Conduct rules, ethics and professional practice Flashcards
1
Q
What is the central purpose of the RICS (3, To M, To P, To Be)?
A
- To maintain the highest standards of education and training
- To protect consumers through strict regulation of professional standards
- To be the leading source of information and independent advice on land, property, construction and associated environmental issues
2
Q
How does the RICS ensure members abide by the Rules of Conduct for Members, 2007 (as amended 2013) (4 powers)?
A
Head of Regulation at the RICS investigates claims of misconduct. They have the power to:
- Serve a Fixed Penalty notice - used only for supply of info breaches.
- Make a Regulatory Compliance Order - low level breaches that can be easily corrected, written document stating actions to take within a specified time period.
- CPD sanctions - obligation to do some CPD req.
- Refer to a Disciplinary Panel - serious breaches, 50% are lay members (non RICS)
Member has right to appeal decision made at a Disciplinary Panel by going to an Appeal Panel
3
Q
How does the RICS ensure firms abide by the Rules of Conduct for Firms, 2007 (as amended 2017) (3)?
A
RICS ensures firms comply by conducting audits
Firms have to provide information when:
registering with the RICS and
in an annual return
4
Q
Why must a Chartered Surveyor do CPD (2 sort of)?
A
It is one of the Rules of Conduct for Members, 2007 (as amended 2013)
Ensures you remain up to date with relevant legislation and any changes in the industry
5
Q
Why must a Chartered Surveyor main solvent (2 sort of)?
A
It is one of the Rules of Conduct for Members, 2007 (as amended 2013)
May impair your decision making and mean that you’re more likely to take bribes and not act in the best interest of the client
If you’re unable to manage your own finances, it does not reflect well on you being able to manage your client’s finances
6
Q
What has the RICS produced to help surveyors make ethical decisions?
A
The RICS has created the Ethics Decision Tree, which members can refer to if they are asked to do something they are unsure about
7
Q
How would you approach a conflict of interest (A, WA, M)?
A
Follow the guidance set out in the RICS Global Professional Statement on Conflicts of Interest, 2017:
- Conflict avoidance - decide whether the conflict is manageable and whether proceeding is in the best interest of all parties
- Written advice to both parties - disclose the nature of the conflict, explain how you will manage it and request written confirmation of informed consent (inform to seek independent advice if needed)
- Conflict management - set up an information in accordance with provisions agreed with the clients
8
Q
What is money laundering?
A
Money laundering is legitimising the proceeds of crime.
9
Q
Why does you firm have Terms of Engagement? What should be included in Terms of Engagement?
A
Creates a contract with the client
Sets out the proposed fee basis, payment of expenses and that a copy of of the firm’s complaints handling procedure is available upon request
10
Q
How would you close down a practice (5, I,I,R,S,R)?
A
Inform the RICS
Inform clients and arrange for them to be handed over to a new firm
Return any clients’ money
Set-up professional indemnity run-off cover for a minimum of 6 years
Retain a copy of client files and record for a minimum of 6 years
11
Q
What is the structure of the RICS (GC, who reports to, groups below GC and responsibilities)?
A
Governing Council (33 (now 25?) members) runs the RICS and provides management and strategic direction.
• They meet three times a year.
• New president every year.
Regulatory Board, Management Board and Audit Committee and various committees report to the Governing Council
17 specialist professional groups covering property, land and construction
Each professional group has an elected board and is responsible for outlining standards of competence and practice.
12
Q
What changes have been made to the Royal Charter and Bye-Laws (GC, head position roles)?
A
Creating a smaller, more diverse and geographically representative Governing Council (i.e. only 6 for UK and EMEA)
Reduced size of Governing Council to a minimum of 25 seats, with 15 geographical seats
A new Chair of the Governing Council will act for up to 6 years
President will focus on ambassadorial duties and continue to be elected on an annual basis
13
Q
Why would you like to be a Chartered Surveyor (5, S,R,M,K,N)?
A
- Status - professional credentials provide client confidence
- Recognition - promotion of your professional excellence
- Market advantage - RICS status gives you a competitive advantage
- Knowledge - International practice standards and professional guidance
- Network - access to over 140,000 members worldwide
14
Q
What are the THREE benefits of regulation for firms (CPS)?
A
- Confidence - for client as regulated firms are monitored by RICS regulation
- Professionalism - firms have to provide clear, impartial and expert advice
- Security - firms have to have recognised CHP, access to ADR and PII cover
15
Q
How many hours of CPD do you have to undertake, what are the rules, what other understanding must you maintain and how/by when must it be recorded?
A
Minimum of 20 hours of CPD per year, of which at least 10 hours must be formal
Member must maintain an understanding of RICS Professional and Ethical standards every 3 years
Members must record their CPD using the RICS CPD Management System on the RICS website by the 31st December
16
Q
What are the Rules of Conduct for Members, 2007 (as amended 2013) (ECS CPD SIC)?
