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TD Ethics > RICS Core Material > Flashcards

RICS Core Material Flashcards

1
Q

What are the levels of the RICS core materials?

A
  1. International Standards - eg RICS Valuation Global Standards
  2. Professional Statements - eg Conflicts of Interest, Global 2017/ Property Measurement 2018
  3. Practice Statements - eg Surveyors Acting as an Expert Witness.
  4. Guidance Notes - eg Comparable Evidence in Real Estate Valuation
  5. Codes of Practice - eg Rating Code of Practice (Mandatory Professional Statement)
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2
Q

Fee negotiations - what should you avoid?

A

Aggressive Fee undercutting
Avoid price fixing
Collusion

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3
Q

What is the process when producing Terms of Engagement?

A

CIT
check Competence
check no conflicts of Interest
confirm Terms of engagement in writing before starting instruction

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4
Q

Which Act allows a cooling off period of 14 days from the date of engagement?

A

The Consumers Rights Act 2015

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5
Q

Why might you decline an instruction?

A

Not competent
Proposed client with not sign Terms of E or complete AML Checks
Conflict of Interest or Personal Conflict

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6
Q

What would you normally include in a valuation terms of engagement?

A

If it was a red book valuation I would follow VPS 1.

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7
Q

What would you normally include in a rating terms of engagement?

A

A letter to a potential client which includes
Our services
The term
The fee
Terms of appointment -
Mandatory declaration by Ratepayers - in Rating Code of Practice

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8
Q

What is a conflict of interest? An example?

A

Where a member or firm’s independence and impartiality is threatened due to a conflict. eg

  • Party conflict - acting in the interests of a client conflicts with a duty owed to another client
  • Personal interest - financial or relation
  • Commercial Relationship - different service offerings
  • Acting on both sides of the transaction
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9
Q

What does the Conflict of Interest 2017 state?

A

a member must not advise or represent a client which would involve a conflict or significant risk of a conflict, other than those who have provided informed consent.

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10
Q

What is informed consent?

A

When a party or individual who is affected by a conflict acknowledges the existence but agrees to instruct a RICS regulated firm.

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11
Q

Three types of conflicts of interest?

A

Party Conflict - same or related instruction for two parties.
Own Interest Conflict
Confidential Information Conflict

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12
Q

What are the steps to handle a conflict?

A
  1. Conflict Avoidance - Consider transparency or full impartiality. Decide to accept or not
  2. Written Advice to both parties - Disclose the conflict to both parties, be clear as you can, acquire informed consent from both parties.
  3. Conflict Management - Set up an information barrier with the provisions agreed by both parties.
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13
Q

Investment agency conflicts - key points?

A

Can act for both sides of the transaction

must state if you are representing on a exclusive basis or not

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14
Q

What’s incremental advice

A

When an agent is approached to offer advice to an alternative party. eg the seller to value the building if you are acting for the buyer. Need informed consent and information barrier.

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15
Q

Example of when a conflict of interest has been managed at your firm?

A

CHECK? Within the last year we completed a red book valuation for an office property. We then received an instruction from a lender to complete a loan security valuation. We disclosed our previous involvement with the borrower to the lender and acquire informed consent in writing from the lender that they were happy for us to proceed.

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16
Q

How would you deal with a compliant?

A
  1. inform my line manager. Assess the seriousness of the compliant.
  2. Follow my firms complaints handling procedure
17
Q

What is your firms complaints handling procedure?

A
  1. Details of the complaint made in writing to Usha De Sousa - Legal Counsel
  2. Within 7 days, AY will reply to confirm our understanding of the circumstances leading to the complaint.
  3. Within 28 days the person dealing with the complaint with inform the relevant person of results of the investigation/any action has been taken.
  4. Still dissatisfied - attempt to resolve through negotiations.
  5. Still not resolved - referral to arbitration produce for surveying disputes or effective dispute resolution.
18
Q

What is negligence? How can it occur?

