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Ethics > General - Subs & JLL > Flashcards

General - Subs & JLL Flashcards

1
Q

What is the role of the RICS?

A
  1. Maintains professional standards of education and training
  2. Consumer protection through strict regulation of professional standards
  3. Leading source of independent information and advice
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2
Q

What are the professional obligations of a RICS member?

A
  1. Compy with CPD requirements
  2. Cooperate with the RICS
  3. Provide info requested by the standards and regulations board and their delegates
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3
Q

What are the professional obligations of a registered firm?

A

“1. Cooperate with the RICS
2. Provide information requested by the standards and regulations board and their delegates
3. Publish their complaints handling procedure (CHP)- including information on alternative disputes+ maintain a complaints log
4. Hold the appropriate PI cover for their work, in line with RICS standards
5. Display the RICS designation on their business literature
6. Report on required matters

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4
Q

What are the RICS rules of conduct?

A
  1. Be honest and act with integrity, comply with obligations - professional and to the RICS
  2. Maintain professional competency and ensure services are carried out by those with the necessary competency and expertise
  3. Provide a good quality and diligent service
  4. Treat others with respect and promote diversity and inclusion
  5. Act in the public interest, take responsibility and act to prevent harm and maintain public confidence
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5
Q

What’s rule 1 of the RICS Rules of Conduct?

A

Be honest, act with integrity and comply with professional obligations, including your professional obligations to the RICS

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6
Q

What’s rule 2 of the RICS Rules of Conduct?

A

Maintain professional competency and ensure services are carried out by those with the necessary competency and experience

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7
Q

What’s rule 3 of the RICS Rules of Conduct?

A

Provide good quality and diligent service

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8
Q

What’s rule 4 of the RICS Rules of Conduct?

A

Treat others with respect and promote diversity and inclusion

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9
Q

What’s rule 5 of the RICS Rules of Conduct?

A

Act in the public interest, take responsibility and act to prevent harm and maintain public confidence

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10
Q

What is the key legislation covering AML and what does it cover?

A

Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017
Covers estate agency and financial business work

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11
Q

What do the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 implement?

A

Cover estate agency and financial business work, require professionals to take a risk-based approach, sets out the obligations of private sector firms

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12
Q

What are the obligations of a firm under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017?

A
  • Staff training
  • Appropriate record keeping, policies and procedures - which meet regulation requirements, including written assessment and internal controls
  • AML checks must be undertaken to confirm the identity of the proposed purchaser of a property and the source of funds – before exchange of contract
  • Compliance with due diligence and additional risk factors considered when assessing the need for enhanced due diligence and additional information and monitoring
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13
Q

What did the 2019 amendment to ‘Money Laundering, Terrorist Financing and Transfer of Funds’ cover?

A
  1. Letting agents must register properties over £8.5k pcm
  2. CDD (customer due diligence) checks on sales and lettings - undertaken on both sides (LL/T & vendor/purchaser)
  3. EDD (Enhanced due diligence) on those from high risk countries, PEPs
  4. Firm policy should - identify and scrutinise large and unusual transactions, and those without clear purpose
  5. Have group procedures for information sharing
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14
Q

When would EDD (enhanced due diligence) be required?

A
  1. PEPs - politically exposed person
  2. People from high risk countries
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15
Q

What are the penalties for failure to comply with AML?

A

14 years prison or unlimited fine for assisting, 5 years or unlimited fine for tipping off

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16
Q

What information do you need on different organisations for AML checks?

A
  1. Public Limited company - evidence of stock exchange listing
  2. Publicly accountable body - evidence of government ownership/ control
  3. Private Limited company - Certificate of incorporation, name, registered address, directors and shareholders of over >25%
  4. Private Individual - Proof of identity (passport/ driving licence) & evidence of address
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17
Q

What information do you need on a public limited company for an AML check?

A

Evidence of stock exchange listing

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18
Q

What information do you need on a publicly accountable body for an AML check?

A

Evidence of government ownership/ control

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19
Q

What information do you need on a private limited company for an AML check?

