee cutting or collusion with competitors
- Fees should be market-based and agreed on an ad-hoc basis with clients
- Healthy competition is encouraged but aggressive fee cutting is NOT
- Can enter into further fee negotiations with client after having submitted your initial fee proposal as long as you act in a professional manner
- Do not undercut another firm
- May wish to vary your proposed level of service when renegotiating your initial fee but you still must provide a high standard of service
- Must be completely transparent so client understands that you may be in receipt of, or offering a referral fee and state so in ToE if applicable
2
Q
What is the example case study for fee penalties?
A
4 Somerset estate agents were fined for illegal price fixing. Colluded to set minimum commission rates, fined by competition and market authority.
3
Q
What are referral fees?
A
Intro fees – They should be granted in consideration with the Bribery Act 2010 and the RICS Rules of Conduct
4
Q
What is the fee basis for independent expert or arbitrator?
A
Hourly fee basis
5
Q
If a client asked you to lower your fees because of their limited funding, what would you do?
A
- I hope that the client wouldn’t be put in that situation but there are some considerations, particularly the Rules of Conduct that I need to think about how I am acting ethically
- I’d like to think that the fee I have quoted for that job in accordance with the Rules of Conduct is fair fee for that work and if I’m asked to reduce it, does that become uneconomic for me and undercutting is not something that is ethical
6
Q
Are there any circumstances in which you may be able to proceed?
A
If the scope of work involved is reduced
If you don’t need to measure as they have a building survey/they’ve has market report done
7
Q
How would you calculate a fee proposal?
A
- Review work required with the commission based on level of information available
- Calculate time and number of individuals required to undertake the work and multiply it by an hourly rate adding a suitable allowance for over heads and profits
8
Q
What should you do before accepting an instruction?
A
CIT
- Check professional Competence
- No conflict of Interest or personal interests
- Confirm Terms of Engagement in writing and get written approval form the client before you start work on the instruction
9
Q
What typically goes into the ToE?
A
- Proposed fee basis
- Detailed results of Conflicts of Interest
- Scope of work
- Payment of expenses and how calculated
- Copy of the Firm’s Complaints Handling
10
Q
When would you decline an instruction?
A
- not competent to undertake the work
- don’t have sufficient facts on the issue
- client won’t sign your Terms of Engagement
- conflict of interest / personal interest
- Failure to comply with AML checks
- PII cap cannot be agreed / PII doesn’t cover
- Potential client is on the UK Gov sanctions list
11
Q
In your role in agency, what legislation do you follow?
A
- Section 18 of the Estate Agents Act 1979
- Money Laundering Regulations, 2017
- Consumer Rights Act 2015 – cooling off period of 14 days from the date of the agreement
12
Q
If you’re at a social occasion and a friend of a friend comes up to you and asks for advice, what would you do?
A
- There are a number of issues that would cause you to stop and think about that situation such as am I qualified to deal with that and is it my area of expertise and are there any conflicts but first of all it is not a suitable social situation to be asked to give any professional comment so I will say to that person if it is something that I or someone in my firm could assist with, nice to meet you here’s my business card and I will meet you in the office
- There are no terms of engagement agreed and set out so you are not covered by insurance (PII) and you are acting against the Rules of Conduct.
13
Q
What is a conflict of interest?
A
When a member or firm’s independence and impartiality is threatened due to the existence of a conflict between two clients
14
Q
What are examples of a Conflict of Interest?
A
- Financial interest
- Personal interest
- Commercial relationships
- Acting on both sides of a transaction
15
Q
What is the RICS Guidance for Conflicts of Interest?
A
- RICS Global Professional Standard on Conflicts of Interest 2017
o Mandatory
o Sets out high-level principles for the appropriate identification and management of conflicts
o A member must not advise/represent a client where there is a conflict of interest other than when informed consent is granted from all those who may be affected prior to commencing an instruction
o RICS firms must have effective systems in place
o RICS firms must keep records of their compliance to the statement
16
Q
What are the three types of conflict of interest?
A
- A Party Conflict – work on the same/related instruction for two different parties
- Own Interest Conflict – personal interest
- Confidential Information Conflict – work between two parties that is confidential
17
Q
How is informed consent obtained?
A
- Can only be in writing by the party
- Person explaining to them is entirely transparent about any material factors and sure that the party affected understands what they are doing
- only seek informed consent if satisfied that all relevant parties are best served by doing so
18
Q
What is the difference between conflict avoidance and conflict management?
A
- Conflict avoidance: you do not accept the instruction
- Conflict management: you accept the instruction and steps are agreed and put in place to manage the conflict, such as an information/ethical barrier, with written agreement of all parties
19
Q
How do you handle a conflict / What steps must you take where a conflict arises?
A
- Step 1:
o Upon Receipt of full facts, decide if you should avoid because your impartiality is compromised or if it can be managed through transparency and openness - Step 2: Written advice to both parties
written consent from both parties ASAP
Disclose the nature of the conflict
How to deal with it
Set up an information / ethical barrier
Be as clear and inform them to seek independent advice if needed - Step 3: Conflict Management
After receiving written consent, set up an information barrier in accordance with the provisions agreed with both clients
20
Q
How should information/ethical barriers operate?
