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Harry Penman APC > Ethics L1 > Flashcards

Ethics L1 Flashcards

1
Q

What are the ethical principles that the Rules of Conduct are based on?

A

Honesty,
Competence,
Integrity,
Service,
Respect
Responsibility

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2
Q

Tell me about the RICS Governance Structure

A
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3
Q

President
Vice President
Cheif Exec
COO

A

President - Tina Paillet
Vice President - Justin Sullivan FRICS
Cheif Exec - Justin Young
Chairman - Martin Samworth

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4
Q

What are the 5 Rules?

A
  1. Honesty and Integrity
  2. Be competent
  3. Quality and Dilligent Service
  4. Encourage diversity and teamworking
  5. Act in the public interest.
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5
Q

Give an example behaviour for each.

A
  1. Honesty and Integrity - don’t mislead or lie.
  2. Be competent - Maintain CPD, competance checks.
  3. Quality and Dilligent Service - detailed client brief with ToE
  4. Encourage diversity and teamworking - do not discriminate based on protected characteristics.
  5. Act in the public interest - complaints handling.
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6
Q

What are the core professional obligations to members to RICS?

A

Promptly provide any information
Comply with RICS
Maintain CPD

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7
Q

What are the professional obligations to firms of the RICS

A

Publish complaints handling
Adequate PII cover
Sole principles locum cover
Cooperate with RICS
Promptly provide
Identify that they are regulated by RICS
Report any matter that is required under registration of firms

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8
Q

How would you set up in business as a regulated firms?

A

Company start up pack and logo pack
Inform and register
Appoint contact officer
Complaints handling
PII Cover
Abide by rules for firms
Use “Regulated by RICS” on all literature

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9
Q

What disciplinary procedures can the RICS impose?

A

Investigation
Disciplinary panel hearing
Individual tribunal member hearing

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10
Q

In what circumstances can these be imposed?

A

Regulatory Tribunal Rules
Serious compliant - investigated disciplinary panel from RT
Minor cases with admission - regulatory compliance order.
Minor cases no admission - dealt with by tribunal member, potential expulsion.

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11
Q

When did RICS last update their disciplinary panel rules?

A

2019

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12
Q

What are the different levels of action within these procedures?

A

Fine
Expulsion
Regulatory compliance order

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13
Q

What do you understand by the term professional practice?

A

Act in a way that is compliant with RICS rules, regulations and guidance.

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14
Q

What money laundering regulations or legislation are you aware of?

A
  • The Money Laundering, Terrorist Financing and Transfer of Funds (
    Information on the Payer) Regulations 2017
  • Proceeds of Crime Act 2002
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15
Q

What is a red flag of money laundering?

A

Reluctance to disclose identity
Cash purchases
Unclear beneficial ownership
Politically Exposed Persons

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16
Q

What bribery legislation are you aware of?

A

Bribery Act 2010

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17
Q

What is a bribe?

A

Offering, promising or giving financial or other inducement to act improperly or illegally.

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18
Q

What are the penalties for accepting a bribe?

A

Criminal sanctions including prison and unlimited fine.

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19
Q

What are the penalties for being involved in money laundering?

A

Unlimited fine and or prison (>14 years).

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20
Q

What constitutes an offence under the Bribery Act 2010?

A

offering or accepting a bribe
Failure to prevent bribery by an organisation.
Facilitation payments to public officials.

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21
Q

What constitutes an offence under the current money laundering regulations?

A

Failure to conduct risk assessment
Failure to keep records
Failure to register with the sector regulator
Failure to conduct Due Diligence
Failure to provide training

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22
Q

How long should you keep anti money laundering records for?

A

5 Years

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23
Q

What is Professional Indemnity Insurance (PII)?

A

Provides clients with recourse to recover losses incurred by negligent acts of surveyors.

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24
Q

Can you tell me about the RICS requirements in relation to PII?

A

It is fundamental requirement of all regulated firms.

Turnover:
- > £100,000 requires £250,000 of cover.
- > £100,000-£200,000 requires £500k of cover
- > £250,000 - £1m of cover

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25
Q

What is a PII aggregation clause?

A

A clause that allows multiple claims to be treated as a single claim ie aggregated.

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26
Q

What does ‘claims made’ mean in terms of PII?

A

That the cover in place at the time of the claim is relevant rather than the time negligent act took place.

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27
Q

Is a PII excess usually paid for per claim?

