Disciplinary Procedures, Fee Negotiations and ToE

Question 1

Who regulates the RICS?

Answer 1

Self regulation - RICS Rules of Conduct and disciplinary procedures

Question 2

Would every shortcoming of an RICS Member or Firm end in disciplinary procedures?

Answer 2

No…

Question 3

If an RICS Member has failed to follow with RICS Guidance, does this result in disciplinary action?

Answer 3

No but failure to follow Guidance will be considered when examining the behavior of a Member or Firm
A firm may be asked to justify the steps they took, and this may be considered.

Question 4

How are disciplinary procedures usually triggered?

Answer 4

By someone complaining to the RICS, an allegation by a client or third party etc.

Question 5

What are the three levels of disciplinary action?

Answer 5

1. Action by Head of Regulation
2. Disciplinary Panel
3. Appeal Panel

Question 6

What happens under the first step (action by Head of Regulation)?

Answer 6

Formal investigation by the Head of Regulation who can initiate four actions upon completion of their investigation if they consider that disciplinary action is required.

Question 7

What are the four actions the Head of Regulation can take if they consider that disciplinary action is required?

Answer 7

1. Serve a Fixed Penalty Notice
2. Make a Consent Order
3. CPD Sanctions
4. Refer the matter to the RICS Disciplinary Panel for consideration under the discipline rules

Question 8

When would a Fixed Penalty Notice be served?

Answer 8

Only for breaches of rules relating to supply of information to the RICS

Question 9

When would a Consent Order be made?

Answer 9

Low level breaches of the Rules i.e. minor breaches which could easily be corrected

Question 10

What is a Consent Order?

Answer 10

Written document which states what actions a Member must take and for what period of time

Question 11

What are CPD sanctions?

Answer 11

Place an obligation on a Member to follow the CPD requirements

Question 12

When are breaches referred to the RICS Disciplinary Panel?

Answer 12

More serious breaches of conduct where the Head of Regulation considers that a hearing is required under disciplinary rules

Question 13

What are the penalties available to the RICS Disciplinary Panel?

Answer 13

1. Issue a Consent Order
2. Unlimited fine - must be proportionate to the breach
3. Impose conditions upon future continued RICS Registration
4. Expulsion from membership or firm removal
5. Require for the results to be published in the RICS Modus magazine, RICS website or the local newspaper

Question 14

What does the Appeal Panel do?

Answer 14

They will consider a Member or Firm’s appeal and review the decision having regard to previous evidence and any new evidence

Question 15

What penalties can the Appeal Panel impose?

Answer 15

They can allow the appeal or can vary the penalty imposed

Question 16

Are Members of the Appeal and Disciplinary Panel lay members?

Answer 16

50% are

Question 17

What are the three most common breaches of the RICS Rules of Conduct?

Answer 17

Rule 3 - Professional Behaviour
Rule 6 - CPD
Rule 8 - Protecting Clients Money

Question 18

What kind of actions breach professional behaviour?

Answer 18

Sharing confidential information
Repeated failure to communicate
Company director failing to pay taxes and continuing to trade even though the firm was insolvent

Question 19

What should you avoid when undertaking fee negotiations?

Answer 19

Price fixing, aggressive fee cutting (not be seen to under cut another firm) or collusion with competitors

Question 20

How should you go about setting your fees?

Answer 20

Understand the clients requirements
Understand how much work will be required and at what level
Calculate the fee from the services that will be provided

Question 21

Can you enter into further fee negotiations with a client, once your initial fee proposal has been submitted?

Answer 21

Yes as long as you act in a professional manner

Question 22

How can you reduce your fee if the client says it is too high?

Answer 22

Vary the level of service but be aware of still providing a high standard of service

Question 23

What should you do if you are receiving or offering a referral fee?

Answer 23

Should be completely transparent with your clients and consumers and state in ToE if applicable

Question 24

Are referral fees allowed?

Answer 24

Yes but they should be considered in the context of the Bribery Act (2010) and the RICS Ethical Standards.

Question 25

Are you aware of a recent case relating to fee collusion?

Answer 25

Yes, 4 x Somerset Estate Agents colluded to set a minimum commission rate and were prosecuted and fined after illegal price fixing in March 2017

Question 26

What must terms of engagement include as a minimum?

Answer 26

Proposed fee basis
Payment of expenses and how calculated
CHP available upon request

Question 27

What three steps should you always follow with ToE?

Answer 27

Check professional Competence
Check no conflicts of Interest or personal Interests
Confirm ToE in writing and get written approval BEFORE you start work on the instruction
- Compliance with s18 of the Estate Agents Act for agency work

Question 28

What is the cooling off period allowed on ToE?

Answer 28

14 days under the Consumer Rights Act and the Estate Agents Act (1979)

Question 29

When may it be appropriate to decline an instruction?

Answer 29

Not competent to carry out the work - outside your limitations
You do not have sufficient facts on the issue
The proposed client will not sign you ToE and / or complete AML checks
There is a conflict of interest or personal interest
A PII liability cap cannot be agreed
The advice is for a friend or on a pro bono basis (e.g. free of charge for a charity) and your PII will not cover work carried out on a personal basis
The potential client is on the UK Government Sanctions List

Question 30

What is the over riding question you should always ask yourself in relation to Ethics?

Answer 30

Would you be content for your actions to be made public in the newspaper or on the internet?