A
- The barrier must be robust enough to offer no chance of information passing between the two parties
- Keep a clear audit trail of communications
- Compliance officer to oversee
- Surveyors acting on two sides must be different and physically separated, preferably on different buildings/floors
21
Q
What other RICS professional Statement is there that relates only to the UK commercial investment agency work where a specific risk has been identified?
A
- Dual Agency
o Where an agent has a contractual agency relationship with both the seller and the buyer at the same time
o Must be avoided - Multiple Introductions
o Where an agent has competing contractual relationships simultaneously with several buyers for commercial RE investment opportunities
o Agents can make multiple introductions but TOE must state whether the agent is acting on exclusive or non-exclusive basis. If the appointment is on a non-exclusive basis, the agent must obtain informed consent from the client subject to information barriers in place - Incremental Advice
o An agent is approached by another party to provide advice, value, etc. related to a purchase/disposal that is incremental to an existing instruction
o E.g. An agent acting for the seller in relation to a disposal but is approached by the buyer, or its lender, to provide a valuation
o Only provide advice if consent is given information barrier put in place - Personal Interest
o Arises when acting for a family member, close business partner, personal interest, financial interest or friend
o Remain impartial and not let it affect professional judgement – transparency is key
o Declare facts promptly and in writing before you accept the instruction
o Remember S.21 of the Estate Agents Act 1979 – declaration of personal interest
22
Q
What system does your firm have in place to prevent Conflict of Interests?
A
- All firms must keep records to show their compliance with the statement
- CRM system / list of instructions
- Separate Admin Team
23
Q
Rent review instructions go on a long time, do you need to refresh your COI checks?
A
Yes
24
Q
If later down the line you discover that a partner in the firm had taken on an instruction where there could be a potential COI with your responsible considerations?
A
- If there is a potential COI, I pay regard to the guidance set out in the RICS Professional Standard for COI so I would need to gather information on what the issue might be and decide on appropriate action
- That might be notifying both parties on the issue
- If I felt like it could be something effectively managed, I would seek informed consent in line with the RICS PS on COI
25
What does RICS bye-laws say about confidentiality?
Client Confidentiality must be maintained for all client affairs
26
What does confidential information include?
- Historic information
- Information provided by a client prior to instruction
27
How long does a firm have to hold old files for?
Min of 6 years
28
What should you do if you found confidential information?
- It cannot be used
- Client and sender should be advised of the error
- Record this to firms compliance officer
- Any confidential material received in error should be deleted
29
What should you do if a 3rd party wants access to your files?
Get client approval first unless you are subject to a statutory duty overriding the client’s confidentiality rights (e.g. police/HMRC investigation)
30
What RICS material is there on CHP?
RICS Guidance on Complaints Handling, 2016
31
Is it mandatory to have a CHP?
Yes for RICS regulated firms
32
What must be included in your CHP?
- Make it clear to client that your firm operates a CHP in the ToE
- Notify your PII insurers as soon as possible if there’s a complaint
- Details of CHP issued to client the same time as ToB
- Complaints log – details, progress and outcome of any complaints
- Include RICS approved ADR mechanism
33
What would you do if you receive a letter of complaint?
- Acknowledge receipt
- Forward it to my firms designated complaint handler as per our company’s complaint handling procedure
- Ask them to provide additional information
- Send over a copy of your complaints handling procedure
- I would also inform our PII providers immediately
34
What is your firms CHP?
- Stage 1: In House
o Complaint must be in writing
o Details passed on to nominated complaints handling officer
o Acknowledged within 7 days
o Investigated within 28 days
o Keep complaints log to show details, progress and outcome
- Stage 2: External
o If complainant is still not happy with the response
o Refer to and provide the name of the independent redress scheme that HG has chosen to use, as approved by RICS Regulatory Board – The Centre for Effective Dispute Resolution (CEDR)
o There is also The Property Redress Scheme / RICS Dispute Resolution Service
- This in regards to a complaint about an area of service
- Individual who made the complaint must be updated on the progress of the issue
35
When will the RICS become involved?
If a member fails to respond to the complainant or prevents the party gaining access to an independent redress mechanism
36
If you are a sole practitioner, how do you deal with appointing a complaints handling officer?
Nominate a surveyor in another firm to act as their complaints handling officer
37
What would happen if there was a complaint about a surveyor who has breached a professional statement?
It would go to RICS Regulation
38
What are the CPD requirements post qualification?
- Members must undertake a minimum of 20 hours of CPD in a calendar year
- 50% must be formal CPD
- Members must maintain a relevant and current understanding of RICS Rules of Conduct during a rolling 3 year period
- Record CPD using RICS CPD Management System by 31st Jan each year
39
What is the difference between formal and informal CPD?
- Formal: structural learning with clear learning objectives/outcomes
o E.g. Seminars / online training
- Informal: self-managed learning relevant to professional role
o Revision / on the job training
- RICS Decision Tree helps inform whether its formal/informal
40
What types of articles do you read?
- Weekly digests of relevant press
- JLL Quarterly London Office Market Report
41
How do you keep up to date with topical issues?
- I am on the mailing list for CPD providers
- I exchange industry articles and relevant information with colleagues
- Follow up on updates on the RICS website
- Web research on key topics relevant to my field of surveying
42
What is your CPD strategy?
- Meet with line manager twice a year to review my career development plan and objectives and build CPD strategy around these objectives, current topics and personal interest
- E.g. CPD on 1954 LL&T Act for lease advisory