A
ECS CPD SIC:
Ethical behaviour Competence Service Continuing Professional Development (CPD) Solvency Information to the RICS Co-operation
17
Q
What are the Part II - Conduct of Business Rules of Conduct for Firms, 2007 (as amended 2017) (PCS CPD CCI)?
A
PCS CPD CCI:
Professional behaviour Competence Service Continuing Professional Development (CPD) Complaints handling Clients' money Indemnity insurance
18
Q
What information is required by the RICS for registration and in the annual return (6)?
A
- Type of business and staffing details
- Statutory regulated activities - such as for financial services
- Nature of clients
- Complaints handling procedure and records
- Professional indemnity insurance certificate
- Whether the firm hold clients’ money
19
Q
Can you rely on due diligence checks undertaken by a solicitor/what document provides guidance?
A
Can only rely on information provided by a third party where there is an appropriate level of confidence in the quality of the information provided by that party
Guidance contained within RICS Countering bribery, corruption, money laundering and terrorist financing, 2019
20
Q
If you are conflicted, can you still undertake an instruction if you’ve got informed consent?
A
Depends whether you would be able to act impartially, whether you believe that you undertaking the instruction would be in the best interest of all those who are or may be affected and whether its prohibited by law
21
Q
What forms of conflict of interest are there (3)/what do they relate to?
A
Party Conflict - acting on both sides of a transaction
Own Interest Conflict - relating to a personal interest
Confidential Information Conflict - relating to work between two parties which is confidential
22
Q
What would you do if you had a personal conflict of interest and how would you manage this?
A
Ensure that all parties were aware and provided informed consent
Would refer the instruction instruction internally and ensure that the appropriate information barriers were setup
23
Q
What would you have to do if you were required to hold clients’ money?
A
RICS has issued a Professional Statement on Client Money Handling, 2019:
- Client account must be kept separate and clearly identifiable
- Word client is on the bank account and cheque book
- A client must be able to have their monies on demand
- Payment of interest is agreed with a client and accounts must be kept in credit
- Regular bank reconciliation
- Accurate records are kept with a running balance available
- Annual audit and reporting obligations by certified accountant employed by RICS
- If cash receipts are used to settle transactions, make sure records show all cash transactions
- Signatories must be agreed with authorised staff and two signatories should be required
- A discrete account is for a single named client account only
- RICS Regulatory Review Visits can be undertaken by RICS usually on a routine 3 yearly basis
- Firms handling client money need to display their procedure on their website
24
Q
How many Principals in a firm have to be RICS members for a firm to be regulated (2 dates), and what is a Responsible Principle?
A
Until April 2020: a regulated firm is a practice that has 50% or more principals who are RICS members
From April 2020: if a practice provides surveying services and 50% of principals are RICS members, then it has to be regulated. If firms want to apply to be registered then they must now have more than 25% of Principals as RICS members (previously they only required one Principal to be an RICS member)
Responsible principal - firm must nominate a responsible principal who is obliged to ensure all steps are taken to ensure compliance with regulatory and RICS requirements, including reporting to the RICS
25
Why are the RICS requiring 25% of Principal to be members in order for firms to apply to be regulated?
Concerned that as the RICS profession and brand grows, having a single RICS qualified Principal does not provide sufficient assurance that RICS professional standards have adequate influence within the senior management of firms
26
What is the law associated with gift giving and receiving (2)?
Bribery Act 2010 and Proceeds of Crime Act 2002
27
What are the SIX principles of the Bribery Act 2010?
1. Proportionality
2. Top level commitment
3. Risk assessment
4. Due diligence
5. Communication
6. Monitoring and review
28
What are the FOUR offences under the Bribery Act 2010?
1. Bribing
2. Receiving a bribe
3. Bribing a foreign public official
4. Failing to prevent bribery
29
How would you define a bribe (4 actions, 3 types, 2 reasons)?
Bribe can be the giving, offering, promising or receiving of an advantage such as a payment, gift or a service for an action which is illegal or a breach of trust
30
What does the Ethics Decision Tree include, what does it encourage members to consider/ask, and what further assistance is available?
Framework of questions members should ask themselves
Encourages members to consider the legality of their action and the consistency with the RICS Global and Professional Ethical Standards
Ultimate question is whether members would be content to have their decisions or actions made public
RICS Regulation Confidential Hotline offers further assistance to members with any ethical issue
31
What is considered an appropriate margin of error (principle and 3 possibilities)?
When valuing it depends on the availability of comparable evidence and the complexity of the valuation, as to what would be an acceptable margin of error
±10% is usually considered to be a reasonable margin of error but more likely ±5% for residential property
Case of Dunfermline Building Society and CBRE (2017) assumed an acceptable margin of error of ±15%
32
What is the background to the RICS (founded, Charter, governance)?
Founded in 1868
RICS has a Royal Charter, granted by Privy Council in 1881
RICS Regulations and Bye-laws set out the governance of the institution
33
What are the FOUR levels of membership for the RICS?