A

It can be although RICS limits uninsured excess to 2.5% of the insured sum!

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28
Q

In a negligence claim, what would help to show that you acted with consideration and due process?

A

keep detailed notes and records that you have acted in compliance with RICS rules and guidance.

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29
Q

Can good record keeping help to provide a defense in a PII claim?

A

Yes it can help provide a defense but its not a defense in its own right.

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30
Q

If you were providing services outside of your usual scope to a client, what might you need to do in relation to your PII cover?

A

Inform the insurer and make sure you are covered.

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31
Q

What is run off cover?

A

PII cover provided between the last date a negligent act could occur and the date when the liability for negligence ends.

6 years

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32
Q

What RICS requirements are there relating to run off cover?

A

A minimum limit of £1,000,000 in all for a period of six years from the expiry date of the policy in force at the time of cessation is maintained.

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33
Q

What changes did RICS recently make to the Minimum Approved PII Wording?

A
  • ‘Each and every’ claim basis
  • Written on a full civil liability basis and
  • Turnover based on previous year
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34
Q

Would a dictated report avoid the need to have any written site notes?

A

No.

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35
Q

What are the rule around uninsured excess?

A

up to 2.5% of insured sum or £10,000 which ever the greater.
If over £500,000 then just 2.5%

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36
Q

Explain PII requirements relating to fire safety cover and cyber cover.

A

Firms must hold cover to protect against these risks. Specifically advice provided on fire risk and data breach by cyber attack.

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37
Q

How long can a PII claim arise after the work is undertaken?

A

6 Years

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38
Q

What is the Assigned Risks Pool (ARP)?

A

Insurance provided to firms that are unable to obtain cover on the open market.

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39
Q

Explain your understanding of the RICS Professional Standard Risk, Liability and Insurance (1st Edition).

A

This practice information is intended to assist both members and their clients in understanding the main risks and liabilities associated with surveying. It guides members in the negotiation of equitable contracts with clients and the avoidance of major risks and pitfalls.

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40
Q

Who might need to access the ARP?

A

Firms that have a history of claims, or complaints.

41
Q

Explain when you might agree a liability cap.

A

To ensure that there is a limitation of liability on high risk work, or where liability would otherwise exceed cover limit.

42
Q

How would set out third party reliance in Terms of Engagement?

A

‘Our advice is provided for your benefit alone and solely for the purposes of the instruction to which it relates. Our advice may not, without our written consent, be used or relied on by any third party, even if that third party pays all or part of our fees, or is permitted to see a copy of our advice. If we do provide written consent to a third party relying on our advice, any such third party is deemed to have accepted the terms of our engagement.’

43
Q

What are the three key terms that should be considered from a risk perspective in the context of every instruction you undertake?

A

The scope of the work
The fee calculation
The liability cap

44
Q

What is an annual return?

A

Yearly statement provided by registred firms providing an update on the businesses, including turn over, structure, principles, valautions, complaints, claims etc.

45
Q

Tell me what you understand about Complaints Handling Procedures (CHP).

A

A way of providing people with an issue about service provision, offering a reliable means of addressing and escalating a complaint in the event it’s not resolved in the first instance, culminating in review and decision by a third party.

Redress mech
issued with TOE
Clear, transparent
Names and Contact
3,15,3,15 Ombudsman
Inform insurers

46
Q

When and how can the RICS be involved in a complaint about a firm or member?

A

If the complaint involves a breach of the rules of conduct. Intervention by the regulatory tribunals board.
- Establish if the complaint is within scope
- Investigate
- Disciplinary proceedings

47
Q

Can you tell me about the CPD requirements for members of RICS?

A

20 hrs 10 formal 10 informal

48
Q

Why is CPD important?

A

Stay abreast of an industry where best professional practice is constantly moving.

49
Q

Tell me about the RICS’ guidance on dealing with Conflicts of Interest.

A

RICS’ mandatory rules and defines conflicts.
Set out principles as to how to apply the standards
Guidance on how members and firms can meet their obligations.

50
Q

What is double dipping (dual agency)?

A

Acting for both parties in a transaction.

51
Q

Why is double dipping (dual agency) unacceptable?

A

Because you can’t represent both parties without a conflict.

52
Q

How would you close down a regulated firm?

A

Inform staff
Inform clients
Deal with client money
Run off cover
Manage retention and disposal of filling records
Inform RICS
Make it clear you have closed.

