Ethics Level - 1 Flashcards

Question

What are the penalties for accepting a bribe?

Answer 1

The Bribery Act is policed by the Serious Fraud Office If this Act is breached, there is a maximum penalty of 10 years imprisonment and/or an unlimited fine for individuals; companies face an unlimited fine

Answer 2

Failure to comply with regulations: Maximum 14 years prison sentence and/or unlimited fine for assisting with money laundering Maximum 5 years prison sentence and/or unlimited fine for tipping off a person by informing them that they are under suspicion for money laundering or for failing to report suspicion

Answer 3

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

Answer 4

1. Failure to carry out due diligence 2. Failure to report suspicious activity 3. Failure to keep appropriate records 4. Knowingly facilitating money laundering or terrorist financing

Answer 5

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

Answer 6

PII is mandatory for surveyors working in practice. All members must ensure that an adequate and appropriate level of insurance is in place for each instruction having considered potential liabilities which may exist. All policies must be underwritten by an RICS approved insurer.

Answer 7

Provision included in a PII policy that sets a limit on the amount of money that an insurer will pay out for multiple claims that arise from the same cause or source. This is intended to prevent an insurer from being held responsible for an unlimited amount of damages arising from a single mistake or event.

Answer 8

Term used to describe a PII policy that provides coverage for claims made against the insured during the policy period, rather than claims arising from events that occurred during the policy period.

Answer 9

Excesses can be paid on a per-claim basis or on an aggregate basis. With per-claim excess, the amount is payable for each claim made during the policy period. With an aggregate excess, the excess amount is payable once, regardless of the number of claims made during the policy period, once the aggregate amount is reached, the insurer starts paying for the claim.

Answer 10

1. Documented process- having a clear documented process showing that you were acting with due care and consideration 2. Professional standards - demonstrate that you were acting in accordance with industry best practices 3. Adequate resources - having the appropriate staffing resource to ensure the work was done correctly 4. Regular reviews - can help identify and address issues early, demonstrating proactive management of work 5. Communication - maintaining clear and open communication with clients or stakeholders to show you were acting in their best interest

Answer 11

Yes, good-record keeping can help to demonstrate that the professional followed appropriate procedures, made reasonable decisions, and kept appropriate records of their actions. This helps the professional defend themselves against any allegations of negligence.

Answer 12

Notify the PII provider to ensure that the additional services are covered under the policy. The PII provider may charge an additional premium for the extended coverage.

Answer 13

Type of insurance that provides protection for professionals after they have retired or ceased trading, against claims arising from work they did before they retired or ceased trading.

Answer 14

1. RICS members who cease trading must have the adequate run-off cover 2. RICS requires a minimum of 6 years run-off cover 3. Run-off cover must be provided by a RICS approved insurer 4. Members must notify their insurer of any potential claims that may arise 5. Members must maintain accurate records for the period of run-off cover

Answer 15

1. Cyber attacks are now covered subject to a sub-limit of £250,000 2. Retroactive cover date has been extended to 1 January 2000 3. Limit of indemnity has been increased to £500,000 for regulated firms 4. Territorial limit has been extended to include worldwide cover 5. Aggregate limit has been increased to four times the limit of indemnity (max £10m) 6. Non-disclosure clause has been revised to clarify the circumstances under which an insurer can avoid a policy for non-disclosure

Answer 16

Case law has established that keeping adequate site notes can be crucial in providing a defence in a professional negligence claim. William Hare Ltd v Shepherd Construction held that the defendant's failure to keep adequate site notes and records contributed to the claimant's difficulties in establishing its case.

Answer 17

While dictated notes can be used as a supplement to written side notes, they may not be considered a substitute for them.

Answer 18

Building owners and managers have a legal responsibility to ensure the safety of occupants, including fire safety. RICS members require cyber cover to include first and third party losses resulting from a cyber attack, such as data breaches, ransomware and cyber extortion. PII cover is required for both.

Answer 19

Scheme that provides PII cover to RIC regulated firms that are unable to obtain PII cover in the commercial market. The ARP provides a safety net for firms that have had their PII cancelled, declined or not renewed by an insurer.

Answer 20

Available at a cost for members who cannot arrange cover

Answer 21

The guidance note aims to provide guidance to RICS members on the management of risks and liabilities, as well as the appropriate insurance coverage needed to protect against potential losses or claims. Topics such as risk assessment, risk management, liability exposure, different types of insurance policies and principles of PII are covered. The document provides information on the minimum level of professional indemnity insurance required for RICS members, as well as the need for appropriate cover for fire safety and cyber risks.

