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Ethics (Good Questions) Flashcards

1
Q

Tell me what you understand about the RICS Rules of Conduct

A
  1. New rules were published in October 2021 and became effective in February 2022.
  2. The rules replace the previous Rules of Conduct for Members and Firms and the 5 Global Professional and Ethical Standards.
  3. The rules apply to members and firms.
  4. There are five rules of conduct.
  5. Appendix A sets out professional obligations which are to be followed by members and by regulated firms.
  6. The new rules of conduct were developed to have easier structure, clear examples, focus on respect, diversity and inclusion and to tackle global challenges.
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2
Q

What are the Five Rules of Conduct in RICS Rules of Conduct 2021?

A
  1. Members and firms must be honest, act with integrity and comply with their personal obligations, including obligations to RICS.
  2. Members and firms must maintain their professional competency and ensure that services are provided by competent individuals who have the necessary expertise.
  3. Members and firms must provide good-quality and diligent service.
  4. Members and firms must treat others with respect and encourage diversity and inclusion.
  5. Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in their profession.
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3
Q

What is Rule 3 of the RICS Codes of Conduct? What are example behaviours

A

Rule 3: Members and firms must provide good-quality and diligent service.

Example behaviours:

  1. Understand client’s needs and objectives.
  2. Agree scopes of work, limitations and timescales for work.
  3. Inform clients that they are regulated by RICS and may need to disclose records to RICS.
  4. Undertake work in a timely manner, with due care, skill and diligence.
  5. Keep proper records of their work and decisions.
  6. Communicate with clients clearly in a way they can understand.
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4
Q

What is Rule 1 of the RICS Codes of Conduct?

Can you give some examples of behaviours supporting Rule 1?

A

Rule 1: Members and Firms must be honest, act with integrity and comply with their professional obligations, including obligations to RICS.

Rule 1 covers being ethical

  1. Members / Firms must not mislead by actions or omission (e.g altering a valuation)
  2. Members must not allow themselves to be influenced improperly (e.g bribery).
  3. Members and firms identify actual and potential conflicts of interest throughout an assignment and either do not act, or do so in accordance with RICS Conflicts of Interest Professional Statement.
  4. Members and firms act to prevent others being misled about their professional opinion.
  5. Firms keep client money safe and have appropriate accounting controls.
  6. Members do not misuse client money.
  7. Members / firms do not facilitate financial crime and firms have effective processes to prevent employees from doing so.
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5
Q

What is Rule 2 of the RICS Codes of Conduct? Can you give some example behaviours?

A

Rule 2: Members and firms must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise.

Example Behaviours

Rule 2 covers competency and knowledge

  1. Have required knowledge, skills and resources to competently undertake work.
  2. Supervise employees to ensure they are competent.
  3. Check that subcontractors have the necessary knowledge, skills and resources to undertake tasks competently.
  4. Reflect on the work undertaken and its impact, and consider how they might apply what they have learned to their future work.
  5. Comply with CPD requirements to maintain and develop knowledge and skills throughout career.
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6
Q

What is Rule 4 of the RICS Codes of Conduct? What are some example behaviours?

A

Rule 4: Members and firms must treat others with respect and encourage diversity and inclusion.

Example behaviours:

  1. Respect rights of others and treat others with courtesy.
  2. Do not bully, victimise or harras.
    3.Firms should check that supply chains do not include modern slavery.
  3. Report abusive labour practices.
  4. Develop and inclusive culture in their work place.
  5. Members / Firms should not discriminate.
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7
Q

What is Rule 5 of the RICS Codes of Conduct? What are some example behaviours

A

Rule 5: Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession.

Example behavious:
1. Question practices and decisions that they suspect are not right.
2. Support others who have acted in good faith to report concerns.
3. Ensure public statements do not undermine public confidence in the profession.
4. Quickly respond to complaints in an open and professional manner.
5. Manage professional finances responsibly.
6. Do not dissuade complainants from approaching an ADR provider / RICS or any other regulatory body.

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8
Q

What are the professional obligations of RICS firms?

A

Firms must:
1. publish a CHP, incl. ADR provider approved by RICS and maintain a complaints log.
2. Ensure previous & current professional work is covered by adequate and appropriate PII cover that meets RICS standards.
3. with sole principals must make appropriate arrangements for their professional work to continue.
4. must cooperate with RICS
5. promptly provide all information reasonably requested by the Standards and Regulation Board, or those acting on its behalf.
6. display on their business literature, a designation to denote they are RICS regulated.
7. Report to RICS any matter they are required to under the Rules for the Registration of Firms.

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9
Q

What are the Professional obligation to RICS for Members?

A

Members must:

  1. Comply with CPD requirements.
  2. Cooperate with RICS.
  3. Promptly provide all information reasonably requested by the standards & regulation board, or those acting on its behalf.
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10
Q

What RICS Guidance note covers the use of social media? What is your understanding of it?

A

Use of social media: Guidance for RICS members, 2021.

  • RICS notes the importance of social media to members and firms.
  • Reminds members of the high standards of professional behaviour expected of RICS members.
  • RICS may take disciplinary action in certain situations to protect the profession.

RICS is likely to investigate concerns about social media posts where they involve:
- Discrimination
- Dishonesty
- Abusive / threatening behaviour
- Bullying
- Frequent concerning communications
- ignoring previous advice or warnings.

RICS is unlikely to investigate posts which:

  • Are critical of an organisation
  • Use professional and respectful language
  • are removed if requested.
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11
Q

What RICS documents cover conflicts of interest?

