Ethics L1 part 2

Question 1

What steps need to occur prior to undertaking an instruction?

Answer 1

1. Check professionally competent.
2. No conflicts of interest / personal interests
3. Confirm terms of engagement in writing and get written approval from client before work is started on the instruction.
   - Copy of firms complaints procedure available on request

Question 2

Why might you decline an instruction?

Answer 2

Reasons for declining an instruction

1. Not competent to undertake the work
2. Not enough information/facts on the issue
3. Client will not sign the ToE / agree to AML checks
4. PII cap cannot be agreed
5. Potential client is included in the UK Government sanctions list

Question 3

When does a conflict of interest arise?

Answer 3

A conflict of interest arises when a member or a firms interdependence and impartiality is threatened due to the existence of a conflict between a client and a member – any financial interest, a personal interest, commercial relationships, acting on both sides of the transaction

Question 4

Define conflict management

Answer 4

Instruction is accepted, and steps are agreed and put in place to manage the conflict such as an information barrier with written agreement from all parties

Question 5

Name the professional standards relating to conflicts

Answer 5

RICS Global Professional Statement on Conflicts of Interest, 2017

Question 6

Name the three types of conflicts

Answer 6

Party Conflict – relating to work on the same or related instruction for two different parties
Own Interest Conflict – relating to a personal interest
Confidential Information Conflict – relating to work between two parties which is confidential

Question 7

How can conflict of interests be managed

Answer 7

Require informed consent from both parties
• Disclose the nature of the conflict, and set out the proposals of how the firm plans to deal with the conflict i.e. information barrier
• Request written confirmation of their informed consent that your firm can act in accordance with the provisions of the procedure proposed

Question 8

Name the RICS professional statement relating to client money

Answer 8

RICS PS Client Money Handling, 1st edition, 2019

Question 9

Information within RICS PS Client Money Handling

Answer 9

information on holding client money, providing information to clients, receipts of client money, payments from clients accounts, accounting records and control, compliance.

Question 10

Main requirements when handling clients money

Answer 10

• Client accounts must be kept separately and clearly identifiable. The name ‘client’ must be on the bank account
• A client must be able to have their monies on demand
• Accurate records should be kept with a running balance available
• Two signatories should be agreed with staff for payments

Question 11

When starting a new practise, what things are required from the RCS

Answer 11

• Inform RICS of your new practise by completing a Firm Detail Form
• Appoint a responsible Principal for all RICS
• Register with RICS for regulation of the firm (Registration Guidance on Regulation)
• Arrange PII and send details to RICS
• Set up procedures to address handling clients money
• Register for the RICS Valuer Registration Scheme if undertaking Red Book Valuations
• Obtain RICS approval for CHP and set up a complaints log and appoint a Complaints Handling Officer
• Staff training plan
• Completion of RICS Annual Return at end of each year

Question 12

When starting a new practise, what statutory compliance information should you be aware of

Answer 12

• Equality Act 2010
• Bribery Act 2010
• Health and Safety Compliance – Health and Safety Act 1974
• Inform the HMRC for VAT and Tax registration
• Ensure compliance with current employment law – National Living Wage, working hours etc
• Register for data protection (GDPR 2016 and Data Protection Act 2018)

Question 13

What to do when closing a business

Answer 13

• Inform RICS of closure of the practise
• Ensure clients are informed and return any monies held by clients to their own accounts
• Inform your insurers and procure PII run off cover for a minimum of 6 years from the expiry of the policy in force at the time of cessation in accordance with RICS requirements
• Retain a copy of client files for at least 6 years

Question 14

Name the Act relating to bribery

Answer 14

Bribery Act 2010

Question 15

What is the main purpose of the bribery act

Answer 15

Aims to reduce bribery in business in the UK/abroad, came into force July 2011

Question 16

Define a bribe?

Answer 16

Is the giving, offering, promising or recieving of an advantage such as a payment, gift or service for an action which is illegal or a breach of trust

Question 17

Name the 4 offences relating to the Bribery Act 2010

Answer 17

Bribing, Recieving a Bribe, Bribing a foreign official, failing to prevent bribery

Question 18

Key principles of the Bribery Act 2010

Answer 18

Proportionality, top level commitment, risk assessment, due dilligence, communication, monitoring and review

Question 19

Penalties under the Bribery Act 2010

Answer 19

10 years imprisonment / unlimited fine

Question 20

When can gifts/hospitality not be classed as an offence under the Bribery Act 2010

Answer 20

Reasonable and proportionate hospitality - meals / sporting events

Question 21

Name examples of possible bribes

Answer 21

• The offer or receipt of cash inducements or other “kickbacks”
• Payments for lavish or inappropriate entertainment
• Favours including offers of employment.
• Arrangements which may personally benefit, directly or indirectly, a member of staff or their family, friends, associates or acquaintances.

