Ethics, ROC, Professionalism Flashcards
(197 cards)
1
Q
When was the RICS founded?
A
1868
2
Q
Who and when was the royal charter granted?
A
By the Privy Council in 1881
3
Q
How many levels of the RICS are there and what are they?
A
FRICS, MRICS, AssocRICS, Trainee/Student
4
Q
What do you need to become a fellow of the RICS?
A
- Achieving FOUR of the fellowship characteristics (5 years or more MRICS, leadership role, professional/technical achievement, academic achievement or raising the profile of the RICS)
-A portfolio of professional achievement (incl CPD)
5
Q
How is the RICS regulated?
A
The RICS is self-regulated and internally monitored.
Bye-laws determine how the RICS is regulated.
(not regulated by the Government or external parties)
6
Q
Who manages and agrees the strategy for the RICS?
A
The Governing Council manage and agree the strategy for the RICS.
The regulatory board, audit committee and management board beneath the Governing Council execute the strategy.
7
Q
What is the aim of the RICS?
A
- Qualify and equip their members to offer the highest standards of professional service
- Promote and enforce standards
- Lead solutions to the major challenges facing the built environment through professional expertise in the publics interest
8
Q
Who is the RICS Chair of Governing Council?
A
Martin Samworth
9
Q
Who is the current RICS Chief executive officer?
A
Justin Young
10
Q
Who is the president of the RICS?
A
Ann Gray
11
Q
Who is the RICS young representative?
A
Sunny-Thomas Obasuyi MRICS from BNP Paribas Real Estate UK
12
Q
What do you know about the RICS?
A
Globally recognised professional body
Promote and enforce highest professional standards
Influence policy and embed standards to protect consumers and businesses
134,000 highly qualified trainees and professionals
13
Q
What do the RICS standard documents do?
A
- Lay out the ethical, conduct and competence related standards for the profession.
^ As members and firms work to this standard they deliver confidence, transparency and professionalism.
14
Q
What are the 5 benefits of being an RICS member?
A
- Status (confidence)
- Recognition (Promote professional)
- Market (Competitive advantage)
- Knowledge (Knowledge sharing)
- Network (Access to other professionals)
15
Q
What are the new RICS Rules of Conduct?
A
Rule 1 - Members and firms must be honest, act with integrity and comply with their professional obligations.
Rule 2 - Members and firms must maintain their professional competence and ensure services are provided by competent individuals who have the necessary expertise
Rule 3 - Members and firms must provide a good quality, diligent service
Rule 4 - Members and firms must treat others with respect and encourage diversity and inclusion
Rule 5 - Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession.
16
Q
When did the previous Rules of Conduct change?
A
The new rules came into effect on 2 February 2022
The previous rules had been in place for members and firms since 2007.
17
Q
Why did the previous Rules of Conduct change?
A
To provide a single document for clarity for RICS members and firms
Now a greater focus on clearer example behaviours, understanding evolving technology and tackling climate change.
18
Q
What documents does the new ROC replace from the old ROC 2007?
A
The rules of Conduct October (global practice statement) 2021 will over haul the previous separate documents:
- Rules of conduct for members
- Rules of conduct for firms
- Global professional and ethics standards
- Appendix A of ROC now includes the professional obligations of members and firms.
19
Q
Explain your understanding of Rule 1?
A
- RICS members and firms should not allow themselves to be influenced improperly through the acceptance of work referrals, gifts or hospitality.
- RICS members and firms must identify conflicts of interest and decline instruction if required
20
Q
Explain your understanding of Rule 2?
A
- RICS members and firms must only act for clients where they have the necessary knowledge, skills and resources to carry out competently.
- Firms must supervise any employees undertaking work on their behalf (i.e. junior surveyor undertaking a complex valuation due to resourcing issues - suitably qualified surveyor should undertake this)
21
Q
Explain your understanding of Rule 3?
A
- RICS members and firms must understand the clients instruction, requirement (i.e. timeframe) and objectives before acting on their behalf.
22
Q
Explain your understanding of Rule 4?
A
- RICS expects its members to respect the rights of others and treat others with courtesy.
- Everyone is to be treated fairly, illuminating discrimination on age, disability, gender, pregnancy, race, religion, sexual orientation etc.
- RICS member and firms need to a adopt a no tolerance policy of bullying and harassment.
23
Q
Explain your understanding of Rule 5?