A
  1. RICS Global Professional Standard on Conflicts of Interest, 2017
  2. RICS Professional Statement: Conflicts of Interest - UK Commercial Property Market Investment agency
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12
Q

What is your understanding of RICS Conflicts of Interest 2017?

A
  • Came into effect on 1st January 2018.
  • States members must not advise or represent a client where doing so would involve a conflict of interest or significant risk of conflict of interest unless all affected parties provide informed consent.
  • States Informed consent may only be sought where the RICS Member / Firm is satisfied that proceeding is in the interests of all those affected and is not prohibited by law.
  • Members / Firms must identify and manage Conflicts of Interest in accordance with the professional standard.
  • Keep records of decisions made in relation to whether to accept assignments, obtain informed consent and avoid conflicts of interest arising.

-Defines three types of conflict of interest

  1. Party Conflict - relating to work on the same or related instruction for two different parties.
  2. Own Interest Conflict - relating to a personal interest.
  3. Confidentiality Conflict - relating to work between two parties that is confidential.
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13
Q

What is your employers conflict of interest procedure?

A
  1. Declare any actual or potential conflicts of interest on iEthics.
  2. Discuss situation with my line manager and HR Business Partner.
  3. Line manager is then responsible for dealing with conflict of interest and ensuring suitable processes and procedures are put in place. E.g removing conflicted employee from the situation.
  4. Processes and procedures are to documented on iEthics.
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14
Q

What is your understanding of RICS Professional Statement: Conflicts of Interest - UK commercial property market investment agency?

A
  1. Mandatory professional statement relating to UK commercial investment agency where specific risk has been identified.
  2. Covers dual agency; Where an agent has a contractual relationship with both seller and buyer - this practice is not to be undertaken.
  3. Multiple introductions; where an agent has competing contractual relationships simultaneously with several buyers for commercial real estate investment opportunities. - Agent must make clear on ToE whether acting on Exclusive or Non-Exclusive basis.
  4. Incremental Advice; Where an agent is approached by another party to provide advice that is incremental to an existing instruction - RICS member must only provide such incremental advice if consent is given and an information barrier is put in place.
  5. Personal Interest / Own Interest Conflicts - Must not allow to influence professional judgement. Facts should be declared promptly and in writing before accepting the instruction.
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15
Q

What is your understanding of the RICS Professional Standard: Countering Bribery and Corruption, Money Laundering and Terrorist Financing (2019)?

A

The Professional Standard sets out mandatory, globally applicable requirements for RICS members and regulated firms in relation to bribery, corruption, money laundering and terrorist financing.

Divided into three parts:
1. Mandatory requirements.
2. Guidance setting out good practice.
3. Supplementary guidance.

Part 1:

RICS regulated firms must:

  1. Not offer or accept bribes or facilitate / be complicit in ML and TF
  2. Have procedures and systems in place to comply with the law.
  3. Report suspicion to relevant authority.
  4. Evaluate and review risks to the firm.
  5. Retain records to show firm has met requirements of the Professional Standard.
  6. Use third party reliance for checks only when confident in quality provided. (ML & TF)
  7. Take appropriate measures to understand the client and the purpose of the instruction. (ML &TF)
  8. Verify the client by undertaking basic ID checks. (ML & TF)

Part 2: Guidance

Practical guidance is provided such as:

  1. Have a written policy in place for the procedures.
  2. Publish a code of behaviour.
  3. Provide staff training.
  4. Encourage transparency.
  5. Set up a gifts register.
  6. Keep up to date with the legislation.

Part 3: Supplementary guidance.

  1. Establish risks-based approach - 3 W’s - Who / What / Why
  2. Dealing with PEP’s - EDD
  3. Need to identify beneficial ownership - e.g by requesting certificate of incorporation.
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16
Q

What legislation covers Bribery? What is the aim of it?

A

Bribery Act 2010 - the aim is to reduce bribery in business in the UK and abroad.

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17
Q

What are the six 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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18
Q

What are the four offences of the Bribery Act 2010?

A
  1. Bribing
  2. Receiving a bribe
  3. Bribing a foreign public official
  4. Failing to prevent bribery
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19
Q

What legislation covers Money Laundering?

A

Terrorist Financing and Transfer of Funds Regulations 2023 amendment. (Originally 2017)

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20
Q

What is your understanding of the Terrorist Financing and Transfer of Funds Regulations (2017) 2023 amendment?

A

Key provisions of the regulations include:

  1. A requirement to have written risk assessments.
  2. Implement systems / policies / controls / procedures to address risks and meet regulation requirements.
  3. Adopt appropriate internal controls.
  4. Provide staff training.
  5. Comply with new customer, enhances, and simplified due diligence requirements.
  6. Comply with the requirements relating to PEPS.
  7. Ensure appropriate record keeping, policies and procedures.
  8. AML checks must be undertaken to verify identify and source of funds prior to exchange.
  9. Include additional high-risk factors when assessing the need for EDD and to seek additional info and monitoring in certain cases.

ALSO

  1. Limit of 10,000 euros for acceptance of cash
  2. Detailed record keeping of procedures undertaken is required.
  3. Senior member of staff / board member must be appointed to take responsibility for compliance.
  4. Money Laundering Reporting Officer must be appointed to report suspicions to National Crime Agency.
  5. Firm must maintain records for minimum of 5 years.
  6. Firms must report to Companies House any discrepancies between their information held on Companies House Register.
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21
Q

What are an estate agents legal obligations under Terrorist Financing and Transfer of Funds Regulations 2023 amendment?