A
  • Certificate of incorporation
  • Name
  • Registered address
  • Directors and shareholders with more than 25%
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20
Q

What are some red flags regarding money laundering?

A
  1. Inability or unwillingness to show the relevant documents
  2. Changing parties
  3. Unusual transaction features e.g. not commercial, urgency
  4. Payment in unusual currencies
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21
Q

What are the areas of offence under the Proceeds of Crime Act 2002?

A
  1. Concealing criminal property
  2. Entering into an arrangement which you suspect facilities the use of criminal property
  3. Acquisition, use or possession of criminals property
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22
Q

What is the RICS guidance on Money Laundering and what does it cover?

A

GN: 2019 Guidance Note – Countering Bribery and Corruption, Money Laundering and Terrorist Financing (reissued 2023 as a professional standard)
Covers mandatory, good practice and supplementary guidance for firms and members

+ 2022 ‘AML Sanctions Update’

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23
Q

What must firms do regarding AML?

A
  • Have policy addressing due diligence processes and high risk situations
  • Have appropriate and proportionate systems in place
  • Provide training
  • Identify the beneficial owner of a company involved in a transaction
  • Appoint a senior person to be in charge of AML
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24
Q

Who is in charge of AML at LSH?

A

Kevin Maddern

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25
Q

What must RICS members do regarding AML?

A
  • Keep up to date with current training and regulation
  • Comply with employers policy and process
  • Management must take a leadership role - ensure employees have an appropriate regime
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26
Q

What does the RICS ‘AML Sanctions Update 2022’ cover?

A

Reminder on sanctions including
2. Understanding risk factors and red flags
3. Using software as part of due diligence when a firm engages with high risk clients or assets
4. Checking high risk individuals against the Treasury’s consolidated list
5. Checking high risk individuals regularly

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27
Q

What is the key legislation covering bribery?

A

Bribery Act 2010

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28
Q

What are the offences under the Bribery Act 2010?

A
  1. Bribing
  2. Receiving a bribe
  3. Bribing a public official
  4. Failing to prevent a bribe
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29
Q

What are the principles of the Bribery Act 2010?

A
  1. Proportionality
  2. Top level commitment
  3. Risk assessment
  4. Due diligence
  5. Communication
  6. Monitoring and review
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30
Q

What are company responsibilities under the Bribery Act 2010?

A

Companies must prove the have taken steps to prevent bribery, including
- identifying risks
- training staff
- clear policies
- regular reviews
The company is responsible for the actions of the individual unless they can prove adequate policies and processes.

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31
Q

What are the punishments for breaking the Bribery Act 2010?

A

Unlimited fine for companies and individuals, up to 10 years prison for individuals

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32
Q

What does the Bribery Act 2010 say about hospitality?

A

Not prohibited, must be reasonable and proportional, and if relevant should be recorded on the gift register?

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33
Q

Who policies the Bribery Act 2010?

A

The Serious Fraud Office

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34
Q

What should firms not do in relation to fees?

A
  • Price fix
    Fee cut aggressively
    Collude with competitors
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35
Q

How should fees be agreed?

A

Based on the market and on an ad hoc basis

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36
Q

Can you re-enter fee negotiations after a fee has been agreed?

A

Yes, as long as this is done professionally - should disclose variations to levels of service

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37
Q

What must you do when receiving a referral fee?

A

Disclose to the client, include in TOE in some cases.

38
Q

How do you comply with Rule 1 of the RICS rules of conduct?

A

Rule 1 = Be honest, act with integrity and comply with professional obligations, including obligations to the RICS
1. I undertake conflict of interest checks
2. I am open and transparent when negotiating fees and services
3. I do not allow myself to be improperly influenced

39
Q

How do you comply with Rule 2 of the RICS rules of conduct?

