Ethics

Question 1

What are the RICS Rules of Conduct 2021?

Answer 1

1. Members and firms must be honest and act with integrity and comply with their obligations and the obligations stated by the RICS.
2. Members and firms must maintain competence and ensure work is done by competent individuals.
3. Members and firms must provide good quality and diligent service.
4. Members and firms must treat others with respect and promote diversity and inclusion.
5. Members and firms must act in the publics interest and take responsibility for their actions to prevent harm and maintain public confidence in the profession

Question 2

What does appendix A of the Rules of Conduct outline?

Answer 2

It outlines that members must comply with their CPD requirements set by the RICS.
Members must cooperate with the RICS
Provide all information that is requested by the standards and regulatory board.

It also outlines that firms must have a complaints handling procedure.
Ensure that work is covered by adequate professional indemnity insurance
If a sole principal have things in place for handover if they were to stop working
Cooperate with the RICS
State that they are regulated by the RICS

Question 3

What is the ethics decision tree?

Answer 3

The ethics decision tree is a framework that members should use if they are in a situation which they aren’t sure is ethical or not. For example it includes things to consider such as is it legal? If the work was to be published would you be okay with it? Is it in line with the RICS Rules of Conduct.

Question 4

What are disciplinary procedures?

Answer 4

To uphold the publics perception and regulating the surveying profession the RICS have disciplinary procedures in place which are undertaken by the Standards and Regulation Board.

Thre levels of disciplinary action are:
Action by head of regulation
Disciplinary Panel
Appeal Panel

Question 5

What are the stages that are taken in a discplinary procedure?

Answer 5

First stage is the initial investigation by head of regulation of the RICS.
They then initiate either of the following:
1. Serve a fixed penalty notice
2. Make a regulatory compliance order
3. Refer the matter to a single member of the regulatory tribunal for consideration
4. Refer the matter directly to a disciplinary panel

Question 6

What is a fixed penalty notice?

Answer 6

Used for breaches relating to the supply of information to the RICS. It includes a fine or caution.

Question 7

What is regulatory compliance order?

Answer 7

Used for low level breaches that can be corrected. Includes a written document that warns members and firms they must stop and pay a fine. Includes things like not undertaking required CPD.

Question 8

What is action disciplinary panel?

Answer 8

Used for more serious breaches of conduct. Head of regulation can decide whether a hearing is required. Penalties can include reprimand, caution, fine, expulsion etc.

Question 9

What is appeal panel?

Answer 9

This panel considers a member or firms appeal against any disciplinary action. They review the decision and make a decision.

Question 10

What is the RICS guidance on Social Media?

Answer 10

Use of Social Media: Guidance for RICS members 2024. This states that RICS members must act in accordance with the rules of conduct when on social media.

Members must also the policy of the said social media platform. They are not to harrass, bully, discriminate people. RICS is unlikely to investigate if a member is criticising a policy or an organisation.

Question 11

What is a professional standard?

Answer 11

Set guidance members must follow. They include mandatory requirements with the word ‘must’ for best practice.

Question 12

What is a RICS practice information?

Answer 12

These do not contain advice, they are supporting information for members.

Question 13

What is a practice alert?

Answer 13

These alert the profession on potential risks emerging in certain areas. For example there was a practice alert relating to Commercial Property Management and the new legislative requirements for fire risk assessments and fire management plans.

Question 14

How should fees be agreed?

Answer 14

Fees should avoid price fixing or aggressive cutting or collusion with competitors.
Fees should be market based and agreed with the client.
Healthy competition is encouraged.
You can enter into further fee negotiations with the client once initial fee proposal has been made. Depends on scope of work and timescales.

Question 15

What is a Terms of Engagement?

Answer 15

This is a document that states the instruction and fee. It includes a firms complaints handling procedure and professional indemnity insurance and the relevant caps.

Before issuing terms of engagement you must check you are competent enough to do the work, check for any conflicts or personal interests, confirm terms of engagement in writing and get written approval BEFORE you start work.

Question 16

Why might you decline an instruction?

Answer 16

If you are not competent to do the work.
If there are conflicts that you can’t avoid or mitigate.
You don’t have sufficient facts from the client
A professional indemnity insurance liability cap can’t be agreed
The work is pro bono and your insurance does not cover it
The client is on the UK’s sanction list

Question 17

What is a conflict?

Answer 17

Anything that impacts your impartiality to provide your client with good quality work.
Examples include - own interest, acting on both sides of a transaction, financial interest.

Question 18

What is conflict avoidance and conflict management?

Answer 18

Conflict avoidance is when you don’t accept the instruction.
Conflict management is putting the necessary steps to manage the conflict. Such as information barriers and physical barriers.

Question 19

What is the RICS Professional Standard on conflicts of interest?

Answer 19

RICS Professional Standard: Conflicts of Interest 2017
It states that members or firms must not provide advice to a client where there is an active conflict only if the client has provided written informed consent.

Question 20

What are the three types of conflicts?