53
Q

What can you tell me about RICS guidance relating to bribery, corruption or money laundering?

A

RICS Countering Bribery, corruption, money laundering and terrorist financing 2019 1st edition.
Document provides:
- Mandatory requirements on the issues
- Guidance for good practice
- Supplementary guidance on first two parts.

54
Q

What status does it hold?

A

Professional Stadard so sets our mandatory requirements.

55
Q

What are some of the key principles of this guidance?

A
  • Take a risk based approach to countering these issues.
  • Firms and Members take responsibility to prevent
  • Firms must have policies and training in place to counter.
  • Due Diligence on clients
56
Q

What are the current RICS rules for firms?

A
  1. Complaints handling proceedure
  2. PII Cover
  3. Locum Cover
  4. Cooperate with RICS
  5. Promptly Provide
  6. Designation for regulated by the RICS
  7. Report any matter required under rules for firms
57
Q

When did these last change.

A

The rules for the registration of firms (effective from 2 February 2022)

58
Q

What was the key change?

A

Introduce the requirement for all RICS regulated firms to appoint a Responsible Principal.

59
Q

Who is a ‘qualified member’ of RICS?

A

A person who has completed a relevant degree, structured training and 2 years of experience before passing their APC

Or 10 years of relevant experience before completing APC.

60
Q

What is a phoenix firm?

A

A company that declares insolvency one day to reincorporate the following day under another name but without the liabilities.

They can buy the assets of the business but only at Market Value. Often known as a pre-pack.

61
Q

When must a firm register for regulation?

A

IF
a. the Firm provides surveying services to the public
b. the Firm is operating in Regulated Area A
c. at least 50% of the Firm’s Principals are RICS Members.

62
Q

What are the registration eligibility criteria?

A

As above but:
25% of pirnciples are members AND
Can demonstrate there is a plan to get to 50% OR they are supported by another registered firm.

63
Q

Who is a Responsible Principal?

A

Someone that fits the following criteria:

Condition A: Head of Regulation must confirm suitability.
Condition B: Executive influence or delegated responsibility by direct manager.
Condition C: Either RICS Membership or regulatory expertise.

64
Q

What happens if a firm cannot comply with the eligibility criteria?

A

They must show a reasonable path to compliance within a realistic time frame.

65
Q

What are the rules around use of the RICS logo and ‘Regulated by RICS’ designation?

A

Follow Policy Statement and branding guidelines.
Adhere to Rules of Conduct and Registration.
Fulfill obligations in RICS Charter and Bye-Laws.
Obtain permission before altering the RICS logo.
Use the logo appropriately to avoid trademark issues.
Ensure logo use does not harm professional reputation.
Use the chartered surveyor designation responsibly.

66
Q

When did these rules last change and what were the changes?

A

February 2022

67
Q

Tell me about the restrictions to the use of the designation ‘Chartered Surveyors’ by firms.

A

50%+ of partners or directors are chartered members.
No partner/director has been expelled from RICS without readmission.
Designation only appears in trading name, not corporate name.
UK-based firms registered with RICS for Regulation.
Non-UK firms agree to comply with RICS Rules of Conduct.
Chartered members use appropriate designatory initials in business.

68
Q

What must be included in ToE relating to firm regulation?

A

Standard statement outlining RICS registration and compliance with RICS standards and rules.

69
Q

What is a locum and who might need one?

A

Sole practitioner, to cover them in the event of their incapacitation.

70
Q

How could a sole trader set up their CHP using a locum?

A

The locum would provide the role of objective review that a manager or director would in a larger firm.

71
Q

What RICS guidance relates to handling client money?

A

Client Money Handling, 1st Edition 2022

72
Q

When was this last updated?

A

2022 became a Professional Standard having been a professional statement since 2019.

73
Q

What do the RICS Rules of Conduct say about client money?

A

Preserve the security of client money by:

Clear segregation by employees
Principle must oversee accounting functions
Must be secure
Properly administered and audited
Clients must have FULL access
Must be named “client money”

74
Q

Explain your understanding of the RICS Scheme Rules relating to client money protection.

A

Third party scheme to protect clients money in worst case scenario.
Required participation by regulated firms.

75
Q

What are the main schemes available to firms?

A

Surveying and Residential Agency

76
Q

When were these last updated?

A

2020

77
Q

What is the current compensation limit?