A
  1. Register with HMRC if they let properties for more than 10,000 euros a month.
  2. Individuals and businesses need to be approved and remain registered by HMRC to trade.
  3. CDD checks on new sales / lettings > 10,000 euros.
  4. EDD checks if red flags occur.
  5. Firms must have policies to identify and scrutinise transactions which are
    • Complex / large
    • unusual
  6. Firms must train employees to identify and prevent ML & TF risks.
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22
Q

What are the penalties for failing to comply with money laundering regulations?

A
  1. Maximum 14 years imprisonment and/or unlimited fine for assisting with ML.
  2. Maximum 5 years imprisonment for informing someone they are under suspicion / failing to report suspicion.
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23
Q

What are the typical requirements for CDD money laundering checks?

A
  1. Public Limited Company = check if listed on regulated market e.g London Stock Exchange listing.
  2. Publicly accountable body = check government ownership / control.
  3. Private Limited Company = Certificate of Incropration + Full Name + Registered Number + Registered Office + Business Address + Names of directors + shareholders with over 25% or more holdings.
  4. Private individual = Copy of valid passport or driving licence with photo + Bank statement / credit card bill / council tax statement / utility bill less than 3 months old.
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24
Q

What are EDD checks and when would you conduct them?

A

Additional Procedures required for any transaction involving a PEP or a person established in a high risk third country / or a family member of a PEP.

  • More detailed examination required as higher risk of money laundering / terrorist financing.
  • PEP’s are at higher risk of corruption by virtue of their position and influence.
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25
Q

How might a company protect itself from employees undertaking bribery?

A
  • Ensure adequate policies and procedures are in place to prevent bribery such as:
  1. Identifying potential risks.
  2. Staff Training
  3. Provision of Clear Policies.
  4. Regular reviews.
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26
Q

Who policies the Bribery Act and what are the penalties if breached?

A
  1. Serious Fraud Office policies the Bribery Act
  2. Maximum penalty of 10 years imprisonment and / or an unlimited fine. (COMPANY FINE ONLY)
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27
Q

What are some examples of red flags with money laundering?

A
  1. Inability or unwillingness of parties to provide identity documents
  2. Changes to parties involved in transactions
  3. Unusual transaction features - e.g urgency or loss making.
  4. Payment in unusual currencies.
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28
Q

What is some recent RICS Guidance on sanctions? What does it cover

A

Anti-money laundering sanctions update, 2022

  1. Covers estates agents roles in enforcing sanctions
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29
Q

What can an estate agent do to enforce sanctions?

A
  1. Consider risks to a business as part of AML procedure.
  2. Understand sanctions can include UK citizens and people who live in the UK
  3. Understand risk factors and red flags.
  4. Use software as part of due diligence
  5. Check individual clients against consolidated list
  6. check existing clients regularly
  7. Contact Office of Financial Sanctions Implementation (OFSI) for assistance if client is a possible match to sanctions list.
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30
Q

What does the Proceeds of Crime Act 2002 cover?

A

Proceeds of Crime Act 2002

  • Provides powers for enforcement authorities to recover proceeds of crime.
  • Creates a set of criminal offences intended to combat money laundering
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31
Q

What are the three main areas of offence in the Proceeds of Crime Act 2002?

A
  1. Concealing criminal property.
  2. Arrangements (facilitating / getting involved)
  3. Acquisition, use and possession.
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32
Q

What does the Economic Crime (Transparency and Enforcement) Act 2022 cover?

A
  1. Includes measures for a beneficial ownership register of overseas entities owning property in the UK.
  2. Strengthens investigation powers into unexplained wealth orders.
    3.Allows easier prosecution of those involved in sanctions-busting / not providing identify documents.
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33
Q

What RICS compliance do you need to follow when starting a new practice?

A

RICS Compliance for Starting a new practice:

  1. Inform RICS of new practice (complete Firm Details Form)
  2. Appoint a Responsible Principal for RICS Communication
  3. Register with RICS for regulation.
  4. Arrange PII and send details to RICS.
  5. Set up procedures for Client Money Handling requirements, incl. Protection Scheme.
  6. Register for RICS Valuer Registration Scheme if undertaking Red Book valuations.
    7.Obtain RICS approval for the Complaints Handling Procedure.
  7. Appoint a Complaints Handling Officer (NR = Railway Ombudsman)
  8. Use a logo kit from the RICS to comply with designation ‘‘Regulated by RICS’’.
  9. Plan for succession if sole practioner
  10. Ensure CPD logged online on the RICS CPD Management Sytem
  11. Set up Staff Training Plan
  12. Ensure completion of an online RICS Annual Return at the end of each year.
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34
Q

What statutory compliance must you undertake when starting a new practice?

A
  1. Disclose business name
  2. Appoint a money laundering officer.
  3. Register for data protection.
  4. Asbestos Register.
  5. Inform HMRC for VAT and Tax registration
  6. Insurance compliance for employer and public liability.

COMPLY WITH

  1. Equality Act 2010
  2. Financial services compliance
  3. Bribery Act 2010
  4. Fire safety compliance
  5. Estate agency compliance
  6. Health and Safety compliance.
  7. Employment law compliance.
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35
Q

What RICS compliance do you need to follow when closing a practice?

A
  1. Inform RICS
  2. Ensure clients are informed and hand over arrangements are made.
  3. Return any monies held by clients to their accounts.
  4. Inform insurers
  5. Procure PII run-off cover for a minimum of 6 years in accordance with RICS requirements.
  6. Retain a copy of the client files and records for a minimum of 6 years.
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36
Q

What RICS guidance covers Client Money?

A

RICS Professional Standard ‘Client Money Handling’ (2019).