Answer 20

Own interest - relates to a personal interest
Party conflict - relates to work on the same instruction for two different parties
Confidential Information conflict - relates to work between two people that is confidential

Question 21

What must you do if you notice a conflict?

Answer 21

Complying with the RICS professional standard Conflicts of Interest 2017. I would either decline the instruction or require written informed consent from the client. I would do this by letting them know what the conflict is, how we can manage it with the correct barriers. I would be clear as possible to allow them to make their own decision.

Question 22

What is incremental advice?

Answer 22

This is where an agent is approached by a party to provide advice to include valuation, building surveying, or planning, related to the purchase or sale that is incremental to an existing instruction.

Question 23

What is confidentiality and why is it important?

Answer 23

RICS Bye Laws state that client confidentiality must be maintained for all clients.
This includes historic information.
If a third party wants access to client’s information you need to let your client know and get approval. Unless you are subject to statutory duty such as police or HMRC investigating it.
Old files must be held for minimum 6 years.
Any confidential information received in error should be disposed of securely.

Question 24

What is a complaints handling procedure?

Answer 24

It is a requirement that all RICS firms must have in place to meet the Rules of Conduct 2021. Terms of engagement must include the CHP. You need to notify your PII insurers as soon as a complaint is lodged as this could lead to a claim for negligence.
Complaints log must be maintained
Firms must include ADR in their CHP.

Question 25

What is your firms CHP?

Answer 25

If a complaint is made then we have to acknowledge it within 7 days. After which we have to investigate the complaint within 28 days. The procedure is transparent and fair. If the person that made the complaint is still not happy with the outcome then we move onto the second stage which is the RICS Dispute Resolution Service.

Question 26

How many hours of CPD is required by members?

Answer 26

20 hours of CPD a year. 10 hours must be formal - structured learning with an outcome. Infomral includes private study.

Question 27

What is negligence?

Answer 27

It is a breach of your duty of care. You can avoid this by understanding your client's instructions, ensuring competence, keep upto date with market knowledge, undertake work in accordance with RICS guidance. Yianni v Edwin Evans 1981 highlighted that a residential valuer could owe a duty of care to a mortgage purchaser that would rely on the valuation.

Question 28

What is the limitation act 1980?

Answer 28

Limits the length of a claim being made - 6 years from when the service was provide 6 years from when a loss was suffered 15 years if the claimant did not know a loss was suffered earlier

Question 29

What is PII?

Answer 29

Professional indemnity insurance - required by all members and firms. It is to protect claims from clients and third parties where there has been a breach in duty of care. There must be adequate cover in place depending on turnover. 100,000 or less - cover of 250,000 100,001 to 200,000 - cover of 500,000 200,001 and more - cover of 1,000,000

Question 30

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

Answer 30

The maximum amount a firm has to pay before insurance kicks in is: Turnover of £10 million - the greater of 2.5% or £10,000 whichever is greater Turnover over £10 million - no set limit, up to insurer.

Question 31

What is the required run off cover?

Answer 31

For consumer claims you must have a run off cover of £1 million over 6 years after stopping trading. For commercial claims you need to make sure there is adequate and appropriate cover over 6 years (no fixed amount) If insurers won't give you run off cover you can apply for the RICS Run Off Pool. Cover is required for Pro Bono work and there is a Member Support Service to help if a firm has gone into administration and someone needs to handle claims.

Question 32

What is the professional standard on handling clients money?

Answer 32

Client Money Handlin 2019 It includes numerous procedures firms must follow including: - Client account must be kept sparately and clearly identifiable - The word client must be on the bank account - Client must be able to have 24/7 access to their account - Payment of interest is agreed with the client - Regular bank reconciliation checking that payments have been received - Annual audit done by a certified accountant

Question 33

What must you do when starting up a practice?

Answer 33

Inform the RICS of your new practice Appoint a responsible principle for RICS communication Register with the RICS for regulation Arrange PII Set up procedures for handling clients money Have a CHP in place Appoint a Complaints handling officer if sole practioner Use correct logo kit Ensure CPD is logged You must also comply with statutory law such as: Health and Safety Act 1974 Equality Act 2010 Asbestos Register Bribery Act 2010 Appoint a Money Laundering Reporting Officer Fire safety compliance

Question 34

What should you do when closing down a practice?

Answer 34

Let the RICS know of your closure Let client's know and have handover arrangements in place Return monies held in client accounts to client Inform insurers and procure PII run off cover for a minimum of 6 years. Retain client files for at least 6 years.

Question 35

What is the key legislation to consider on Bribery?

Answer 35

Bribery Act 2010 - Aims to reduce bribery in businesses around the UK and abroad. A bribe is the giving, offering, promising, or receiving something that gives you an illegal advantage.

Question 36

What are the 6 principles of Bribery?

Answer 36

1. Proportionality 2. Risk assessment 3. Communication 4. Monitoring and Review 5. Top level commitment 6. Due dilligence

Question 37

What are the four offences of Bribery?