A

It when a usual duty of care to clients and third parties is breached and there is a loss. A claim for damages can arise.

19
Q

Under the Limitation Act 1980 - what are some of the current limitation periods for negligence?

A

Contract law - 6 years from the date of negligence
Tort law - 6 years from the date the claimant suffered the loss.
Where the loss was not apparent at the time of the tort there is a period of 3 years from the date on which loss could reasonably have been discovered to 15 years long stop from the negligent act.

20
Q

What’s the difference between Contact and Tort?

A

Contract is right and obligations created by an act of agreement through a contract.
Tort - right and obligations created through common law, eg negligence

21
Q

How can negligence be avoided or reduced?

A

Clearly understand the clients objectives
Ensuring your competence
Undertake work in accordance with RICS standards and guidance notes.

22
Q

What is Professional Indemnity Insurance?

A

Insurance to protect clients, surveyors and thirds parties against negligence claims when there is a duty of care breach and a claim for damages arises.
PII is done on a claims made basis

23
Q

Which insurance company would you choose?

A

RICS have outlined an assigned risk pool of insurers

24
Q

What are the current minimum PII requirements of a firm?

A

Based on a firms turnover in the preceding year and its minimum level of indemnity required for each and every claim
>£100k = £250k
£100k to £200k = £500k
£200k = £1 mill
A new business must estimate their turnover

25
Q

What is the maximum level of uninsured excess required by the RICS?

A

Liability up to £500k = Greater of 2.5% of the sum insured or £10k
Liability of over £500k = 2.5% of the sum insured

26
Q

A claim on a valuation, how long can someone claim till?

A

Three years beginning on the date on which the claimant learned about their entitlement to bring the claim. There is a long stop period of 15 years from the date of valuation of the report.

27
Q

What if a firm ceases to exist?

A

RICS requires firms to buy “Run off” PII to cover this.

28
Q

What is a liability cap for valuation reports?

Whats yours?

A

its a limit agreed in the contractual agreement that a client can only claim damages up to a certain amount. Standard is up to £5million. Can be more

29
Q

Why is handling clients money important?

A

Well the importance is underpinned through the Rules of Conduct for firms which requires a firm to preserve the security of clients money in the course of practice or business.
Important as client money needs to be safe
Only used for appropriate purposes

30
Q

What are the six main areas of good practice as set out by the RICS in their professional statement regarding client money?

A
  1. Holding Money - Correctly
  2. Providing information to clients - correct fee basis/invoice amount
  3. Receipts of client money - paid into the correct account
  4. Payments from client accounts - ensure payment is returned swiftly
  5. Accounting records and controls - keep records
  6. Compliance - comply with AML, rules and regs
31
Q

If you were to set up your own firm what would you need to do?

A

Need two main areas RICS and Statutory Compliance
RICS
Inform the RICS
Register with RICS for regulation by the Regulatory Board
Set up PII and send details to RICS
Setup a complaints handling procedure/complaints log
Appoint complaints handling officer
Register for RICS Valuer Registration Scheme
Logo kit from RICS
Ensure CPD log
Succession Planning

Statutory
Disclose business name
Bribery Act 2010 compliance
Health and Safety Compliance
Appoints a AML reporting officer
Register for data protection
Inform HMRC
Discrimination Compliance  under equality act
Employment Law Compliance - National Minimum Wage
32
Q

What should you do when closing a practice?

A

Inform the RICS
Inform Clients at the earliest opportunity
Return Monies
Ensure you have “run-off” PII
Retain a copy of client files for a minimum of 6 years

33
Q

What is your firms AY Conflict of Interest Policy?

A

To take all reasonable steps to identify and prevent conflicts.
How to set up an information barrier
Best practices to acquire informed consent
Record Keeping
Monitoring

34
Q

How would you conduct a conflict of interest check?

A

Run a report off the CRM database

Check for types of conflict - Party Conflict, Commercial Relationships.

TD Ethics (6 decks)

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