A
- Members and firms are required to question practices and decisions that they suspect are not right (raise concerns with colleagues, senior management, clients, RICS)
- When making public statements ensure these do not undermine public confidence in the profession
- Complaints to be dealt with promptly, openly and professionally
(useful sense check, if our actions were brought to the media or public forum, would we be comfortable standing behind our actions?)
24
Q
What are the professional obligations of members?
A
- Members must comply with CPD requirements (20 hours of CPD, 10 formal hours)
- Members must cooperate with the RICS
- Members must promptly provide all information reasonably requested by the standards and regulation board, or those delegated on their behalf.
25
What are the professional obligations of firms?
- Firms must publish a complaints handling procedure (incl an alternative dispute resolution provider approved by the RICS), and maintain a complaints log.
- Firms must ensure all previous and current professional work is covered by professional indemnity cover (must meet RICS approved standards).
- Firms with sole principal need to make appropriate arrangements for their work to continue in the event of death/ inability to work.
- Firms must co-operate with the RICS
- Firms must promptly provide all information reasonably requested by the standards and regulation board, or those delegated on their behalf.
- Firms must display they are regulated by the RICS (in accordance with RICS policy)
- Firms must report to the RICS any matter that they are required to report under the Rules for Registrated Firms.
26
How do you demonstrate Professional Behaviour throughout your work / instructions?
- Act honestly and with integrity
- Provide a good and diligent service
- ask myself if I would be happy for my actions / advice to be made public.
27
What are the RICS requirements for registration of a firm?
- inform RICS of your new practice
- appoint a responsible principle for all RICS communication
- register with the RICS for regulation of the firm by the regulatory board
- professional indemnity insurance
- client money handling procedures
- RICS Valuer registration scheme
- complaints handling procedure, complaints log and complaints handling officer
- logo kit from the RICS
- if sole practitioner - future of business
- CPD logged on online RICS system
- staff training plan
- online annual return each year
- business plan
28
If you were unsure on whether proceeding with an action or instruction is ethically correct, how would you come to a decision?
I would used the ethics decision tree.
29
What is the professional and ethical standards decision tree?
Decision making framework to deal with ethical dilemmas
30
What is the purpose of the ethics decision tree?
Helps RICS members to deal with ethical dilemmas by asking several questions
31
What are the stages of the ethics decision tree?
- Check you have sufficient facts on the issue
- is it legal?
- in line with ROC?
- Have you consulted the right people?
- clear reasoning for the decision?
- Informed decision?
- Happy for actions to be made public?
32
Why do the RICS take disciplinary action?
To protect the public interest and safeguard the reputation of the profession.
33
What can trigger a disciplinary procedure?
- Complaint made to the RICS
- Allegation by a client or 3rd party
- Information received or established by the RICS
34
Who creates Rules about the exercise of disciplinary powers?
Royal Charter and Bye-Laws authorise the Standards and Regulation Board to make Rules about the exercise of disciplinary powers.
35
Do you know of a recent disciplinary hearing?
David Laurent didn't comply with RICS’ requirements in respect of CPD and did not complete and record at least 20 hours of CPD on the RICS CPD portal.
Hearing took place June 2023 - outcome:
Regulatory Compliance Order
- Fine of £300
- Contribute £100 towards the cost of investigation and agree to publication of a summary of the Order for a period of 12 months.
36
When might a RICS rule of conduct be breached?
- Breaches of professional behaviour (rule of conduct - 1, 2)
- Breach of CPD
37
What is the first step of disciplinary action and can you explain the process?
Step 1 is a formal investigation undertaken by the head of regulation.
Following investigation they can initiate one of the four following actions if disciplinary required:
1. Serve a fixed penalty notice
2. Make a regulatory compliance order
3. CPD sanctions
4. Refer to a disciplinary panel for consideration under the disciplinary rules.
38
What is a fixed penalty?
Fine and/or caution issued by RICS when a Regulated Member breaches the Rules.
39
What is a regulatory compliance order?
Used for less serious case:
Procedure to ensure future compliance with the standards. This may include a fine, caution or conditions on the membership of the Regulated Member.
40
What is the procedure and action by a regulatory tribunal?
Used for more serious breaches
Head of regulation can consider a hearing from a disciplinary Panel, drawn from the independent Regulatory Tribunal.
The Disciplinary Panel will conduct a hearing to hear the evidence supporting the allegations and determine the outcome.
They may:
- Impose sanctions ranging from a fine to expulsion
- Can determine costs against Regulated Members.