A

Rule 2 = maintain professional competence and ensure services are provided by competent individuals with the necessary expertise
1. Only undertake work when I have the appropriate knowledge, skills and resources
2. Ensure that tasks are only given to those with the appropriate knowledge, skills and resources
3. Reflect on what I learn at work and how I can apply this knowledge in the future
4. Undertake CPD and identify areas where i need development
5. Remain up to date with relevant current legislation

40
Q

How do you comply with Rule 3 of the RICS Rules of Conduct?

A

Rule 3 = provide good-quality and diligent service
- Understand clients needs and objectives before undertaking work
- Agree scope of services before taking on work, including limitations and timescales
- I undertake work with due diligence and in a timely manner
- I communicate material information on which my advice is based
- I keep proper records of work and decisions, with enough detail to justify my decisions and for my work to be audited
- I use accurate and up to date data and ensure this is kept securely

41
Q

How do you comply with Rule 4 of the RICS rules of conduct?

A

Rule 4 = treat others with respect and encourage diversity and inclusion?
- I have undertaken training on unconscious bias, this helps me to develop an inclusive workplace culture
- I have undertaken training on modern slavery
- I treat others fairly and don’t discriminate

42
Q

How do you comply with Rule 5 of the RICS rules of conduct?

A

Rule 5 = Act in the public interest, take responsibility for my actions and act to prevent harm and maintain confidence in the profession
- I question decisions i do not think are right, raising concerns with senior management
- I am conscious about what i post on social media
- I respond to complaints promptly, openly and professionally

43
Q

What are the three types of COI?

A
  1. Party conflict - work on same/ related instruction for different parties
  2. Own interest conflict - personal conflict
  3. Confidential information conflict
44
Q

What is the RICS guidance on COI?

A

RICS COI Professional Statement 2017, reissued in 2023 as a professional standard
Identifies 3 types of conflict
How to identify and manage

45
Q

What are the three stages of managing COI?

A

“1. Avoidance - is conflict irresolvable or can it be managed?
2. Written advice - disclose nature of the conflict and all relevant information & proposal for managing, request written, informed consent.
When necessary, advise parties to seek independent advice.
ONLY seek informed consent if it is in the best interest of all parties, informed consent can only be received if all factors have been explained and understood
3. Manage - Information barrier, must be robust
Different surveyors, if possible they should be physically separated
Clear audit trail necessary
Must be managed by the compliance officer

46
Q

When was the RICS founded?

A

1868

47
Q

When did the RICS receive its royal charter?

A

1881

48
Q

What is a royal charter?

A

Instrument of incorporation, granted by The King, which confers independent legal personality on an organisation and defines its objectives, constitution and powers to govern its own affairs.

49
Q

How do you become FRICS?

A

Must provide evidence of 4 fellowship characteristics ( 5 + years MRICS, leadership role, professional or technical achievement, academic achievement, raising the profile of the RICS) + portfolio of professional achievement and CPD

50
Q

Who is the president of the RICS?

A

Ann Gray

51
Q

How is the RICS structured?

A

Governing council with regulatory and management boards and committees reporting to the council

52
Q

How is the RICS structured in the UK?

A

4 national associations, 10 regional boards, local associations

53
Q

How many RICS members

A

c. 130,000

54
Q

What does the RICS governing council do?

A

Management and strategic direction

55
Q

How many members of the governing council?

A

25

56
Q

What were the findings of the Levitt Review?

A

Lack of purpose, clarity and structure in RICS governance

57
Q

What was the purpose of the Bichard review?

A

Independent review of RICS governance to:
1. clarify the purpose of the RICS, including responsibility to act for the public advantage
2. Make recommendations for the governance to deliver on purpose
3. Make proposals for incoming leadership on the future culture and strategy of the institution

58
Q

What were the seven recommendations of the Bichard Review?

A
  1. Renewed focus on public interest remit
  2. Self-regulation through increased independence of regulatory functions
  3. Increased focus on diversity and inclusion - membership and governance
  4. Empowering and enabling members - increasing engagement, focus on young people
  5. Simplified governance structure
  6. Leadership on society issues such as climate change
  7. Review every 5 years
59
Q

What are the benefits of being a member of the RICS?