1. FRICS
2. MRICS
3. AssocRICS
4. Trainee/Student
34
What must you do to achieve FRICS status (4)?
Provide evidence of achievement to the Fellowship assessor of FOUR Fellowship characteristics. They are grouped into the following categories:
1. CHAMPION - a Member who has gained recognition by an appropriate authority.
2. EXPERT - a Member who has been verified in advancing, sharing or interpreting knowledge.
3. INFLUENCER - a Member who influences how professionalism is perceived.
4. ROLE MODEL - a Member who exceeds standards for the advantage of clients, colleagues or the wider public.
A personal statement on current role, practices and ambitions.
35
What is the UK Structure of the RICS (3 levels)?
4 National Associations
10 Regional Boards
Local Associations
36
Who is the current CEO of the RICS?
Dr Sean Thompkins
37
Who is the current President of the RICS?
Kath Fontana (President elected from November 2020)
38
What are the FIVE Principles of RICS Regulation for Members and Firms?
PACTT:
1. Proportionality: making the penalty proportional to the breach
2. Accountability: to all members and the public
3. Consistency: treating all members the same
4. Targeting: serious breaches
5. Transparency: to all members, clients and the public
39
What are the International Ethics Standards, 2016, and who publishes?
Ethical framework for the global property market
| Published by the International Ethics Standards Coalition
40
What relevance do the International Ethics Standards, 2016 have for the RICS, and what may be a future prospect?
* Did not originate from the RICS but are promoted by the RICS
* RICS are currently reviewing the Global Professional and Ethical Standards, 2015 and may extend them to reflect the International Ethics Standards more closely
41
What are the Rules of Conduct, 2007 and how are they changing?
* Two short documents setting out the standards of professional conduct and practice expected of members and firms
* RICS announced in November 2019 that there would be a full review of the Rules of Conduct in 2020
42
In what circumstance will the RICS disciplinary procedure be triggered (3)?
Someone complaining to the RICS
Allegation by a client or third party
Information received or established by the RICS
43
What are the THREE levels of disciplinary action?
1. Action by Head of Regulation
2. Disciplinary panel
3. Appeal panel
44
What are the THREE most common breaches of the Rule of Conduct for Firms, 2007 (as amended 2017)?
1. Professional behaviour
2. CPD
3. Protecting client's money
45
What FOUR actions can the Head of Regulation of the RICS impose?
1. Fixed Penalty notice
2. Compliance Order
3. CPD Sanctions
4. Refer to disciplinary panel
46
When would the Head of Regulation issue a Fixed Penalty notice?
Only used for breaches relating to the supply of information to the RICS by firms and members
47
What is a Compliance Order, and when used?
Written document which states the actions which the member or firm must take or desist from taking for a specified period of time
Used for minor breaches which can be easily corrected
48
When would the Head of Regulation refer the matter to a Disciplinary Panel?
Used for more serious breaches of conduct
49
Who forms the Disciplinary and Appeal Panels?
50% are lay members (non RICS members)
50
What are the FIVE penalties available to the Disciplinary Panel?
1. Compliance Order
2. Unlimited fine per breach (proportionate though)
3. Impose conditions upon future continued RICS registration
4. Expulsion from membership or remove a firm
5. Publication of results (Modus, RICS website, local newspaper)
51
What does the Appeal Panel do in disciplinary proceeding/what power do they have?
Consider a member's or firm's appeal to the outcome of a disciplinary procedure
Will review the evidence previously presented and any new representations
Can allow the appeal and vary the penalty previously imposed
52
What is an RICS International standard?
High-level, principle-based mandatory standard developed in collaboration with other relevant organisations e.g. RICS Valuation - Global Standards, 2019
53
Give an example of 3 pieces of RICS Core material that you have had reference to in your work?
Conflicts of Interest, 2017
UK Commercial Real Estate Agency, 2016
Property Measurement, 2018
54
What is an RICS Practice Statement?
Document that provides members with mandatory requirements e.g. Surveyors Acting as Expert Witnesses, 2014
55
What is an RICS Guidance Note, and RICS recommendation?
Document provided by RICS to promote good practice. RICS strongly recommend that you have regard to the contents of any relevant guidance note e.g.
Comparable Evidence in Real Estate Valuation, 2019
56
What is an RICS Code of Practice, and status?
Document produced with other professional bodies and stakeholders to provide up-to-date research and advice to practitioners e.g. Rating Consultancy Code of Practice, 2017
Have the same status as a professional statement or a guidance note (mandatory or recommended good practice)
57
What should you consider during fee negotiations (2, 1 on RICS docs)?
Firms should avoid price fixing, aggressive fee cutting or collusion with competitors
Fees should be market-based and agreed on an ad-hoc basis with clients
Must consider the RICS Global Professional and Ethical Standards, 2015 and Rules of Conduct, 2007 as amended
58
What should you do if accepting or offering referral fees (3)?