Answer 22

Most firms aim to cap their liability with clients for individual instructions. This may be to limit exposure to potential claims, particularly in high-risk or complex engagements.

Answer 23

Through the inclusion of a clause in the agreement between the client and the firm outlining the conditions under which the client can rely on the work of a third party.

Answer 24

1. Scope - define the scope of work to be undertaken and ensure that it is clearly understood by all parties. 2. Responsibility - the responsibilities of all parties involved in the instruction should be clearly defined, stating who will be responsible for each aspect of the work undertaken 3. Liability - the liability of the consultant should be clearly defined in the terms of engagement, identifying the types of losses or damages and any limitations or exclusions to this liability

Answer 25

A report that companies are required to file annually with a government agency or regulatory body. Including information about the company's directors, shareholders, registered address, share capital and any company changes. This is to provide transparency and accountability to stakeholders.

Answer 26

CHPs are guidelines or procedures that a firm has in place to deal with complaints from clients or customers. The purpose is to ensure that complaints are dealt with promptly, fairly and efficiently.

Answer 27

RICS can become involved if the complainant is not satisfied with the outcome of the firm or member's internal complaint handling process. The RICS will review the case and determine whether there has been a breach of rules of conduct or professional standards.

Answer 28

Minimum of 20 hours CPD per calendar year. 10 hours of which must comprise formal CPD. All members must maintain an understanding of the RICS Rules of Conduct during a rolling 3-year period. CPD records must be submitted by the 31st January each year.

Answer 29

CPD is important to ensure that professionals maintain and improve their knowledge, skills and competence throughout their careers. This helps individuals to keep up-to-date with new developments, stay relevant in a changing marketplace and demonstrate commitment to professional growth and improvement.

Answer 30

1. Disclosing any actual or potential conflicts of interest to all parties involved in the transaction. 2. Seeking the consent of all parties involved in the transaction to proceed with the work after disclosing the conflict 3. Declining the instruction or withdrawing from the transaction if it is not possible to manage to conflict of interest effectively Members should maintain accurate records of any potential or actual conflicts of interest, and the steps taken to manage them. This can help to demonstrate that the member has acted in good faith and in accordance with the professional standards.

Answer 31

A situation where a single agent represents both sides in the same transaction. This can create a conflict of interest, as the agent has a duty to represent the best interests of both parties but may not be able to do so effectively due to competing interests.

Answer 32

Because it creates a conflict of interest. The agent will not be able to represent the best interests of both parties.

Answer 33

Inform the RICS of retirement/closure Ensure clients are informed at the earliest opportunity Return any monies held by clients to their accounts Inform 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 Retain a copy of the client files and records for a minimum of 6 years

Answer 34

The RICS guidance is aimed at ensuring members and firms understand their obligations and responsibilities when it comes to identifying, reporting and preventing any potential risks of bribery, corruption or money laundering.

Answer 35

The guidance is considered mandatory for all members and firms. Failing to comply may result in disciplinary action by RICS.

Answer 36

1. Due diligence 2. Risk assessment 3. Record keeping 4. Training 5. Reporting 6. Confidentiality 7. Compliance culture

Answer 37

1. Have written ML and TF risk assessment 2. Implement systems, policies and procedures to address ML and TF 3. Adopt ppropriate internal controls 4. Provide staff training 5. Comply with new customer, enhanced and simplified DD requirements 6. Comply with requirements relating to PEPs 7. Ensure appropriate record keeping 8. AML checks must be undertaken to confirm identity and source of funds 9. Include additional high-risk factors when assessing the need for enhanced DD

Answer 38

Complete a Firm Details Form Appoint a Responsible Principle for all RICS communication Register with RICS for regulation by Regulatory Board Arrange PII and send details to RICS Setup procedures for Client Money Handling Register for RICS Valuer Registration Scheme if undertaking Red Book valuations Obtain RICS approval for Complaints Handling Procedure Set up complaints log Appoint a Complaints Handling Officer Use a logo kit from RICS Plan for succession of business if a sole practitioner Ensure CPD is logged online Ensure completion of RICS Annual Return at year end

Answer 39

Effect from 2nd February 2022

Answer 40

Changes to PII Requirement for cyber and data protection insurance Requirement for adequate and effective risk management procedures Requirements for firms to have adequate and effective CHPs Requirements to have adequate and effective anti-bribery and corruption policies Requirements to ensure staff are properly trained

Answer 41

An individual who has completed the necessary education, raining and experience requirements. This involves an RICS accredited degree, structured training period and passing of the Assessment of Professional Competence.