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37
Q

What are the six main areas of good practice as set out in the RICS Professional Standard ‘Client Money Handling’ (2019)?

A
  1. Holding Client Money
  2. Providing information to Clients
  3. Receipts of client money
  4. Payments from client accounts
  5. Accounting records and controls
  6. Compliance
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38
Q

What procedures should Chartered surveyors need to be aware of when handling Client Money?

A
  1. Client accounts must be kept separately & clearly identifiable.
  2. The words ‘client’ must be on the bank account and cheque book.
  3. A client must be able to have their monies on demand.
  4. Payment of interest is agreed with a client and accounts must be kept in credit.
  5. Regular bank reconciliation checking that payments received are transferred to the bank account.
  6. Expenditure records checked monthly.
  7. Accurate records are kept with running balance available.
  8. Annual audit and reporting obligations are met (by a RICS employed certified accountant).
  9. Money can only be withdrawn from a client account if properly required.
  10. Records show all cash transactions.
  11. Signatories must be agreed with authorised staff (two signatures should be required).
  12. Firms handling client money must display their procedures documents on their websites.
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39
Q

What RICS schemes are available for when an RICS Regulated firm is unable to repay a client’s money?

A

RICS runs a Client’s Money Protection Scheme for claims.

  • Last resort for when a firm is unable to repay a clients money.
  • Limits and exceptions set out in scheme rules.
  • Scheme is split into two parts for commercial and residential surveying firms.
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40
Q

What is negligence?

A

Breach in the duty of care which results in damages.

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41
Q

What case law relates to negligence?

A

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

OVER TURNED BY SCULLION V BANK OF SCOTLAND (2010) IN THE CASE OF A COMMERCIALLY ASTUTE BORROWER

Scullion v Bank of Scotland (2010)
- Relates to a breach in duty of care owed to Mr. Scullion in relation to a valuation report.
- Court of Appeal held that a surveyor who provides advice on value to a lender in respect of a buy-to-let purchase does not owe a duty of care to the borrower.
- Overturned Yianni v Edwin Evans (1981) in the case of a ‘‘commercially astute’’ borrower.

Burges v Lejonvarn (2020)
- Established professionals providing pro bono professional services without a contract still owe a duty of care in tort to act with reasonable care and skill.
- Court of Appeal also determined that they are not under a duty to advise or give warnings and not liable for work they do not do.

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42
Q

What are the limitation periods for negligence?

A

Limitation Act 1980

Contract
- 6 years from date of negligent act / breach of contract / omission.
- Section 14a provides an alternative limitation period of 3 years from the date of knowledge of the damage (15 year long stop from negligent act)

Tort
- 6 years from the date the claimant suffered the loss.

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43
Q

How could you avoid negligence?

A
  1. Understand clients objectives
  2. Confirm precise instructions in writing the ToE
  3. Ensure you are competent
  4. Undertake work in accordance with RICS standards and practice information.
  5. Make detailed file notes and take photographs.
  6. Keep up to date with market knowledge and legislation.
  7. Undertake and record CPD
  8. Cap liability excess on PII policy in ToE.
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44
Q

Why is PII important?

A
  • Protects clients, surveyors and third parties against negligence claims
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45
Q

Is PII mandatory?

A

Yes

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46
Q

What RICS documents set cover PII?

A
  1. RICS Professional Indemnity Insurance Requirements
  2. RICS Practice Information - Risk, Liability and Insurance (2021)
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47
Q

What are RICS members PII requirements?

A
  1. Members must ensure there is an adequate and appropriate level of insurance in place.
  2. All policies must be underwritten by an RICS approved insurer
  3. Firms must consider their risk profile to negligence claims when deciding their level of insurance.
  4. The policy should be fully retroactive as PII policies work on a claims made basis.
  5. Certificate is to be sent to RICS on annual basis as part of the firms annual return to RICS.
  6. Insurers must be notified when potential claim arises.
  7. Adequate and appropriate run off cover is required following cessation of trading.
  8. PII cover is required for pro-bono work.
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48
Q

What support services does the RICS have in place for members who cannot arrange cover or whose employer has gone into admisitraion?

A
  1. RICS Assigned Risk pool is available for members who cannot arrange cover (at a cost)
  2. Members Support Services (MMS) for members facing claims for work carried out by an employer who has gone into administration.
    - offers help, advice and further support.
49
Q

What is an ‘‘adequate and appropriate’ run-off cover following cessation of trading?

A
  1. Consumer claims: a minimum of £1,000,000 of aggregate cover over a period of six years.
  2. Commercial Claims - firms must consider what is adequate and appropriate for a minimum of six years.
50
Q

What should a firm do if they are unable to obtain run-off cover from their insurer / open market?

A
  1. Can apply for coverage to the RICS Run-off Pool.
51
Q

What are the minimum indemnity requirements for PII?

A
  • Minimum requirements are based on the firms turnover in the proceeding year.

£100,000 or less = £250,000 for each claim
£100,001 - £200,000 = £500,000 for each claim
£200,001 or more = £1,000,000 for each claim

If a new firm estimate the turnover and adjust in due course accordingly

52
Q

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

A
  • Maximum requirements are based on the firms turnover in the preceding year.

Up to £10 million = the greater of 2.5% of the sum insured or £10,000
Over £10 million = no set limit.

53
Q

What RICS guidance sets out member and firm requirements for Complaints Handling?

A

RICS Guidance Note on Complaints Handling (2016)

54
Q

What are are the firm requirements set out in RICS Guidance Note on Complaints Handling (2016)?