Answer 37

1. Bribing 2. Receiving a bribe 3. Bribing a foreign official 4. Failing to prevent a bribe

Question 38

What is the role of a company in regards to bribery?

Answer 38

Companies are responsible for individual employees corrupt actions. They must prove that they were not apart of it and have the necesssary measures in place to stop bribery - Identification, training, clear policies, and reviews. There must be a gift register in place to record reasonable and proportionate gifts.

Question 39

What are the penalties under the Bribery Act?

Answer 39

Maximum penalty of 10 years or an unlimited fine.

Question 40

What regulation relates to money laundering?

Answer 40

The Money Laundering, Terrorist Financing and Transfer of Funds 2017 Money laundering is when criminal activities are covered and disguised to make legitimate gains. The regulation covers estate work. Key provisions include: Providing staff training Complying with new customer due dilligence and enhanced due dilligence requirements Complying with the requirements relating to Politically exposed person (PEP) Ensure appropriate record keeping is in place AML checks to be done to confirm the identity of the client and their source of funds Additional high risk factors when assessing transactions between high risk third countries. You are not to take more than 10,000 euros as a fee.

Question 41

What are the legal obligations of estate agents?

Answer 41

Regulation requires estate agents that let properties for more than £10k must register with HMRC. Agents must conduct customer due dilligence checks on vendors, purchasers, landlords and tenants. Enhance due dilligence checks are done if there are any red flags. (PEP or high risk third world countries).

Question 42

What are the levels of due diligence checks?

Answer 42

There are two types customer due diligence and enhanced due diligence. Customer due diligence: - Identify the client using passports, driving licence or electronic identification. - Find out the identities of the owners of the company on company house - For a company their name, address and company number is required - You also need the name of the directors unless listed on regulated market (stock exchange) - Find out their funding arrangements Enhanced due diligence - Additional evidence and monitoring is required when dealing with a client from a high risk third world country or a PEP. - PEP is someone who has vast influence i.e celebrity or politician - PEP generally present a higher risk of bribery due to their position and influence - Detailed evidence of transaction purpose and increased monitoring.

Question 43

What are some more regulations under the Money Laundering, Terrorist Financing and Transfer of Funds 2017?

Answer 43

Detailed record keeping of procedures undertaken A senior member to be appointed to take responsibility for all compliance A responsible person must be in place to report any suspicious activities to the National Crime Agency who decide the necessary steps and actions required. A firm must maintain records for minimum of 5 years and to report to Companies House any differing information the firm holds and what is on company house register.

Question 44

What are the penalties under the Money Laundering, Terrorist Financing, Transfer of Funds 2017?

Answer 44

Maximum 14 years sentence and or unlimited fine for assisting with money laundering Maximum 5 years sentence and or unlimited fine for tipping off a person by informing them they are under suspicion.

Question 45

What is the required checks for money laundering checks?

Answer 45

Public limited company - London Stock Exchange Listing Public Accountable body - Government ownership Private limited company - Full name, registered numebr, registered office, names of directors, identification of higher risk client. Private individual - Copy of valid passport, driving licence, electronic identification, copy of bank statement, credit card bill council tax statement

Question 46

What is red flag of money laundering?

Answer 46

Unwillingness to provide identification documents Paying in unusual currency Unexpected urgency to complete the instruction They make a significant loss once the instruction completes

Question 47

What other legislation relates to money laundering?

Answer 47

Sanctions and Anti Money Laundering Act 2018 - Wider sanctions have been issued due to the conflict in Ukraine. Provides guidance on dealing with companies on the sanction list. Proceeds of Crime Act 2002 - Provides powers to enforcement authorities to recover moeny from criminal activities. - Creates a set of offences to combat money laundering: 1) Concealing criminal property 2) Arrangements - if a person becomes involved in control of criminal property 3) Acquisition use and possession - if a person uses criminal property Economic Crime Act 2022 - Strengthens the investigative powers regarding unexplained wealth orders. Allows for easier prosecution of those involved in non compliance with sanctions and unwillingness to provide identifiable documents.

Question 48

What Professional Standard relates to bribery and money laundering?

Answer 48

Countering Bribery, corruption, money laundering and terrorist financing 2019. Sets out mandatory requirements for members and firms relating to bribery, money laundering and terrorist financing. It is split into 3 parts: Part 1: Bribery and Corruption - not offer or accept anything could count as a bribe Have procedures in place to combat bribery and comply with law Report suspicious activity to relevant authority (National crime agency) Perform risk assessments Retain records to show compliance Part 2: Money laundering and terrorist financing Firms and members must not facilitate money laundering Have systems in place that comply with law Report suspicious activity Verify the client by conducting due diligence (CD or EDD) Retain records to show has met requirements of standard Part 2: Guidance Have a gift register Ecourage transparency Keep up with legislation Part 3: Supplementary Guidance Guidance on who you act for, what you are doing, why you are being tasked to do it. Dealing with PEP Need to identify the beneficial owner of a company