Answer 42

A type of company that arises from the ashes of a previously insolvent business. Typically owned and controlled by the same individuals as the old company.

Answer 43

If a firm offers surveying services to third parties and where the 50% or more of the principals are RICS members.

Answer 44

The firm must have: A principal or director who is a qualified member of the RICS Adequate PII Appropriate systems and controls in place to ensure compliance with RICS regulations and standards Demonstrate financial stability Appropriate arrangements in place for handling complaints and disputes Comply with all relevant laws and regulations provide accurate and up-to-date information to RICS about ownership/structure Pay the required registration fees to RICS

Answer 45

An individual within a regulated firm who is responsible for ensuring that the firm complies with the RICS regulatory requirements. This includes procedures, staff training, regulatory returns completed (accurately) and any breaches reported to RICS.

Answer 46

It may not be able to register with RICS for regulation or may have its registration revoked. The RICS may also take disciplinary action against member or firms that fail to comply with the rules and regulations.

Answer 47

Only firms regulated by RICS can use the logo and designation. Firms must ensure that the use is not misleading and obtain the RICS' prior written consent before using either. Failure to comply can lead to disciplinary action.

Answer 48

February 2022 Firms must be registered with RICS The RICS logo must comply with RICS Brand Guidelines

Answer 49

The term is restricted to firms that are regulated by RICS and have at least one RICS member as a principal or director. This is to ensure the use of the designation is reserved for those who have met the rigorous standards of the RICS.

Answer 50

1. Name of the firm and registration with RICS status 2. The firm's registered office address 3. Details of regulatory framework that the firm operates under 4. Information on the firm's complaints handling procedure 5. PII arrangements 6. Fee agreement 7. Description of services provided 8. Details of qualifications/expertise 9. Any other terms relevant to the engagement

Answer 51

A person who temporarily fulfils the duties of another person during their absence. A locum surveyor may be employed to cover the absence of a regular surveyor or to provide additional capacity during periods of high demand.

Answer 52

The locum should be someone with suitable experience and qualifications to handle complaints, and given clear instructions on how to handle complaints that may arise. The ToE with the locum should clearly outline their role in handling complaints, including the procedures to be followed.

Answer 53

RICS Professional Statement 'Client Money Handling' 1st edition 2019 (with effect from 1st January 2020)

Answer 54

The RICS Scheme Rules relating to client money protection are designed to protect the money of clients held by regulated firms. The rules require that firms must maintain adequate protection and provide compensation in the event of loss of client money. Firms must maintain a separate client account for all money, which must be clearly distinguishable from any other account held by the firm. The client account must also be reconciled at least once a month.

Answer 55

1. Client Money Protection Scheme - provides protection to clients in the event that the firm is unable to repay money that is held on their behalf. The most recent update was in April 2019. (Relevant to property management) 2. RICS Insurance Backed Guarantee Scheme - provides protection to clients in the event that the firm is unable to honour its contractual obligations. The most recent update was in October 2021. (Relevant to valuations and other commercial services)

Answer 56

The current limit is £50,000 per claim.

Answer 57

The fee covers the cost of RICS monitoring and regulating the firm's compliance with its regulatory obligations, including compliance with RICS standards, as well as laws and regulations. The fee also covers the cost of RICS providing support and guidance to the firm on regulatory matters.

Answer 58

Rent deposits, rent, service charge and retentions. Office money refers to funds that belong to the firm, such as fees received from clients for services provided. These can be held in the firm's own accounts, and are not subject to the same regulations and protections as client money.

Answer 59

1. Segregation - client money held separately 2. Record keeping 3. Reconciliation 4. Insurance 5. Staff training 6. Audit 7. Notification - of fraud or misappropriation of client money

Answer 60

Climate change - adopting more sustainable and resilient approaches to development and management. Technology - driving innovation and improving efficiency. Urbanisation - adapt to developing more compact, mixed-use and sustainable urban environments. Demographic shifts - firms needs to be more flexible and responsive to changing customer needs and expectations. Geopolitical risks - firms need to be more aware of risks (trade tensions and political instability) and take steps to manage them effectively.

Answer 61

Involved a fraudulent property transactions in which a fraudster impersonated the owner of a property and sold it to a buyer. The buyer's solicitor failed to carry out proper due diligence and identify the fraud. This highlighted the need for greater due diligence checks when dealing with property transactions. It also emphasises the importance of having appropriate insurance coverage to protect against potential losses as well as identity verification and security measures.

Answer 62

The case established that the existence of a professional duty of care does not depend on the existence of a contractual relationship, and that professionals an be held liable for professional negligence even when providing informal or free advice. The case highlighted the importance of setting out clear Terms of Engagement and the scope of services provided.