* Must be completely transparent with your clients and consumers, so they understand you are receiving or offering a referral fee
* State in you terms of engagement if applicable
* Consider your actions in context of the Bribery Act 2010 and the RICS Global Professional and Ethical Standards, 2015
59
What steps should you follow when you receive instructions from a client (CIT)?
CIT:
1. Competence
2. Conflicts of interest check
3. Terms of Engagement
60
What must your Terms of Engagement comply with if you're undertaking agency work?
Section 18, Estate Agents Act 1979
| Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017
61
What is the cooling off period following the establishment of Terms of Engagement?
Consumer Rights Act 2015 allows a cooling off period of 14 days from the date of the agreement
62
Why may it be appropriate to decline an instruction (5)?
1. You are not competent to undertake the work
2. You do not have sufficient facts on the issue
3. Proposed client will not sign the terms of engagement or complete the AML checks
4. There is a conflict of interest
5. Proposed client is on the UK Government's sanctions lists
63
What would you do if a family member or friend asked you for some advice on a pro bono basis?
I would be unable to give them advice as my firm's professional indemnity insurance would not cover work carried out on a personal basis
I would refer them to another surveyor who would be able to advise them appropriately
64
What is a conflict of interest?
Arises when a member or firm's independence and impartiality is threatened due to the existence of a conflict between two parties
65
What does RICS Conflicts of Interest, 2017 require all firms to have (2)?
Must have effective systems and controls in place appropriate to the size and complexity of their business, to ensure full compliance
Firms must keep records to show their compliance with the statement
66
How should your firm operate information barriers when Conflicts of Interest are being managed (4, think security and procedure)?
* "Reasonable steps" must be taken to operate an effective barrier to prevent information passing between the two parties
* Surveyors acting on the two sides must be different and be physically separated
* Information regarding the instruction should be securely stored
* Keep an audit trail of all actions taken. Firms Compliance Officer must oversee all actions
67
What guidance does the RICS provide on Conflicts of Interest for commercial investment agents?
RICS Conflicts of Interest – UK commercial property market investment agency, 2017
68
What is a personal interest / own interest conflict?
Arises when acting for a family member, a close business associate or someone with whom you have a financial / personal interest / benefit (known as a ‘connected person’)
69
What should you do if a personal interest / own interest conflict arises?
Must not let it interfere with or influence your professional judgement. Full transparency is required
Facts must be declared in writing before the instruction is accepted
70
What legislation governs a personal interest / own interest conflict when undertaking agency work?
Section 21, Estate Agents Act 1979
Any personal interest with a "connected person" (i.e. someone who could benefit financially from the transaction) should be declared in writing
71
What is the aim of the Bribery Act 2010?
Reduce bribery in business in the UK and abroad
72
Who is responsible for an employees' corrupt actions under the Bribery Act 2010?
Companies are responsible for an employees' corrupt acts unless they can show that they had adequate policies and procedures in place to combat bribery
73
Is hospitality permitted under the Bribery Act 2010?
Offering clients reasonable and proportionate hospitality does not constitute an offence, as long as they are recorded in a gift/hospitality register
74
What steps (4, simple procedural) must companies put in place to prevent bribery under the Bribery Act 2010?
Identification of potential risks, staff training, provision of clear policies and regular reviews
75
Who is the Bribery Act 2010 policed by?
Serious Fraud Office
76
What is the penalty for individuals and companies for breaching the Bribery Act 2010?
Individuals: maximum of 10 years imprisonment and/or an unlimited fine
Companies: an unlimited fine
77
Who do the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017 cover?
Estate agency work and relevant financial business work inside and outside the UK by a firm
78
What are the key provisions of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017 (8, documents, staff, compliance, procedures, new check, appointment)?
1. Written money laundering and terrorist financing risk assessment for the firm
2. Implement systems, policies and controls and procedures
3. Provide staff training
4. Comply with new customer due diligence (CDD), enhanced due diligence (EDD) and simplified due diligence requirements (SDD)
5. Comply with the requirements relating to politically exposed persons (PEPs)
6. Ensure appropriate record keeping, policies and procedures
7. Vendor's agent must undertake AML checks to confirm the identity of the proposed purchaser and verify their source of funds before contracts are exchanged
8. Money Laundering Reporting Officer (MLRO) must be appointed to report any suspicions to the National Crime Agency using a Suspicious Activity Report (SAR)
79
What did the changes in 2020 to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations require letting agents to do (3, registration and checks in certain circumstances)?
* Letting agents have to register with HMRC within 12 months of May 2020 if they let individual properties for more than the equivalent of €10,000 per month
* Where they undertake lettings of properties for more than €10,000 per month, they will have to undertake CDD check on landlords and tenants on any new letting or subletting
* EDD will have to be undertake when any red flags occur
80
When should you undertake Enhanced Due Diligence (2)?
If the client is a politically exposed person (PEP), a PEP family member/business associate or from a high-risk third country
81
How long must a firm maintain records for under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017?