41
What are the penalties of a regulatory tribunal?
1. Issue a compliance order
2. Impose an unlimited amount of fine per breach (must be proportionate to offence)
3. Impose conditions on future continued RICS registration
4. Expulsion from membership or remove a firm
5. Require a publication of the results of the hearing in the RICS modus, local news etc.
42
What is a CPD Sanction?
- Place an obligation on a member to follow the CPD requirement.
43
In respect of negotiating a fee what should be avoided?
- Price fixing
- Aggressive fee cutting
- Collusion with competitors
44
How should a fee be agreed?
Fees should be market based and on an ad-hoc basis with clients
You can entre into fee negotiations with a client after submitting an initial proposal
45
Where should a referral fee be stated?
Terms of engagement
46
What act should be considered when dealing with referral fees?
Bribery Act 2010
47
What should be included within Terms of Engagement?
Must state in writing:
- Clients agreement to the proposed fee basis
- payment of expenses (and calculation)
- a copy of the firms complaints handling procedure is available upon request
48
What 3 steps should you follow when considering Terms of Enagagement?
- Check professionally competent
- No conflicts of interest or personal interest
- Confirm TOE in writing and get written approval from the client before starting work on the instruction.
49
What checks are required for agency work?
(TOEs)
- Compliance with s18 of the Estate Agents Act 1979
- Money Laundering Checks (Money Laundering Regs 2017)
50
How does your firm undertaken COI checks?
- Emailing staff to enquire about any individual involvement
- Searching the Council's files database
- Declaring any personal interests in property at
the time of joining the organisation, and throughout
51
What is the cooling off period for TOEs?
The Consumer rights act allows for a cooling off period of 14 days from the date of agreement.
52
What is section 18 of the Estate Agents Act 1979?
Section 18 requires agents to give clients information before entering into a contract for agency work including strict details of commission and fees for services other than estate agency work.
53
When would you decline an instruction? Give me 3 examples?
- Not competent to undertake the work
- Do not have sufficient facts on the issue
- Client won't sign TOEs or complete AML checks
- Conflict of interest or a personal interest
- Professional indemnity insurance liability cap cannot be agreed
- Advice is for a friend or on a pro bono basis (free of charge for a charity) and PII won't cover work carried out on a personal basis.
- Potential Client is included in UK Governments sanctions list
- Would you be content for your actions to be made public?
54
If you are considering whether to act for a client, what RICS guidance could you use?
The ethics decision tree sets out a framework for considering whether to act for a client.
55
When can a conflict of interest arise?
When a member or firms independence and impartiality is threatened due to a conflict between two clients.
Examples include -
- Financial interest
- Personal interest
- Commercial relationships
- Acting on both sides of a transaction
56
How do you handle a conflict of interest? (Three steps)
- Conflict Avoidance (Y v N)
- (If proceeding) Written advice to both parties
- Conflict Management (information barrier)
57
What is conflict avoidance?
When you determine if the conflict is irresolvable because your impartiality is compromised and if so you do not accept the instruction
58
What is written advice to both parties (COI)?
If wish to accept an instruction set out in writing following 3 points:
- Disclose nature of conflict (facts and how firm intends to manage this)
- Be Clear - ensure both parties can make their own decision (advise to seek independent advice if required)
- Request confirmation form both clients of their informed consent that the firm can act in accordance with the proposed procedure.
59
What is conflict management?
When the instruction is accepted and steps are agreed and put in place to manage the conflict.
i.e. information / ethical barrier with the written agreement of all parties
60
What is an information barrier?
Physical and/or electronic separation of individuals (or groups of individuals) within the same firm that prevents confidential information passing
between them.
61
Tell us about the RICS Professional Standard on COI?
- Dated 2017 came into effect January 2018
- Previously a Professional Statement
- States a member must not advise or represent a client where doing so would involve a conflict of interest or a potential conflict of interest (unless you have informed consent)
62
What is informed consent?
Informed consent is consent given willingly by a party who may be affected by
a Conflict of Interest.
Subject to that party demonstrating they understand:
- there is a COI or potential COI
- the facts known by the RICS member / firm that are significant in the COI
- the nature of the conflict
- that the conflict may effect advice provided by the firm or their ability to act fully in the interests of a client.
63
When should an RICS member or firm seek informed consent?
When a member or firm is satisfied that proceeding despite a COI is in the interests of all those who are or may be affected and is not prohibited by law
64
What are the three types of COI defined?