Answer 63

"Better regulation, high professional standards"

Answer 64

1. Professionalism 2. Confidentiality 3. Integrity 4. Respect 5. Responsibility 6. Transparency 7. Disciplinary action

Answer 65

The Levitt review was in response to concerns about the handling of complaints and effectiveness of the RICS regulatory system. The review made recommendations such as: 1. Improving the handling of complaints - transparency and improved communication 2. Strengthening the independence and effectiveness of RICS regulation 3. Improving governance and accountability

Answer 66

Refers to the process by which a member of a firm reports concerns or misconduct within that firm. These could relate to unethical or illegal behaviour and other regulatory breaches.

Answer 67

Good governance is the process of making and implementing decisions that are accountable and transparent. It envolves establishing and enforcing laws, policies and procedures that promote fairness and honesty.

Answer 68

1. Professionalism - members are to maintain trust and the highest standards of professionalism and act with integrity. 2. Trust - earn and maintain trust of clients, colleagues and the public. 3. Accountability - take responsibility for actions 4. Diversity and inclusion - promote and support 5. Collaboration - to achieve common goals and promote the values of the profession 6. Continuous learning and development for members

Answer 69

Pandora Papers relate to a leak of more than 11 million documents from Panama-based law firmed called Mossack Fonseca, which specialises in setting up offshore accounts and shell companies. Ethical issues raised include: 1. Tax evasion - use of offshore accounts to hide wealth and avoid taxes is considered unethical and may be illegal. 2. Corruption - use of offshore accounts may be used to engage in corrupt activities 3. Conflict of interest - PEPs exposed may have a conflict of interest if they are using offshore accounts while making decisions that affect the public 4. Lack of transparency - difficult to track the movement of money and identify potential illegal activities

Answer 70

Following the Levitt Review of internal governance failings within RICS, RICS commissioned Lord Bichard to undertake a further review to: Clarify the purpose of RICS, including its responsibility to act for the public advantage Make recommendations on its governing structure to deliver that purpose Provide proposals for the incoming leadership and governing body

Answer 71

1. Renewed and increased focus on public interest 2. Maintaining self-regulation (greater independence for regulatory functions) 3. Increased focus on diversity and inclusion 4. Empowering and enabling members through greater support for regional boards 5. Undertaking an independent review of RICS governance 6. A new simplified, clear and accountable governance structure. 7. Greater leadership on issues that matter most to society e.g. sustainability

Answer 72

Included consultation with members and external stakeholders and recommended a quick and phased approach to the adoption of clear responsibilities for governance by key individuals, recruiting a new Management Board and Standards and Regulation Board, and holding elections for key RICS committees and groups.

Answer 73

Integrity relates to the adherence of moral and ethical principles that guide a person's behaviour in their profession. Ethics refers to the specific set of rules and guidelines that govern the behaviour of professionals in industry. Often codified as professional codes of conduct.

Answer 74

Term used to describe various forms of exploitation that occur in society. Red flags: 1. Poor working conditions (lack of safety equipment, inadequate hygiene) 2 .Restricted freedom of movement 3. Coercion and threats 4. Withholding wages and documents 5. Lack of transparency in the supply chain

Answer 75

1. Expanded powers for the government to impose sanctions 2. Strengthened enforcement of financial sanctions 3. New powers for the Office of Financial Sanctions Implementation 4. Enhanced measures to combat money laundering and terrorist financing

Answer 76

A list of countries, individuals, entities and organisations that are subject to economic and trade sanctions imposed by national governments, international organisations or the United Nations. It is important to be aware of the sanctions list because doing business with individuals or entities on the list is illegal and can result in significant financial and reputational consequences.

Answer 77

To increase transparency around the ownership of property in the UK, particularly in relation to the use of offshore entities to hold and purchase property. It is intended to prevent the use of such entities to conceal the identity of the true owners of property, as well as to help prevent money laundering and other illegal activities.

Answer 78

1. Accountability - taking responsibility for actions 2. Integrity - being honest and ethical 3. Inclusivity - promoting diversity 4. Agility - being adaptable to change 5. Collaboration - working together to achieve common goals 6. Professionalism - maintaining high standards of expertise

Answer 79

Act of Parliament which aims to combat economic crime. The Act introduced new offences and powers to investigate and prosecute economic crime, including money laundering, fraud, bribery and corruption. The Act also established the Assets Recovery Agency, which has the power to seize and recover the proceeds of crime. Creation of the offence of failure to disclose money laundering.