5 years
82
Who is responsible for policing the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017?
HMRC are responsible for policing the regulations for estate agents
83
What are the penalties (2 crimes) for failing to comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017?
Assisting with money laundering: maximum 14 years prison sentence and/or unlimited fine
Tipping off a person or for failing to report suspicion: maximum 5 years prison sentence and/or unlimited fine
84
What is the Proceeds of Crime Act 2002?
Provides powers for enforcement authorities in the UK to recover in criminal and civil proceedings money and other assets which are deemed to be the proceeds of crime
Creates a set of criminal offences intended to combat money laundering
85
What are the THREE main areas of offence under the Proceeds of Crime Act 2002 (CAA)?
1. Concealing criminal property: if a person conceals, disguises, converts or transfers criminal property
2. Arrangements: if a person enters into or becomes concerned in an arrangement which they know or suspects facilities the acquisition, retention, use or control of criminal property by or on behalf of another person
3. Acquisition use and possession: if a person acquires, uses or has possession of criminal property
86
What is the RICS guidance on bribery and corruption called?
RICS Countering bribery, corruption, money laundering and terrorist financing, 2019
87
What are the THREE parts of RICS Countering bribery, corruption, money laundering and terrorist financing, 2019 (MGS)?
1. Mandatory requirements for anti-bribery and corruption and for anti-money laundering and terrorist financing
2. Guidance setting out supporting good practice for the above
3. Supplementary guidance on some of the concepts set out in Parts 1 and 2
88
What does RICS Countering bribery, corruption, money laundering and terrorist financing, 2019 say RICS regulated firms must do/not do in relation to bribery and corruption (procedural/records, 5)?
* Not offer or accept anything that could constitute a bribe
* Have procedures in place to comply with the law
* Report suspicion to the relevant authority
* Act with due diligence to perform periodic written evaluations of the risk the firm faces
* Retain records to show the firm has met the requirements of the Professional Statement
89
What does RICS Countering bribery, corruption, money laundering and terrorist financing, 2019 say RICS regulated firms must do/not do in relation to money laundering and terrorist financing (ML & TF) (procedural/records, 8)?
* Not facilitate or be complicit in ML and TF
* Have systems in place to comply with the laws
* Report suspicion
* Evaluation and review the risks presented to the firm
* Use third party reliance for checks only where there is a level of confidence for the quality of information provided by the third party
* Take appropriate measures to understand the client and the purpose of the instruction
* Verify the client by undertaking basic ID checks
* Retain records to show how the firm has met the requirements of this Professional Statement
90
What practical guidance (Part 2) is contained within RICS Countering bribery, corruption, money laundering and terrorist financing, 2019 (7)?
* Have a written policy in place
* Publish a code of behaviour for staff
* Encourage transparency
* Set up a gifts register
* Provide staff training
* Senior management to take control of procedures
* Keep up to date with legislation
91
What supplementary guidance (Part 3) is contained within RICS Countering bribery, corruption, money laundering and terrorist financing, 2019 (3, approaches/how to think about certain issues)?
* ‘Risk-based approach’ – considering who you act for, what you are doing and why you are being asked to do something – when assessing risks to your business
* Dealing with politically-exposed persons (PEPs) – they are higher risk as they hold positions of influence and enhanced due diligence is required
* The need to identify the beneficial ownership of a company partnership or trust – such as by requesting a recent Certificate of Incorporation or Annual Return for a company
92
What is Formal CPD?
Includes structured learning that has clear learning objectives and outcomes e.g. seminars
93
What is Informal CPD?
Includes self-managed learning that is relevant or related to your professional role
94
How long should files be kept for?
A minimum of 6 years before disposing and destroying them securely (although can be sued for negligence for up to 15 years)
95
What should you do if a third parties requests access to your files?
Must get the client's approval first unless you are subject to a statutory duty overriding the client's confidentiality rights e.g. the police or HMRC investigation
96
What should a surveyor do if they find out a confidential piece of information in error about a party who is not their client (4 actions/prohibitions)?
* Cannot use the information for their own purposes
* Client and sender should be advised of the error
* Matter should be recorded in a note to the firm's compliance officer
* Any confidential information received in error should be disposed of securely
97
What are the criteria for proving a negligence claim (3)?
1. Duty of care owed
2. Breach of the duty of care
3. Loss that was caused by that breach
98
What does the Limitation Act 1980 state are the limits on the period for negligence?
Contract: 6 years from the date of the negligent act, breach of contract or omission. (If later) up to 3 years from the date of knowledge of the damage. Claims for negligence are barred for any period longer than 15 years after the negligent act, breach of contract or omission
Tort: 6 years from the date the claimant suffered the loss
99
How can you avoid negligence claims (6)?