A
  1. Recognition-shows excellence to markets
  2. Status - consumer confidence through regulation
  3. Market advantage - competitive advantage
  4. Knowledge - standards, guidance, CPD
  5. Network
60
Q

What are the benefits of a firm being registered with RICS?

A
  1. Client Confidence
  2. Professionalism - have to provide clear, impartial and expert advice
  3. Security - requirement for clear CHP, PII etc
61
Q

What do you need to do to comply with the RICS when registering a firm?

A

-Fill in a registration form and nominate a responsible principal+ register for regulation by regulations board
- Appropriate PII
- Get approval for CHP
- Register to handle client money and set up appropriate procedures including protection scheme
- Valuer registration scheme
- CPD - record on system/ training plan

62
Q

What is included in the annual return?

A
  1. Type of business and staffing details
  2. Statutorily regulated activities
  3. CHP
  4. Client nature
  5. PII details
  6. Whether the firm holds client money
63
Q

How to close a firm?

A

Inform clients and the RICS, ensure run off cover for at least 6 years + keep files for 6 years

64
Q

Why were the new rules of conduct developed?

A
  1. Simpler structure
  2. Clear examples
  3. Focus on respect, diversity and inclusion
  4. Understanding evolving tech
  5. Global challenges such as climate change
65
Q

What is the ethics decision tree?

A

A framework for making ethical decisions

66
Q

What are the stages of the ethics decision tree?

A
  1. Do I have enough information
  2. Is it legal
  3. Does it comply with the rules of conduct
  4. Have I consulted the appropriate people
  5. Is there clear reasoning
  6. Would I be content for the decision to be made public
67
Q

What are the three levels of RICS disciplinary proceedings?

A
  1. Investigation by the head of regulations
  2. Regulatory tribunal
  3. Appeal panel
68
Q

What are the 4 possible outcomes by an investigation by the head of regulations?

A
  1. Fixed penalty notice - for breaches relating to supplying RICS with info
  2. Regulatory compliance order - for breaches such as CPD
  3. Referral to a single member of the regulatory tribunal
  4. Referral to the regulatory tribunal
69
Q

What are the 5 possible outcomes of a regulatory tribunal?

A
  1. Regulatory compliance order
  2. Fine
  3. Impose conditions on future membership
  4. Expulsion or removal
  5. Require publication in modus/ a local paper
70
Q

What social media posts is the RICS likely to investigate?

A

Those containing discrimination, abuse, dishonesty, bullying. As well as patterns of concerning behaviour and ignoring previous advice.

71
Q

What should you do if you come across confidential information?

A

Advise of the error, report to compliance officer, dispose of information securely

72
Q

Who is LSHs compliance officer?

A

David Gilbert

73
Q

How long should old files be held for and why?

A

At least 6 years, as this is the typical time frame for a negligence claim.

74
Q

What is the minimum CHP?

A
  1. Valid complaint made about a breach of duty of care - CHP issued
  2. CHP is transparent, quick and impartially implemented
  3. Includes details of Complaints Handling Officer
  4. Complaint made in writing
  5. Timetable and procedure recorded and logged
  6. Acknowledge within 7 days, respond within 28 days
75
Q

What’s LSH’s CHP?

A
  • Receive formal complaint - provide a written summary of complaint to the head of division
  • Head of division notifies complaints handling officer
  • Officer issues CHP & case handler details to complainant
  • Case handler manages complaint within CHP timescales
  • Provides officer with draft decision prior to issuing to complainant
  • Internal procedure is reviewed and updated if appropriate
76
Q

What should you do if you receive a complaint?

A

Notify complaints handling officer, PII needs to be informed in case it leads to a claim

77
Q

What is the minimum CDP?

A

20 hrs per year, 10 hrs formal

78
Q

What’s the difference between formal and informal CPD?

A

Formal = structured learning with clear objectives and outcomes
Informal = self-managed

79
Q

What is PII?

A

Professional Indemnity Insurance - protects firms, individuals and 3rd parties against negligence claims

80
Q

What does PII need to include?