1. Party conflict
2. Own interest
3. Confidential information conflict
65
What is a party conflict?
- A party conflict relates to work on the same or related instruction for 2 different parties.
e.g. acting on behalf of 2 businesses with the same interests such as competing supermarkets
66
What is an own interest conflict?
Personal interests conflict with their clients
e.g. financial (shares in a company), commercial or personal relationship
67
What is a confidential information conflict?
Obligation to provide information to a client might conflict with another clients requirements to keep the same information confidential
68
What is the main reason for Conflicts of Interest Checks?
To make sure there is nothing in the way of our professional duty to advise and act for clients objectively without impacting other clients, 3rd parties, or our own interests
69
Why is Conflict of Interest checks important?
Helps maintain our integrity and public confidence in the profession
70
Why is it important to record decisions made?
For auditing purposes and in case of future investigations
71
What is confidential information?
Private information (electronically, physically or verbally)
72
An RICS firm / member's duty of confidentiality is...
Continuous and ongoing, it applies to past, present and future clients.
73
COI document places an obligation on firms to...
- Keep records for any decisions made / measures taken
- obtain informed consent (if proceeding)
- Ensure client has full understanding of potential COI including risks and facts
- Must accept that conflict may affect the ability to act in their best interests
74
How would you seek informed consent?
Use the sample form at the end of the COI 2018 document and consider / amend this.
75
What do you do if you don't believe the client has a sufficient understanding of the conflict disclosed?
- Suggest they seek independent legal advice
- Decline the instruction
76
What happens if a conflict arises during an instruction?
Obtain informed consent before proceeding with duties that could cause a conflict.
77
What is there is an information barrier already in place?
Client still needs to provide informed consent
78
How would you ensure an information barrier is in place?
- Separating where people site in offices,
- restricting access to emails and files
79
How do firms comply with COI?
- Conflicts must be managed in accordance with the professional statement
- Every RICS firm must have effective controls / systems in place appropriate to the size of their business to ensure full compliance.
- All firms must keep records to show compliance with the Statement.
80
What is the additional mandatory professional statement to the COI statement?
RICS Professional Statement: Conflicts of interest - UK Commercial Property Market Investment Agency 2017
81
What is the RICS UK Commercial Property Market Investment Agency, 2017 used for?
This professional statement relates only to UK commercial investment agency work where specific risk has been identified.
82
What is dual agency?
Where an agent has a contractual relationship with both the seller and the buyer at the same time.
This practice must NOT be undertaken in any circumstances according to the COI UK doc.
83
What are multiple instructions?
Where an agent has a competing contractual relationship simultaneously with several buyers for investment opportunities.
84
What conflicts of interest does the RICS professional statement Conflicts of Interest - UK Commercial Property Market Investment Agency 2017 (2023 ROC) set out?
- Dual Agency (contractual relationship with seller and buyer)
- Multiple Instructions
(competing contractual relationships with several buyers)
- Incremental Advice
(Approached by another party to provide advice incremental to existing instruction)
85
What must a surveyor do if they are appointed as agent to act on behalf of a Client acquiring a commercial real estate
investment?
State in the TOE's whether the agent is acting on an exclusive or non-exclusive basis.
86
What is acting on an exclusive basis vs non exclusive basis?
Exclusive basis - Other buyers with whom there has
been an ongoing dialogue concerning the purchase of the same property must be informed
that the agent is no longer able to advise them.
Non-exclusive basis - the agent must obtain informed consent
from the client(s), subject to the necessary information barriers being in place.
87
When might an agent find themselves in a conflict via multiple instructions?
When an agent makes multiple introductions of a commercial real estate investment
opportunity (different clients).
88
What is incremental advice?
where an agent
is approached by another party to provide advice related to a purchase or disposal that is incremental to
an existing instruction
(e.g. where the agent is acting for the seller on a disposal but is approached separately by the buyer, or its lender, to provide a valuation)
89
What must be in place if an agent / firm is to accept to provide incremental advice?
- Information barrier in place between team dealing with instruction (maintain confidentiality at all times)
- When an agent has an exclusive instruction to purchase, informed consent must be obtained from the Client before proceeding to provide IA to another buyer.
- where the agent has a sale instruction, the client must be notified before incremental advice
is provided to a prospective buyer, although informed consent is not required.
90
What is a personal / own interest?