* Understand client’s objectives and confirm precise instructions in writing in the Terms of Engagement
* Ensure you are competent to undertake the instruction
* Undertake the work in accordance with the relevant RICS Standards and Guidance Notes
* Make detailed file notes and take photographs
* Keep up to date with market knowledge and legislation and undertake and record your CPD
* Cap the professional liability excess on your PII policy in the Terms of Engagement
100
Who must Professional Indemnity Insurance policies be underwritten by? Provide some examples.
RICS approved insurer e.g. AIG, Allianz and AXA
101
What is the regulatory document issued by the RICS on Professional Indemnity Insurance called?
RICS Professional Indemnity Insurance Requirements, 2019
102
What level of Professional Indemnity Insurance cover should a new business obtain?
Estimate their turnover and adjust in due course
103
What level of run-off cover is required following the cessation of trading (consumer/commercial/RICS recommendation)?
Consumer claims: minimum of £1,000,000 of aggregate cover over a minimum of six years
Commercial claims: must consider what is an adequate level of cover for a minimum period of six years
RICS recommend more length cover as claims can be made up to 15 years after work is undertaken
104
Who can firms apply to if they are unable to obtain run-off Professional Indemnity Insurance cover?
RICS Run-off Pool
105
Who can retired/part-time members apply to for Professional Indemnity Insurance?
RICS Low Earners Scheme
106
Who can members apply to if they cannot arrange Professional Indemnity Insurance?
RICS Assigned Risk Pool
107
Who can members go to if they are facing personal negligence claims for work carried out by a former employer who they though had Professional Indemnity Insurance cover, but does not ?
RICS Member Support Service (MSS)
108
What guidance did the RICS publish on the Professional Indemnity Insurance and valuation?
RICS Guidance Note on PII, Risk, Uncertainty and Insurance in Valuation Work, 2018
109
Why would a firm of surveyors handle clients' money?
Holding deposits, rent, service charge and retentions
110
What are the SIX main area of good practice set out in the RICS Professional Statement Client Money Handling, 2019?
1. Holding client money
2. Providing information to clients
3. Receipt of client money
4. Payments from client accounts
5. Accounting records and controls
6. Compliance
111
What scheme does the RICS run for instances where an RICS Regulated Firm is unable to repay a client's money?
* RICS Clients' Money Protection Scheme
* This is a free service provided to clients of RICS-regulated firms.
* Is an insurance policy to cover client’s direct loss of funds due to a firm regulated by the RICS.
* Scheme split into two parts covering money held by firms undertaking surveying activities and those undertaking residential agency activity
112
```
When starting a new practice, what RICS regulations do you have to comply with-
(Inform who,
appoint who,
register with,
arrange what,
procedures for handling what,
register for what,
obtain approval for what,
set up what,
appoint a,
obtain a,
plan for,
log what,
set up for what staff,
ensure what end of each year?)
```
* Inform RICS - of your new practice by completing a Firm Detail Form
* Appoint a Contact Officer - for all RICS communication
* Register - with RICS for regulation of the firm by the Regulatory Board
* Arrange - Professional Indemnity Insurance and send details to RICS
* Set up procedures for Members Accounts Regulations for handling clients’ money, including Client Money Protection Scheme details
* Register for the RICS Valuer Registration Scheme (VRS) if undertaking Red Book Global valuation work
* Obtain RICS approval for the Complaints Handling Procedure
* Set up a complaints log
* Appoint a Complaints Handling Officer
* Obtain a logo kit from the RICS to use to produce all practice material to ensure compliance with the designation ‘Regulated by RICS’
* Plan for succession/future running of the business if a sole practitioner
* Ensure CPD logged online on the RICS CPD Management System
* Set up staff training plan
* Ensure completion of an online RICS Annual Return at the end of each year
113
When starting a new practice, what statutory regulations do you have to comply with?
(requirement to,
compliance with E, F, B, HS, F, EA, EL, I
appoint whom
Get what register
Register for what
Inform whom (financial))
• Requirement to disclose business name
* Disability discrimination compliance (Equality Act 2010)
* Financial services compliance (Financial Services and Markets Act 2000 and Financial Services Act 2012)
* Bribery Act 2010 compliance
* Fire Safety compliance (Regulatory Reform (Fire Safety) Order 2005)
* Health and Safety compliance (Health & Safety Act 1974, as amended)
* Set up estate agency compliance (Estate Agents Act 1979, Consumer Protection Regulations 2008, Misrepresentation Act 1967)
* Ensure compliance with current employment law i.e. National Living Wage, working hours, stakeholder pensions, gender pay gap reporting etc.
* Ensure insurance compliance for employer and public liability
* Appoint a Money Laundering Reporting Office (Money Laundering Regulations, 2017)
* Asbestos register (Control of Asbestos Regulations, 2012)
* Register for data protection (General Data Protection Regulation, 2016 and Data Protection Act 2018)
* Inform HMRC for VAT and Tax registration (VAT registration threshold is currently £85,000 per annum turnover)
114
What does the RICS require you to do if you are closing a practice? (Inform whom, (3), return what, retain what)?