A
  1. RICS Regulated Firms must have a published complaints handling procedure (CHP) that meets the requirements of the RICS Rules of Conduct.
  2. Terms of Engagement should make clear to the client that the firm operates a CHP
  3. PII insurers must be notified as soon as possible if there is a complaint as this could lead to a claim for negligence.
  4. Details of the CHP should be issued to the client at the same time as Terms of Business.
  5. Firms must include an RICS approved Alternative Dispute Resolution (ADR) mechanism in their complaints handling procedure.
  6. Sole practitioner should nominate a surveyor in another firm to act as their complaints handling officer.
55
Q

Talk me through the process of a complaint. How would you deal with it?

A

Stage One (In House):

  1. Details of CHP should be issued when a firm receives a valid complaint.
  2. Details of the nominated person who will investigate the complaint (The Complaints Handling Officer) must be stated as the person to be contacted in the first instance.
  3. Procedures and strict timescales for the investigation of the complaint should be recorded.
  4. A complaint should be acknowledged within 7 days and investigated within 28 days.

Stage 2 (ADR)
1. If the complainant is not happy then the second stage of the CHP involves using the ADR mechanism the firm has chose to use.
2. The name of the relevant appropriate redress mechanism must be provided to the complainant such as the RICS Dispute Resolution Service.

THE RICS WILL ONLY BECOME INVOLVED IF A MEMBER FAILS TO RESPOND / PREVENTS THE COMPLAINANT FROM ACCESSING ADR

56
Q

How would you manage a conflict of interest?

A

Step 1 - Conflict Avoidance

  1. Consider whether the conflict should be avoided or whether it can be properly managed.
  2. Either accept or decline instruction.

If choose to accept….

Step 2 - Written Advice to Both Parties:

  1. Disclose the nature of the conflict and how the firm intends to deal with it.
  2. be as clear as I can to ensure that both parties can make their own decision.
  3. Recommend they seek independent advice if needed.
  4. Request written confirmation from both clients of their informed consent.

Step 3 - Conflict Management

  1. Once written consent obtained set up an information barrier as agreed with clients.
57
Q

How would you set up an information barrier?

A

THE BARRIER MUST BE ROBUST ENOUGH TO OFFER NO CHANCE OF INFORMATION PASSING BETWEEN THE TWO PARTIES

  1. Surveyors acting on both sides must be different and physically separated (different buildings, different floors, separate support teams.
  2. Securely store all information regarding the instruction.
  3. Keep a clear audit trail of conflict check process and all communication.
  4. Firms compliance officer must oversee all actions.
58
Q

What should you include within a terms of engagement?

A
  1. Proposed fee basis.
  2. Payment of expenses and how they are calculated
  3. State the firms complaints handling procedure is available upon request.
  4. Name of the firm.
  5. Client details.
  6. Scope of work.
  7. Assumptions and limitations
  8. Indemnification and Liability - i.e liability caps.
  9. AML
59
Q

What steps should you undertake prior to commencing an instruction?

A
  1. Check professionally competent.
  2. Check no CoI or personal interests.
  3. Confirm ToE in writing and get approval from client.
60
Q

Why might you decline an instruction?

A
  1. Not competent.
  2. Do not have sufficient facts.
  3. Client will not sign ToE or complete AML checks.
  4. There is a CoI.
  5. PII liability cap cannot be agreed.
  6. Advise is on a pro bono basis and your PII will not cover
  7. Potential client is included in the UK Governments Sanctions list.
  8. Daily mail test.

Would refer to RICS Ethics Decision Tree.

61
Q

What RICS guidance sets out the requirements for registration?

A

RICS Rules for the regulation of firms 2022

62
Q

What are the RICS requirements for registration?

A
  • Must be registered if at least 50% of principals are RICS members.
  • Can apply if at least 25%
    -Each firm must nominate a Responsible Principal
  • Responsible principal is obliged to:
  1. ensure ALL REASONABLE STEPS ARE TAKEN.
  2. Systems are in place to ensure compliance
  3. Report to RICS as required.
63
Q

Why must RICS firms register for regulation?

A
  1. Ensures recognised quality benchmark for all firms.
  2. Regulation provides a gold standard of quality control for clients.
64
Q

What is an annual return?

A
  • Firms must annually make a return to the RICS confirming their compliance with their obligations
65
Q

What information is required by the RICS for registration?

A
  1. Type of business and staffing details
  2. Name of the responsible principal
  3. Statutory regulated activities
  4. Nature of clients.
  5. CHP details and records
  6. PII details
  7. Whether the firm holds clients’ money
66
Q

What disciplinary action can the RICS take against members / firms?

A
  1. Action by head of regulation
  2. Disciplinary Panel
  3. Appeal panel
67
Q

Who undertakes RICS disciplinary procedures?

A

Standards and Regulatory Board

68
Q

What can trigger a disciplinary procedure?

A
  1. Someone complaining to the RICS
  2. Allegation by client / 3rd party
  3. Information received or established by RICS.
69
Q

What RICS document covers the regulatory approach by RICS of members / non members / firms?

A

RICS Regulatory Decision Making 2022

70
Q

What RICS document covers the disciplinary process?

A

RICS Regulatory Tribunal Rules 2022

71
Q

What are the four actions that the Head of Regulation can initiate upon completion of a formal investigation?

A
  1. Serve Fixed Penalty Notice
  2. Make a Regulatory Compliance Order (RCO)
  3. Refer matter to a single member of the Regulatory Tribunal for consideration.
  4. Refer the matter directly to a Disciplinary Panel
72
Q

What is a Regulatory Compliance Order (RCO)?