- When acting for a family member or close business associate or someone you have financial / personal interest or benefit (known as a connected person)
91
What should you do if looking to accept an instruction with potential own / personal COI?
- Do not let a person interfere with or influence your professional judgement
- Full transparency
- Declare facts promptly and in writing before accepting an instruction
(in line with S21 of the Estates Agents Act 1979 (declaration required for agency work))
92
How long should old files be held for before being disposed or destroyed?
6 years
93
What do the RICS Bye Laws state in relation to confidentiality?
Client confidentiality must be maintained for all client affairs (this includes historic information and information provided prior to an instruction)
94
If a third party wants access to your files, what do you do?
- Request Client's approval first unless you are subject to a statutory duty overrising the clients confidentiality rights (e.g. Police investigation)
95
What should you do if a piece of confidential information is heard? e.g. email addressed to another party.
This information cannot be used for their own purposes.
- The client and sender should be advised of the error.
- Matter to be recorded in a note to the firm's compliance officer.
- Any confidential material received in error should be disposed of securely.
96
What is a duty of care?
Duty of care is a legal obligation imposed on an individual requiring adherence to a standard of reasonable care to avoid careless acts that could harm others and lead to a claim in negligence
97
Who does a surveyor owe a duty of care to?
- Clients
- Third Parties
98
What if a surveyor breached a duty of care?
Where breached and there is a loss, a claim for damages arises.
99
What is the limitation act 1980?
Sets out the limitation period for negligence claims:
- Contract: 6 years from the date of the negligent act / breach of contract or 3 years from the date they became aware of the negligent act/breach (long stop date of 15 years in which the claim must be brought)
- Tort: 6 years from the date the claimant suffered the loss.
100
How might you avoid a negligence claim?
- Understand client objectives and confirm precise instruction in TOEs
- Ensure competent to undertake the instruction
- Undertake the work in accordance with RICS Standards and Guidance Notes
- Detailed file notes and photographs
- Keep up to date with market knowledge and legislation and undertake CPD
- Cap professional liability excess on PII policy in TOEs.
101
When does professional negligence occur?
When a surveyor fails to perform and deliver the services to the required standard of service to his/her client whereby the Client has relied on the professional advice provided and this failure causes them a loss.
102
What is the RICS guidance on complaints?
RICS Guidance note, Complaints handling procedure 2016
103
What must firms ensure within their Complaints Handling Procedure?
- A firms written complaints handling procedure must be approved by the RICS
- Firms must include an RICS approved Alternative Dispute Resolution (ADR) mechanism
104
What would you do if there was a complaint made against you or someone in the firm?
- Notify PII insurers as soon as possible if there is a complaint as this could lead to a claim for negligence.
- Add to a complaints log showing the detail progress and outcome of any complaints
105
When should details of the Complaints Handling Procedure be provided to the Client?
Terms of Engagement
106
What are the standard minimum procedures of handling a complaint (two stages) ?
Stage 1 (in house):
- Details of the CHP should be issued whenever the firm receives a complaint from a valid complainant to whom the firm owes a duty of care
- Quick, clear, transparent and impartially implemented procedure
- Details of the nominated person who will investigate the complaint (CHO) is to be stated as the Point of Contact in first instance
- Complaint must be made in writing
- Procedures and strict timescales to be followed for the investigation of the complaint should be recorded.
- Complaint should be acknowledged within 7 days and investigated within 28 days.
Stage 2 (ADR - 3rd party resolution):
- If the complainant is not happy - use an independent redress scheme chosen by the firm.
-The name of the redress scheme must be provided to the client (e.g. RICS Dispute Resolution Service, The Property Redress Scheme)
107
What if you are a sole practitioner and you receive a complaint?
A sole practitioner must nominate a surveyor in another firm to act as their complaints handling officer.
108
When would the RICS become involved in a complaint process?
If a member fails to respond to the complainant or prevents the party gaining access to an independent redress mechanism.
109
How would you deal with a complaint from someone to whom you owe a duty of care?
- Try to understand a complainant’s motivation (listen, repeat back)
- Record the details of the complaint promptly and
accurately.
- Apologise for the client’s need to
complain but do not admit fault or liability.
- Clearly set out the next steps and provide clear
timeframes within which they will occur
- In accordance with the CHP, acknowledge receipt of the complaint promptly. Supply the complainant with a copy of the firm’s CHP and a nominated contact (CHO)
- Evaluate whether the issue is one that should be
notified to insurers under the terms of the firm’s PII (if in doubt, seek your broker’s advice).