• Inform RICS of your retirement/closure
• Ensure that your clients are informed at the earliest opportunity and hand over arrangements made to the new firm
• Inform your insurers and procure professional indemnity insurance run off cover for a minimum of 6
• Return any monies held by clients to their own accounts
years in accordance with RICS requirements
• Retain a copy of the client files and records for a minimum of 6 years
115
What are some of the greatest challenges facing the RICS?
* Lack of diversity in the industry
| * Keeping up with an ever-evolving industry
116
What do the new rules state about the use of the RICS logo and designation ?
* Use of the RICS logo has been restricted to members and regulated firms only
* Logo must be same size as in the document.
* The 'regulated by RICS' designation must be displayed clearly to ensure visibility
* Prescribed text that must be included in the terms of engagement
117
What countries have been identified as high-risk third countries/by whom?
16 countries have been identified as high-risk third countries by the European Commission. These include: Afghanistan, Iraq, Syria, Iran and North Korea
118
Why must a regulated firm have professional indemnity insurance (2 sort of)?
Rules of Conduct for Firms, 2007 (as amended 2017) require firms to have PII
Protect clients and your company from negligence claims
119
What are the Part III - Firm Administration Rules of Conduct for Firms, 2007 (as amended 2017 (6))?
1. Advertising
2. Solvency
3. Arrangements to cover the incapacity or death or a sole practitioner
4. Use of designations
5. Information to the RICS
6. Co-operation
120
What are the FIVE RICS Global and Professional Ethical Standards, 2015?
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
121
What has the RICS Regulatory Board been renamed as?
RICS Standards and Regulatory Board
122
What document has the RICS issued on the handling of client money?
Client money handling, 2019
123
When did Client money handling, 2019 become effective
1st January 2020
124
What is a PEP?
Someone who has been entrusted with a prominent public function - generally presents a higher risk for potential involvement in bribery and corruption by virtue of their position and influence they may hold.
125
Who is a ‘qualified member’/who is not?
AssocRICS/MRICS/FRICS – not student members
126
What is the RICS motto?
There is measure in all things
127
What do you know about the CEO (2)?
- Sleep in the Park in Edinburgh
| - 10,000 surveyors in India by 2029
128
Tell me something topical at the RICS (2)?
- Partnership with Land Aid to raise 2.25 million for homeless to celebrate 150 years
- RICS joined International Fire Safety Standards coalition
129
Tell me an issue at the RICS?
Lack of women and ethical representation
130
What are the RICS doing to change that issue? (Lack of women and ethical representation)
RICS Inclusive Employer Quality Marks. Pledge for firms to be diverse in recruitment and representation.
131
How many rules are there for members?
9
(Seven main rules of conduct
+ Two general rules)
132
How many rules are there for firms?
15
133
How many international ethics standards are there?
10
134
When would SDD be appropriate?
- Appropriate where there is low risk of money laundering or terrorist financing
- not appropriate for property transactions
135
What identification do you require on a private client (2) to do Customer Due Diligence?
- Identity check - Licence/Passport
- Identify beneficial owners where applicable
(??2. Proof of address (e.g. bank statement, council tax statement) not more than 3 months old??)
136
What identification do you require on a company client (5) to do Customer Due Diligence?
1. Certificate of incorporation
2. Full name
3. Company number
4. Address of registered office
5, Names of directors and beneficial owners as anyone who has a shareholding of 25% or more
6. Obtain information on purpose of the transaction and proposed funding arrangements
137
What identification do you require on a PLC client (1) to do Customer Due Diligence?
London Stock Exchange listing
138
What identification do you require on a publicly accountable body to do Customer Due Diligence?
Proof of government ownership/control
139
What guidance is contained within RICS Conflicts of Interest – UK commercial property market investment agency, 2017 on dual agency (i.e. what is it, and when can be undertaken)?
Contractual relationships with the buyer and the seller must not be undertaken in any circumstances
140
What guidance is contained within RICS Conflicts of Interest – UK commercial property market investment agency, 2017 on multiple introductions (i.e. what is it, and when can be undertaken)?
Where agent has competing contractual relationships simultaneously with several buyers, must make it clear whether they are acting on an exclusive or non-exclusive basis. If on a non-exclusive basis, the agent must obtain informed consent from all the parties they are advising
141
What guidance is contained within RICS Conflicts of Interest – UK commercial property market investment agency, 2017 on incremental advice (i.e. what is it, and when can be undertaken)?
Where agent is approached to provide incremental advice on a transaction, they can only do so if they obtain informed consent and an ethical barrier is put in place e.g. if they are disposing of an asset and asked to provide valuation advice
142
What current themes does Kathleen Fontana promote?
She is active in driving engagement and inspiring change in the built environment and is a passionate promoter of technology, social impact and diversity as drivers of long term value.
143
What is the Royal Charter?
• Awarded in 1881 by Queen Victoria, to maintain and promote the usefulness of the profession for the public advantage.