A

RICS PII requirements 2022
1. Adequate and appropriate cover for each job
2. Underwritten by a RICS- approved insurer
3. Minimum indemnity based on previous years turnover
4. Fully retroactive - cover past claims
5. Run off cover for 6 years, recommended 15 years, if firm closes
6. Cover is needed for pro bono work

81
Q

What does the 2021 RICS GN ‘Risk Liability & Insurance 2021’ state?

A
  1. Insurers must provide cover for fire safety claims on buildings up to 4 storeys
  2. Recommends the use of liability caps
  3. Recommends being wary of 3rd party reliance
82
Q

What is a duty of care and who is it owed to?

A

Clients and third parties, based on reasonable care and skill

83
Q

What does the 1980 Limitation Act say?

A

The 1980 Limitation Act provides time limits for negligence claims:
- Under contract, 6 years from the act, breach or omission
OR 3 years from knowledge of the act, subject to being within 15 years of the act
- Under tort, 6 years

84
Q

How do you avoid negligence claims?

A
  1. Understand client objectives and confirm these in the TOE
  2. Cap PII liability excess in the TOE
  3. Keep detailed notes
  4. Ensure competence and record CPD
  5. Follow RICS standards and GNs
85
Q

What needs to be included in all TOEs (not red book)?

A
  • Client’s agreement of proposed fee basis
  • Payment of expenses (and how these will be calculated)
  • copy of CHP
86
Q

What are the PI cover bands?

A

Based on firm’s turnover in the preceding year:
Less than £100,000 - £250,000 indemnity limit
£100 - £200,000 - £500,000 indemnity limit
£200,000 + - £1m indemnity limit

Max level of uninsured excess (% of claim to be paid by the firm) is 2.5% /£10,000 when turnover under £10 milion

87
Q

What is the maximum level of uninsured excess (amount of a PI claim to be paid by the firm)?

A

Turnover under £10m = 2.5% / £10,000
Turnover over £10m = no limit

88
Q

What would you need to do to comply with RICS when setting up a new practice?

A
  1. Inform the RICS by filling in a ‘firm detail form’ and register for regulation by the regulatory board
  2. Appoint a ‘responsible principal’ for RICS communication
  3. Arrange PII and send the details to the RICS
  4. Set up procedures for handling client money + a protection scheme
  5. Register for Valuer Registration Scheme if undertaking Red Book vals
  6. Obtain RICS approval for a CHP, set up a complaints log, appoint a complaints handling officer (in another practice if sole practioner)
  7. Use the logo kit to ensure material complies, uses ‘regulated by RICS’
  8. Ensure logging of CPD and set up a training plan
  9. Ensure completion of annual return
89
Q

What would you need to do to comply with statutory obligations when setting up a new practice?

A
  1. Disclose business name
  2. Comply with Equality Act, Bribery Act, financial services acts (2000 and 2012)
  3. Appoint money laundering officer (Money Laundering Regs 2017)
  4. H&S (H&S 1974)
  5. Asbestos (Control of Asbestos Regs 2012)
  6. Fire Safety (Reg Reform Fire Safety Order 2005)
  7. Register for Data Protection (Data Protection Act 2018)
  8. Estate agent compliance
  9. Inform HMRC for VAT and Tax
  10. Ensure insurance compliance for employer and PII
90
Q

What’s an example of recent case law on negligence?

A

Lewin v Gray 2023
Lewin is a builder who did work on Grays property, fell through the roof and suffered significant injuries.
Claim brought for negligence and under the Occupier’s Liability Act 1957
Held that there was no breach the Act, on the defendant to appreciate and act against risks
+ No breach of tort of negligence - H&S at Work Act 1974 - breaches of duty of care under H&S civilly actionable other than those actionable under the Act
Was a breach of Construction Regulation 2015 - however this didn’t create automatic liability

Relevant is that it confirms to occupiers and insurers that breaches of regulations don’t automatically give rise to civil liability
Judges shouldn’t create duties of care where none currently exist

Ethics (6 decks)

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