If the complainant was still not happy i would provide them with the name of the redress scheme (e.g. Centre for Dispute Resolution, Property Redress Scheme)
110
What is an Alternative Dispute Resolution scheme?
ADR schemes are independent bodies that carry out an impartial assessment on complaints between a customer and a provider.
111
How many hours must an RICS member undertake of CPD per annum?
20 hours CPD per annum.
112
How many hours of Formal CPD must a RICS member undertake per annum?
10 hours (half of the hours recorded)
113
What are the four CPD requirements for members?
- 20 hours minimum of CPD per annum
- 10 hours formal CPD (minimum)
- Maintain a relevant and current understanding of the RICS professional and ethical standards during a rolling three-year period.
- Record their CPD using RICS management system
114
What is formal CPD?
- All forms of structured learning that has clear objectives and outcomes
- online training, courses, seminars
115
What is informal CPD?
- Any self managed learning that is relevant or related to your professional role
- e.g. private study
116
How might you determine if CPD is information or formal?
CPD decision tree
117
What is Professional Indemnity Insurance?
- Covers clients, surveyors and third parties against negligence claims when there is a duty of care breached and a claim for damages arises.
- Mandatory for Surveyors working in practice.
118
Is Professional Indemnity Insurance mandatory for surveyors in practice?
Yes !
119
What are the current minimum PII requirements based on turnover of the firm?
If the Firms turnover for the preceding year is...
the minimum level of indemnity required for each and every claim is...
£100,000...…£250,000
£100,001 to £200,000.....£500,000
£200,001 to £500,000.........£1,000,000
120
What if you're a new business, how do you determine the minimum level of indemnity insurance for a claim without a turnover?
- Estimate the turnover and adjust in due course accordingly
121
What is the maximum level of uninsured excess required by the RICS?
Limit of indemnity....
£10 million or less
£10,000 or 2.5% whichever the greater
Limit of indemnity....
Over £10m
No limit
122
How do you determine the minimum level of indemnity insurance for each and every claim?
This is based on the turnover of the business.
123
All policies must be underwritten by...
(Professional indemnity insurance)
An RICS approved insurer
124
What does the RICS provide on PII?
Regulation: RICS Professional Indemnity Insurance Requirements (Version 9) with effect from February 2022
125
PII policies work on...
...a claims made basis - The policy covers claims that are first made against the insured during the period of insurance regardless of when the negligent act occurred.
126
The PII certificate is to be...
...sent to the RICS on an annual basis as part of the firms annual return to the RICS.
127
What is required once a company has ceased trading? (PII)
- Run-off cover
128
What run off cover is required?
- Consumer claims - minimum of £1,000,000 of aggregate cover over a min of 6 years.
- Commercial claims - firms must consider what is adequate and appropriate for at least 6 years (RICS recommends longer cover as claims can be made up to 15 years after work is undertaken.
(Firms that are unable to obtain run-off cover from their insurer or the open market will be able to apply for coverage to the RICS Run-off pool
129
PII cover is needed for 'pro-bono' basis... whats is this?
Pro-bono is unpaid i.e. work for charities or friends.
130
What is the RICS assigned risk pool (ARP)?
The RICS Assigned Risk Pool is available at a cost for members who cannot arrange PII cover.
131
What are the 6 main areas of good practice as set out in the RICS professional statement (Client Money Handling, 1st edition 2019 Professional Statement)?
1. Holding Client Money
2. Providing Information to Clients
3. Receipts of Client Money
4. Payment from Client accounts
5. Accounting records and controls
6. Compliance
132
What procedures should Chartered Surveyors be aware of in relation to handling clients money?
- Client accounts are kept separately and clearly identifiable
- The 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 the client and accounts must be kept in credit.
- Regular bank reconciliation checking that payments received are transferred to the bank account and expenditure records are checked monthly
- Accurate records are kept with a running balance available
- Annual audit and reporting obligations by a certified accountant
- Money can only be withdrawn from a client account if property required.
- Record all cash transactions
- Signatories must be agreed with authorised staff and 2 signatures should be required
- A single discrete account is for a single named client account only.
- RICS regulatory review visits of inspection can be undertaken by RICS (usually 3 yearly basis by RICS employed accountant)
- All firms handling money need to display their procedures document on their website
133
What is the RICS Clients' Money Protection Scheme?