A
  1. Written document stating terms upon which member / firm must take / desist from taking certain actions.
  2. Includes an agreement to pay a fine.
  3. Used for low level breaches such as:
  • Non compliance with RICS rules incl. not undertaking CPD
73
Q

What can you tell me about Disciplinary Panels?

A
  1. Head of Regulation can consider a hearing is required.
  2. Procedure is used for more serious breaches of conducts.
  3. Members of panel includes lay members.
  4. Penalties include:

a. Issue a RCO
b. Reprimand
c. Fine.
d. impose conditions upon future RICS registration
e. Expulsion
f. Publication of results of the hearing.

74
Q

Who are the current President and Group Chief Executive of the RICS?

A

President = Tina Paillet FRICS

CEO = Justin Young

75
Q

State 6 requirements of the RICS when you set up in practice?

A
  1. INFORM RICS via firms detail FORM.
  2. REGISTER for regulation.
  3. Appoint RICS CONTACT OFFICER for all communication.
  4. prepare a COMPLAINTS HANDLING PROCEDURE and appoint a COMPLAINTS HANDLING OFFICE.
  5. Set up COMPLAINTS LOG
  6. Register for RICS Valuer Registration Scheme if undertaking Red Book Valuations.
  7. Obtain PII and send details to the RICS.
  8. Comply with ACCOUNTS regulation.
  9. Ensure CPD is logged on RICS CPD management system.
  10. LOGO KIT, comply with ‘Regulated by RICS’
  11. SOLE practitioner arrangement.
76
Q

What is the Governance Structure of the RICS

A

In this order:

  1. Privity Council (Grants & Awards Royal Charter)
  2. Governing Council (Management and Strategy of RICS)
  3. Then REGULATORY BOARD, AUDIT COMMITTEE & MANAGEMENT BOARD.
77
Q

What are the RICS Core Values?

A

RICS Professional and Ethical Standards, 2012 (Core Values)

Underpins Rules of Conduct

  1. Act with INTEGRITY
  2. Always provide a HIGH STANDARD OF SERVICE
  3. Act in a way that promotes TRUST in the profession.
  4. Treat others with RESPECT.
  5. Take RESPONSIBILITY
78
Q

Provide some examples of how you reflect the Core Values in your work?

A
  1. INTEGRITY

When offered a bribe to facilitate a disposal, I advised the third party that I had to seek best value and would not accept a bribe. I then logged the incident on my employers iEthics and informed my line manager.

  1. HIGH STANDARDS OF SERVICE

I always try to provide a high standard of service to my client. While at Avison Young a client requested a valuation of their portfolio with a short deadline. I ensured the work was completed in time, to a high standard.

  1. TRUST

I am regularly asked to handle sensitive data by my client. I ensure the correct protections are in place to prevent leaks.

  1. RESPECT

I always have respect for my colleagues and others around me.

  1. RESPONSIBILITY

I provided a valuation figure to my client on a potential disposal. I then realised a mistake in the Argus file. I apologised to the client and re-sent the information so that the client was working with the correct numbers. It only made a slight difference but the client was pleased I had been honest.

I always try to provide the highest standard of service to my clients at all times and always take responsibility for my actions.

79
Q

What arrangements would you make when closing down a practice?

A
  1. inform RICS of RETIREMENT.
  2. INFORM clients and HAND OVER work to new firm.
  3. RETURN MONIES to clients own accounts.
  4. INFORM PI insurers and ARRANGE RUN OFF COVER for 6 years up to £250,000 per claim.
  5. RETAIN CLIENT FILES and records for a minimum of SIX YEARS.
  6. Clients own their files so make COPIES.
80
Q

What are the Rules of Conduct and what is your opinion on them?

A

RICS Rules of Conduct 2021

  • Clearly set out the guidance which should be observed by all surveyors.
81
Q

What are the mandatory professional obligations for RICS members?

A
  1. Comply with CPD requirements set out by RICS
  2. COOPERATE with RICS
  3. promptly PROVIDE ALL INFORMATION requested by STANDARDS & REGULATION BOARD
82
Q

What are the Mandatory Professional obligations for RICS Regulated firms?

A

RICS Regulated firms must:

  1. Publish a COMPLAINTS HANDLING PROCEDURE which covers ADR PROVIDER approved by RICS.
  2. Maintain a complaints log.
  3. Ensure adequate PII cover in place.
  4. Sole practitioner - MAKE APPROPRIATE ARRANGEMENTS in case of death etc.
  5. CO-OPERATE with RICS.
  6. Promptly provide all information reasonably requested by Standards and Regulation board.
  7. Display designation on business literature that they are regulated by RICS.
  8. Report to RICS any matters they are required to under Rules for the Registration of firms.
83
Q

What are the benefits of being regulated by the RICS?

A
  1. Confidence for client.
  2. Professionalism - firms will have to provide clear, impartial and expert advice.
  3. Security - firms will have a recognised complaints procedure, access to free independent redress and PII cover.
  4. Regulation provides a ‘gold standard’ for quality control.
84
Q

When must a firm apply for regulation?

A
  1. When 50% of its partners or directors are RICS members.
  2. Firms may also register if they have over 25% of its partners or directors who are RICS members.
85
Q

What information is needed by the RICS for registration?

A
  1. Type of business and staffing details.
  2. Statutory regulated activities such as financial services.
  3. Nature of clients.
  4. Complaints handling procedure details and records.
  5. PII
  6. Whether the firm holds client money
86
Q

Can you accept a crate of champagne from a client or a supplier?

