Level 3 - Ethics, Policy Documents

Question 1

What is the purpose of RICS policy documents?

Answer 1

Set out the rules and procedures which govern RICS regulation

Question 2

What are some key RICS policy documents?

Answer 2

RICS Guide - Professional indemnity insurance requirements (2019)

Rules for registration of firms

Codes of Conduct for members and firms

RICS professional and ethical standards

Client’s money

Complaints handling procedures

Question 3

What is the purpose of PII?

Answer 3

To protect firms from financial loss in the event of a negligence claim and consequences to pay third party damages

To protect clients from financial losses which the firm cannot meet

Mandatory for surveyors and firms working in practice

Question 4

Under which rule of the RICS Rules of Conduct for firms does PII come under?

Answer 4

Rule 9 of the Rules of Conduct for Firms - Firms must have adequate PII cover under RICS

Question 5

What are the minimum level of indemnity based on?

Answer 5

Based on the firms turnover in the previous year

Question 6

What must the PII include / cover?

Answer 6

On an each and every claim basis / fully retroactive (covers claims made during insurance cover period irrespective of when original act occurred)

Include the RICS minimum policy wording

Provides a minimum level of indemnity based on turnover

Provides a maximum level of uninsured excess

Underwritten by a RICS approved insurer

Covers past and present employees

Includes run-off cover when a firm or member ceases to trade

Question 7

What are the minimum levels of indemnity based on firm turnover?

Answer 7

Firm turnover < £100k = min. level of indemnity £250k

Firm turnover £101k-£200k = min. level of indemnity £500k

Firm turnover >£201k = min. level of indemnity £1m

Question 8

What are the maximum uninsured excess levels based on limits of indemnity?

Answer 8

Limit of indemnity £500k = 2.5% of sum insured

Question 9

What is Run-Off Cover and what is the minimum duration?

Answer 9

To ensure firms, members and their customers are still covered in period following a firm ceasing to trade

The minimum run off cover is 6 years

Question 10

What is the required run-off cover for consumers?

Answer 10

Required limit of £1m for a period of 6 years from expiry date of the policy in force at the time of cessation

Question 11

What is the Run-Off Pool?

Answer 11

Firms that are unable to obtain run-off from the open market, therefore, have to apply for PII in the Run-off Pool

Question 12

What is the difference between a liability cap and a firm’s PII limit?

Answer 12

PII limit = set out in firm’s PII policy and is fixed on the annual PII renewal; it is the maximum amount insurers will pay in any particular claim

Liability cap = agreement between a member and their client, that limits the amount of damage a Client can claim from professional services.

Question 13

What should you do if a PI Claim is made against you?

Answer 13

Notify the insurer immediately - if necessary they can give advice on how to proceed

Question 14

Does PII cover work for charities, friends and pro bono (unpaid) work?

Answer 14

If you are a qualified surveyor employed in a firm you must obtain agreement from employer to carry out such work (they may or may not agree)

If they don’t agree - you will need your own PII insurance

If they do agree - they must obtain specific agreement of their insurer to provide this cover

Question 15

What if you are retiring / conducting part-time work?

Answer 15

If you’re a member who has retired / ceased trading, RICS require you to maintain PII run-off cover for 15 years

The firm’s PII should cover part time employees as with normal employees

Question 16

What is an Assigned Risk Pool (ARP)?

Answer 16

A facility for Regulated Firms who find themselves unable to obtain insurance in normal market (where they do not comply)

ARP = underwritten by all RICS Listed Insurers

Aim of ARP = make a Regulated Firm an insurable risk again in the normal market

Firms can remain in ARP for a max 3 years during which they are audited and guided in how to amend business procedures/practices

Membership = subject to compliance with the terms and conditions of entry

The ARP is managed on behalf of RICS by Miller Insurance Services

Question 17

What is Vicarious Liability?

Answer 17

Dictates that an employer is responsible for negligent acts / omissions of his employees when acting in the course of their employment

Question 18

What happens when a duty of care is breached?

Answer 18

When a duty of care is breached = LOSS = DAMAGES = NEGLIGENCE CLAIM

Question 19

What is a Non-Disclosure Agreement?

Answer 19

A Confidentiality Agreement between two parties outlining the information that is to remain confidential and restricted to other parties.

Question 20

How should a surveyor maintain confidentiality?

Answer 20

Confidentiality = a primary professional duty.

RICS ROC expects members to treat information / advice relating to a client confidential unless otherwise agreed in writing.

Key legislation = Data Protection Act 1998: individuals are protected under the Act concerning data about themselves

However, a member may disclose advice or information if required by legislation / order of a court / giving evidence as an expert witness