A

Claim limit - £10.3m
Aggregate Limit - £20.3m

78
Q

What does the annual regulatory review fee relate to?

A

Fee paid by firms to fund the cost of regulatory oversight.

79
Q

What might client money include?

A

Deposits.
Service charges.
Rent payments.

80
Q

How does this differ to office money?

A

Its not shown on companies books. It doesn’t belong to the company.

81
Q

What are some of the key principles of the RICS Professional Standard relating to client money protection?

A

Separate bank account. labeled as such.
Provide detailed accounting and reconciliation of all transactions.
Return as soon as not required.

82
Q

Explain the key themes from the RICS Futures 2020 Report.

A

How the RICS and the industry should respond to the big challenges of the day:

Climate change
Population increase
AI and use of Big Data

83
Q

Explain the potential implications of the Hart v Large case.

A

Damp in renovated Devon House Home buyers report
- Calculation of diminution in value only
- Competence and suitability of home buyers survey
- Further investigation

84
Q

Explain your understanding of precedent set in Burgess v Lejonvarn.

A

Even in the absence of a formal contract and payment for services, a duty of care can still exist

L, an American architect, provided architectural and project management services to B for a garden landscaping project without payment due to their friendship and L’s new practice. Despite no formal contract, the court found L had a duty to use reasonable skill and care in her services. L could be liable for negligence if services fell below the required standard, despite no payment.

85
Q

What do RICS set out as good practice for the use of social media in their Regulation document (June 2021)?

A

The use of social media does not introduce a new set of restrictions or guidelines; rather, it offers an additional platform through which your professional conduct can be evaluated in accordance with existing rules and standards of conduct.

86
Q

Explain your understanding of the RICS Levitt review.

A

Set up to investigate the surroundings of a suppressed finance audit in 2018 and 4 board members sacked.
Resulted in 18 recommendations for improving governance of the organisation one of which was the Birchard Review.

87
Q

What is whistle blowing?

A

The ability of individuals within an organisation to circumvent existing management chain to report organisational failings.

88
Q

What does good governance mean to you?

A

The role of the senior leadership of an organisation to run it in accordance with its guiding principles or objectives.

89
Q

Explain what the Pandora Papers are and the ethical issues raised within them.

A

The offshoring of massive amounts of wealthy peoples finances for the purposes of tax evasion, many of them British nationals.
It uncovered the tax avoidance in the acquisition of over 1500 UK properties often using shell companies and complex corporate structures.

90
Q

Explain what you understand by the RICS Bichard Review.

A

One of the recommendations of the Levitt review.

The independent Bichard RICS Review which was commissioned by the RICS Governing Council to review the Institution’s purpose, governance and strategy.

91
Q

Explain some of the recommendations of the Bichard Review.

A

Devolution of control and influence to members.
Diversity and Inclusion Panel
Improve uptake of technology
Work in public interest and to public advantage
Client redress and complaints handling
Complete the review process again every 5 years.

92
Q

How will these recommendations be implemented by RICS?

A

Delivered following fairly significant regorganisation of the RICS including setting up of a variety of working groups led by a steering group.

93
Q

How do professional integrity and professional ethics differ?

A

Subjective Actions vs Objective rules.

94
Q

What is modern slavery and how would you identify red flags of it?

A

Forcing a person against their will to work without payment often under threat of punishment or violence.

Inability to speak English, disheveled appearance, lack of PPE, deferential

95
Q

Explain the implications of the Sanctions and Anti-Money Laundering Act 2018.

A

In response to Brexit to replace previous EU directives and regulations with autonomous UK law. Provided means to tackle AML including sanctions regime of unlimited fine and prison time.

96
Q

What is the Sanctions List and why should you be aware of it?

A

Published list of people subject to sanctions by the UK government. Putin might be an example. I should be aware as they would be politically exposed people and present high risk of money laundering and corruption.

97
Q

Why was the Register of Overseas Entities introduced?

A

To improve the establishment of beneficial ownership in UK property.

98
Q

What are the six RICS values published as a result of the Levitt review?

A

Honesty
Integrity
Competence
Service
Respect
Responsibility

99
Q

Explain the impact of the Economic Crime (Transparency and Enforcement) Act 2022.

A

Makes it easier to prosecute corporates for certain financial crimes, and introduce a new failure to prevent fraud offence.

Harry Penman APC (34 decks)

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