Question 22

Describe CJ Gifts and Bribes Policy (BOP60)

Answer 22

• You may only offer or accept gifts and hospitality that are customary and reasonable in terms of value and frequency. You must never offer or accept any gift or hospitality if it may improperly influence a business decision or impair independence or judgment or give the appearance of doing so.
• Accept without declaration – ad hoc gifts below £50 (bottles of wine, chocolate, flowers, lunch/dinner less than £50 per head)
• Gifts / hospitality upto £500 must be declared in the Risk Register on the CJ Loop – sporting events, cases of wine, lunch/dinner

Above £500, gifts have to be approved by compliance or finance director

Question 23

Define money laundering

Answer 23

Money laundering means exchanging money for assets that were obtained illegally, for money or other assets that are “clean”. In the context of our business, money laundering is the use of property (or land) to “clean” money so that it cannot be traced to its source. (financing terrorism)

Question 24

Name regulations relating to money laudering

Answer 24

Money laundering and terrorist financing (amendment) regulations 2019 - came into effect, 10th January 2020

Question 25

Describe the key provisions of the Money laundering and terrorist financing regulations, 2019

Answer 25

- Requirement to conduct a written money laundering risk assessment for the firm - Implement policies and procedures to address money laundering and terrorist financing - Provide staff training on AML - AML checks to confirm the identity of the proposed purchaser and the source of funds

Question 26

Describe letting agent obligations under the Money laundering and terrorist financing regulations, 2019

Answer 26

- It expands the scope of the current anti money laundering regulations to include Letting Agents so that the customer due diligence requirements will apply to transactions for the letting of property (including land) for a term of one month or more, where the monthly rental is €10,000 (£8500) or more - CDD checks on LL/tenants for new lettings and reletting and EDD checks if red flags occur

Question 27

Describe Customer Due Diligence and Enhanced due diligence checks

Answer 27

Customer Due Diligence (CDD) - Identify client via sources such as passport, driving license, bank statements. Enhanced due diligence (EDD) – additional procedures are required for transactions or business relationship involving a person in a high risk third country or politically exposed person

Question 28

What is the maximum amount of cash that can be accepted

Answer 28

£10,000 euros

Question 29

Penalties for money laundering

Answer 29

14 years imprisonment and unlimited fine for assisting in money laundering 5 years maximum for tipping off a person by informing them they are under suspicion of money laundering.

Question 30

Describe Proceeds of Crime Act 2002

Answer 30

sets out the legislation for the recovery of criminal assets with criminal confiscation being the most commonly used power. Offences – concealing criminal property, arrangements or acquisition use and possession

Question 31

Name the RICS Professional Statement on bribery/money laundering

Answer 31

Countering Bribery, corruption, money laundering and terrorist financing 2019

Question 32

What is the purpose of the Countering Bribery, corruption, money laundering and terrorist financing 2019 Professional Statement

Answer 32

Sets out mandatory requirements for members and firms on bribery, corruption, money laundering and terrorist financing – September 2019 1. Mandatory guidance of AML, bribery and terrorist financing – have procedures in place to comply with the law, report any suspicion to relevant authorities, retain records to show firm has met requirements of PS 2. Guidance setting out supporting good practise 3. Supplementary guidance on Parts 1&2

Question 33

How to avoid a negligence claim

Answer 33

* Understand the clients objectives, confirm instructions in writing * Ensure you are comptent to undertake the instruction * Work in accordance to RICS Standards and Guidance Notes * Cap the Professional Liability Excess on your PII policy in ToE

Question 34

Define the CPD requirements under the RICS

Answer 34

1. Members must undertake a minimum of 20 hours of CPD per year, 10 hrs must be formal CPD (structured training, courses, seminars) 2. Must maintain a relevant and current understanding of RICS Professional and Ethical Standards 3. CPD recorded in RICS CPD Management System

Question 35

Describe basic procedures for complaints procedures under the RICS Guidance Note on Complaints Handling, 2016

Answer 35

Complaints handling procedure must be approved by the RICS • PII insurers notified of potential claims as soon as possible, as could lead to a negligence claim • CHP should be handed to clients / made aware of alongside ToE

Question 36

Define a complaint

Answer 36

• A complaint is any criticism however made which implies that any person is less than satisfied with a policy being operated by Carter Jonas

Question 37

How do you deal with complaints if you are a sole practicioner

Answer 37

• Sole practitioner must nominate a surveyor in another firm to act as a Complaints Handling Officer

Question 38

How do you deal with complaints informally

Answer 38

* Be receptive and responsive to any issues irrespective of how they are raised – verbal, email or letter. * Ensure the Office Head and/or Line Manager are kept informed of the situation and also to get another view. * Ensure that all communication from us is courteous and prompt and responses are recorded and kept on file including notes of telephone conversations. * You should acknowledge the receipt of the complaint promptly and certainly within 3 working days at the latest.

Question 39

Describe CJ formal complaints procedure

Answer 39

Managed inhouse by complaints handling officer • All complaints that have the potential to become a claim must be referred to compliance as soon as they are identified, otherwise they may not be covered under CJs PII • Compliance acknowledges receipt of complaint within 3 working days and enclose the CHP • Complaint logged in Complaints Register • Complaint response to complainant within 15 days, if the complainant does not agree, 15 further days to review circumstances. • Third Party Resolution - If the complainant does not agree with our conclusions, they have the right to refer the matter to the property Ombudsman or RICS DRS / The Centre for Effective Resolution

Question 40

Describe PPI

Answer 40

Insurance to protect clients, surveyors, and third parties against negligence claims when there is a duty of care breached and a claim arises for damages

Question 41

Describe rics guidance on PPi

Answer 41

RICS Professional Indemnity Insurance Requirements, v7, May 2020

Question 42

What determines the minimum PII cover set by a firm

Answer 42

Due to the turnover of a firm - £100,000 or less - £250,000 £100,000 - £200,000 - £500,000 £200,000 and above - £1,000,000

Question 43

Describe PII cover for CJ

Answer 43

• CJ PII Cover from Millers – Standard Instructions £5,000,000 (total cover is £50,000,000) CJ Insurance policy – Written on any one claim and in the annual Aggregate Plus unlimited round the clock reinstatements (7 layers to reflect insurer appetite)