144
How many Countries and how many Members does the RICS operate in and have?
* RICS operates in 146 countries.
| * RICS has approximately 140,000 members.
145
Where is the RICS Head Quarters?
• Parliament Square, London.
146
Can you name some of the professional groups?
* Building Surveying.
* Planning and Development
* Commercial Property
147
What are the duties of these professional groups?
* To provide best practice guidance.
* To set standards for professional competence.
* To provide training, CPD and network opportunities.
148
What are the three market sectors covered by the RICS?
* Land.
* Property.
* Construction.
149
What is the RICS Matrics?
* A division of the RICS dedicated to student surveyor training.
* Produces a network of Charity and Networking events.
* Promotes seminars and lectures.
150
What is the Carsberg Report?
• A report undertaken in 2005 as a result of members general dissatisfaction with the RICS’ internal Regulatory procedures.
151
How many levels of RICS membership are there?
• 4.
152
What is the APC?
• The Assessment of Professional Competence is a period of structured training followed by a Final Assessment Interview.
153
What is Lionheart?
• A benevolent fund dedicted to providing support and financial aid to current and past members and their families.
154
If you become qualified, how will you become involved with the RICS?
• I will attend RICS events.
• Become and APC supervisor.
• Respond to Surveys and Consultations.
- Promote the profession
155
Would you like to become an APC Assessor?
• Yes, I would like to keep learning and broadening my understanding of the profession.
156
How do you become an assessor?
• Must be MRICS for three years, plus a 1 day training course.
157
What is the difference between ethics and rules?
* Ethics are a moral principle and value.
| * Rules are the framework we work to.
158
What do you do if you find a member working outside the RICS Rules of Conduct?
* Verify the facts, then politely remind them of their duties as a member of the RICS.
* If they persist I would write to the RICS Head of Regulation and inform them.
159
What can result in expulsion?
* Fraud.
* Dishonesty.
* Criminal Offence.
160
What are the indicators of Money laundering?
* Secretive Client.
* Not knowing where the money is coming from.
* Paying in a special way, i.e. cash.
161
What would you do if a Client offered to pay you in cash for your works?
• Ask them to pay the cash into an online bank account then transfer the money, as paying in cash could be seen as tax evasion.
162
What is the difference between an Institute and an Institution?
An institute is an organisation to advance the study of a particular subject.
An Institution is an organisation that exists to serve a public purpose.
163
When were the Members/Firms rules updated, and which rules were updated?
- Members and Firms Rules Update – Standards and Regulatory Board
o Update February 2020
- Updated firms rules (only the below updated):
o Complaints handling
o Clients money
o Indemnity
o Use of designations
I HAVE PRINTOUT, CHECK QS TO SEE IF I HAVE TYPED UP, OTHERWISE USE PRINTOUT.
164
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What Conduct Rule relates to Locums, what is a Locum, and what are the requirements of a locum re.
Person
Notification
Appointment
Business Closure
PII cover
Things locum can handle (3)
```
o Rule 12 of Rules of Conduct for Firms relates to sole practitioner incapacity/death cover arrangements.
o A locum is effectively another professional who is appointed to ‘stand in’ for the surveyor if they are unable to work e.g. illness/death etc. The requirements are as follows:
Ideally another surveyor, or another ‘trusted professional’
Must notify RICS if firm being run by locum.
Locum should be appointed formally in writing, documenting appointment details, fee basis, termination, PII requirements and process for the locum to act independently/need to seek instructions before proceeding.
If business must close, locum must be able to oversee the sale.
PII cover must cover locums in event of death.
Locum would typically have to be able to handle
• complaints,
• client money and
• access to client files for completion of ongoing work.
165
When were the PII reqs updated, what was clarified, what change was made to automatic wording, and what addition was made to the ARP?
o 1 April 2019 - PII Requirements V7 –
o Clarified ‘adequate and appropriate’ means min 6 years for consumer claims.
o Insurers will provide a £1m aggregate limit for consumer claims, included automatically in the minimum wording.
o The Assigned Risks Pool will be opened to include a Run-Off Pool – to allow firms that cannot reasonably procure run-off for commercial claims on the open market.
166
What 3 consequences have been created re. PII due to COVID, and what 4 actions have RICS taken/seeking to take to help address this issues?
- Current market conditions have resulted in a reduction in PII supply, increased use of exclusions (particularly fire safety exposure), alongside significant increases in premiums being paid.
- RICS actions:
o Recently amended minimum policy wording to provide insurers greater flexibility to write terms.
o Made changes to ARP to allow it to provide more flexible and market appropriate terms, with further changes coming April 2021.
o Upcoming update to Risk, Liability and Insurance Guidance Note to help firms manage ongoing risks.
o Seeking to address firm difficulties in obtaining cover for fire safety work – firms must ensure that the use of EWS1 forms are understood and cover is in place to undertake this work before proceeding.