A
  1. I would always try not to accept gifts from clients so would typically decline the gift in this instance.
  2. I would consider the Bribery Act 2010 and my employers hospitality policy.
  3. My employer’s policy is that anything over the value of £15 should be logged onto iEthics.
  4. I should also consider the timing, value, business reason and frequency of any offers when considering whether to accept.
87
Q

How many Professional Groups are there?

A
  1. There are 20 professional groups covering property professionals, land and the built environment.
  2. These include: Environment, Valuation, Building Control, Rural, Commercial, Residential.
88
Q

What are the RICS disciplinary procedures?

A

The RICS is self regulated

  • Not every breach of rules of conduct will lead to disciplinary proceedings, however a surveyor may be asked to justify the steps that they took.
  • There are three levels - Action by the Head of Regulation, Disciplinary Panel and Appeal Panel.
89
Q

What disciplinary action might the Head of Regulation take?

A

After a full investigation the head of regulation may initiate one of THREE things:

  1. FIXED PENALTY NOTICE
  2. REGULATORY COMPLIANCE ORDER - for low level breaches. Document states terms upon which the member or firm must take or desist from certain actions in a specified time period.
  3. ACTION BY DISCIPLINARY PANEL - for more serious breaches of conduct. Penalty includes unlimited fine, temporary suspension or expulsion from RICS.
90
Q

Can you appeal against disciplinary actions?

A

Yes you can appeal at the appeal panel and the appeal board will review the decision.

91
Q

Can your office sell a property owned by your Senior Director?

A
  • Not relevant for NR
  • In practice, yes but can’t allow to interfere with professional judgement.
    -S.21 Estate Agents Act 1979 requires you to disclose personal interests and declare on particulars.
  • Disclose promptly in writing to interested parties and their solicitor.
  • State whether you will receive any remuneration over and above your fee.
92
Q

What is Lionheart

A
  • Independent charity governed by trustee members of RICS.
  • Provides confidential advice / finance for those in difficulty.
  • Past and Present members.
93
Q

What is the minimum level of PII and run off cover required?

A

£100,000 or less - £250,000
£100,001 to £200,000 - £500,000
£200,001 + - £1,000,000

RICS recommends minimum of 6 years, although can be liable for up to 15 years.

94
Q

What is the maximum level of uninsured excess?

A

Up to £10 million: Greater of 2.5% or £10,000

Over £10 million: No set limit.

95
Q

How much CPD do you have to do?

A

-20 hours
-10 formal
-must log on RICS CPD Management System on RICS website.
-Rolling 3 year review of rules of conduct.

96
Q

What are the VAT rules when setting up in practice?

A
  1. Inform HMRC for VAT registration
97
Q

What would you do if you overheard a confidential conversation between another surveyor and his client? Or seen a confidential email between two parties which was not addressed to you?

A
  1. Do not use to your professional advantage
  2. Do not act on the information you had obtained.
  3. Notify sender and delete email
98
Q

What are the main rules for holding clients’ money? Who gets the interest on client accounts?

A
  1. Keep client accounts separate and clearly identifiable.
  2. The word client must be on the bank account / cheque book.
  3. Client must be able to have monies on demand.
  4. INTEREST PAID TO CLIENT UNLESS OTHERWISE AGREED.
  5. Accounts must be kept in credit.
  6. Regular bank reconciliation.
  7. Keep accurate records.
  8. Annual audit and reporting obligations by certified accountant.
  9. Visits of inspection can be undertaken by the RICS.
  10. Money can only be withdrawn from a client account if properly required.
  11. Signatories must be agreed with only authorised staff.
99
Q

What are the rules for dealing with a conflict of interest between 2 clients in your practice?

A
  1. Accept or Decline instruction
  2. Accept by disclosing in writing
    a) nature / facts of conflict
    b) Information Barrier (Plan to deal with)
    - Info barrier
    - Different surveyor acting for each client
    - Take reasonable steps to operate an effective barrier (pref diff building / floors).
    - Separate support teams and IT systems.
    - Information securely stored.
    - Overall supervision by firm’s compliance officer.
    c) Suggest they obtain independent advice.
    d) Written confirmation to proceed.
100
Q

Can you give a friend some free (pro bono) advice? What are the implications of doing so?

A
  • Surveyors owe a duty of care to clients, if you fail to do so and the client suffers loss, you will be liable to pay damage.
  • If asked to provide advice in social situation, always state that it is inappropriate to provide advice without prior consideration.
  • Suggest the person makes an appointment to come and see you at your office to discuss the matter in formal business setting.
  • agree Terms of Engagement.

CASE LAW

Burgess v Lejonvarn (2020)
- established professionals providing professional services pro bono and without contract owe a duty of care.
- Not under a duty to advise or give warnings and not liable for work they do not do.

101
Q

What’s your understanding of Burgess v Lejonvarn (2020)

A
  • Professionals providing a professional service pro bono and without contract owe a duty of care to act with reasonable care and skill.
  • Court of appeal determined they are not under a duty to advise to give warnings and are not liable for work they do not do.
102
Q

Outline the contents of your company’s complaints handling procedure

A

NETWORK RAIL
- Complaint goes to complaints centre.
- Escalates to Railway Ombudsman.

RICS Complaints Handling Procedure:
- Covered by RICS Guidance Note on Complaints Handling (2016)
- Requirements for RICS Regulated Firms to have a CHP in place that meets Rules of Conduct.
- ToE must make clear to client that firm operates CHP.
- Notify PII insurers if there is a complaint.
- Details of the CHP should be issued to a client at same time as terms of business.
- Complaints log must be maintained to show the details, progress & outcome.
- Firms must include RICS approved Alternative Dispute Resolution (ADR) mechanism in their Complaints Handling Procedure.

Complaints Handling Procedures are TWO STAGE

Stage 1 - In house
1. Issue CHP details to complainant. These should include details of the Complaints Handling Officer.
2. Complaint should be acknowledged within 7 days and investigated within 28 days.

Stage 2 - ADR
1. Involves use of ADR mechanism i.e RICS Dispute Resolution Service.
2. The name of the relevant ADR mechanism must be provided to the complainant.
3. RICS will only become involved if member fails to respond / prevents access to ADR.

ALSO

  1. COMPLAINTS MUST BE IN WRITING
  2. PROCEDURE MUST BE QUICK, CLEAR, TRANSPARENT AND IMPARTIALLY IMPLEMENTED.
103
Q

What is negligence?

A

Surveyors have a duty of care to clients and third parties, using ‘reasonable care and skill’’

When breached there is a loss and a claim for damages arises.

104
Q

How long do you have to store your files in archives? (Negligence)

A
  1. Current limitation periods are under the Limitation Act 1980.

Contract: 6 years from the date of the breach or 3 years from knowledge of damage. (Longstop of 15 years)

Tort - 6 years from the date of damage.

105
Q

How might one avoid a negligence claim?

A
  1. Clearly understand client’s objectives.
  2. Issue clear terms of engagement.
  3. Undertake work in accordance with RICS standards.
  4. Make detailed file notes & take photographs.
  5. Keep up to date with market knowledge and legislation.
  6. Undertake CPD.
106
Q

What are some of the challenges currently facing the surveying profession?

A
  1. Negligent claims
  2. Fee cutting
107
Q

Can you cut fees in the face of competition from another practice?

A

No but you can adapt your service to match the fee.

Healthy competition is encouraged

108
Q

How would you deal with a request from your client to reduce your proposed fee for an instruction?

A
  • Stick to my fee
  • Cutting fees would undermine practice in long run.
  • Or you might not provide the high level service expected of an RICS qualified surveyor.
109
Q

What arrangements do you have to make in respect to the management of your practice if you are a sole practitioner?

A
  • Have appropriate arrangements in the event of incapacity or death.
  • Appoint a COMPLAINTS HANDLING OFFICER and MONEY LAUNDERING REPORTING OFFICER (surveyor from another practice)
  • Make arrangements for future running of a business so clients work ca ncontinue.
110
Q

How would you deal with a client offering you cash?

A
  • Company policy not to accept cash payments.
  • Request they pay electronically.
111
Q

What would you do if a client was offering a cash payment?

A

I may suspect Money laundering or bribery.

I would have regard to Terrorist Financing and Transfer of Funds Regulations 2017, the Bribery Act 2010 and my employers policies.

I would decline the offer, request they pay electronically.

I would also log the issue onto iEthics and speak to my line manager and ethics team.

They may report to Serious Fraud Office if bribery.

112
Q

How can you become a Fellow of the RICS?

A

Achieve 3 or more of the following things:

  1. Member for at least 5 years.
  2. Leadership role.
  3. Professional / technical achievement.
  4. Academic achievement.
  5. Raise profile of the RICS.
113
Q

What are the three main roles of the RICS?

A
  1. Maintain highest standards of education and training.
  2. Protect consumers through strict regulation or professional standards.
  3. To be leading source of information and independent advice on land, property, construction and associated environmental issues.
114
Q

How would you deal with an angry client who is not happy with the valuation advice contained in your report which you have prepared for him?

A
  1. Call and determine issue.
  2. Explain reasoning / adherence to RICS guidance.
  3. If a mistake offer to rectify it.
  4. If they wanted to make a formal complaint I would provide them with a copy of my firm’s complaints handling procedures.
115
Q

Why was the Bichard Review undertaken?

A
  1. Followed review of internal governance failings by Alison Levitt.

Aim was to:

  1. Clarify the purpose of RICS (incl. its responsibility to act for the public advantage)>
  2. Make recommendations on its governing structure to deliver that purpose
  3. Provide proposals for the incoming leadership and governing body on the future culture and strategy of the institution.
116
Q

What did the Bichard Review reccomend?

A

The Bichard review reported in June 2022 making 36 recommendations in 7 key areas:

  1. Renewed and increased focus on public interest incl. amending Royal Charter and creating a public interest panel.
  2. Maintaining self-regulation through greater independence for regulatory functions.
  3. Increased focus on diversity and inclusion across the profession and within RICS governance.
  4. Empowering and enabling members through greater support for regional boards, alongside increased member engagement (renewed focus on younger members).
  5. Undertaking an independent review of RICS governance and effectiveness every five years.
  6. A new simplified, clear, accountable governance structure.
  7. Showing greater leadership on issues that matter most to society. e.g sustainability and climate change.
117
Q

What are the five RICS foundations following the Bichard Review?

A
  1. VISION (natural and built environment that is sustainable, resilient and inclusive for all)
  2. MISSION (inspire members, advance knowledge, uphold standards).
  3. STRATEGIC GOALS (Lead & influence on sustainability, attract a diverse next generation, strengthen trust in the profession, enhance member value and engagement).
  4. VALUES (Professional, Collaborative, Inclusive, Ambitious)
  5. A WORLD CLASS ORGANISATION (an efficient, effective and inspiring professional body that is easy to do business with).
118
Q

What is a Responsible Principal?

A

Person who is obliged to ensure all reasonable steps are taken and systems are in place to ensure compliance with regulatory and RICS requirements, including to report to RICS as required.

119
Q
A

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