This is for claims from clients which provides last resort protection in instances where the RICS Regulated firm is unable to repay a client's money.
There are limits an exceptions set out in the scheme rules.
134
The RICS Clients' Money Protection Scheme is split into 2 parts, what are they?
1. Client Money Protection for Surveying Services - General client money protection covering money held by firms undertaking any surveying activities.
2. Client Money Protection for Residential Agents - Residential agency activity in England protection, covering areas under the Client Money protection Schemes for Property Agents Regulations 2018
135
What do you need to do to start a new practice in compliance with the RICS?
- Inform RICS of new practice by completing a firm detail form
- Appoint a responsible principle for all RICS communication
- Register RICS for regulation of the firm by the regulatory board
- Arrange Professional Indemnity Insurance and send details to RICS
- Procedures to address Client Money Handling Professional Statement (incl Client Money Protection Scheme details)
- Register for the RICS Valuer Registration Scheme (VRS) if undertaking Red Book Global valuation work
- Complaints Handling Procedure (with RICS approval)
- Complaints log
- Complaints handling officer (elect another surveyor in another practice if sole practicioner)
- Obtain a logo kit from the RICS and use to
- Business plan
- CPD logged online
- Staff training plan
- Completion of an online RICS Annual Return at year end.
136
What is statutory compliance of setting up a new practice / firm?
- Requirement to disclose business name
- Disability discrimination compliance (Equality Act 2010)
-Financial Services compliance
-Bribery Act 2010 compliance
-Money Laundering Reporting Officer (MLRegs2017)
-Health and Safety compliance (H&S 1974)
-Asbestos register (CRAR 2012)
-Fire Safety compliance
-Register for data protection (GDPR 2016 and DPA 2018)
-Estate agency compliance
-Inform HMRC for VAT and Tax registration (VAT registration threshold is currently £85k pa turnover)
-Compliance with current employment law (i.e. national living wage, working hours, pensions, gender pay gap reporting)
-Insurance compliance for employer and public liability
137
What is required for closing an RICS practice upon retirement / ceasing to practice?
- Inform RICS of retirement / closure
- Ensure that your clients are informed asap (so they can arrange handover to new firm)
- Return any monies held by clients to their own accounts
- Inform your insurers and procure professional indemnity insurance run-off cover for a min of 6 years from expiry of the policy in force at the time of closure in accordance with the RICS requirements
- Retain a copy of the client file and record for a min of 6 years.
138
What is the motto of the RICS?
In latin - Est modus in rebus
translates to:
There is measure in all things.
139
What insurances would you need if you were starting up your own firm?
- Personal Indemnity
- Employer’s Liability
- Public Liability
- Building insurance of own office.
140
What is the difference between RICS ethics and rules?
Ethics are a set of moral values while rules of conduct are a framework that we work
141
In the case of a breach of a rule of conduct what is the procedure?
A formal investigation by the Head of Regulation of the RICS is the first step in the
process
The RICS can request information and/or visit and inspect to investigate compliance
Members must cooperate fully with all enquiries
142
What sort of breaches would expulsion be suitable for?
Gross / persistent failure to comply with an RICS rule of conduct
E.g. fraud, dishonesty
143
Would you advertise your new company in the press?
Yes as long as it is in a trustful and responsible manner (rules of conduct)
144
What sort of information do registered firms have to send to the RICS
annually?
Type of business and staffing
Nature of clients
Training provision
Complaints handling procedures details and records
PI insurance details
Whether the firm holds clients’ money
145
What is Money laundering?
Money laundering means exchanging money or assets that were obtained criminally
for other money/assets that are 'clean'
146
What are Money Laundering requirements?
Undertake customer due diligence (sanction check) e.g. identify customer
Keep records e.g. of due diligence checks for 5 years
Maintain internal procedures to identify & prevent laundering
Report suspicious activity (SAR = Suspicious Authority Report) internally to money laundering officer, externally to serious organised
crime agency (SOCA).
Train employees on internal procedures & legislative obligations
147
What do you do if you received a letter of complaint?
I acknowledge receipt and I forward it to our designated complaint handler, as per
our complaint handling procedure, providing additional information as required.
148
What are ethics?
The moral principles that govern a person’s behaviour or the conducting of an
activity.
149
How do you know / assess if you are acting ethically?
One way to assess whether you are acting with ethics is to consider whether you
would be happy for your actions to be publicly known and whether you could justify
your actions if they were being challenged.
150
What benefits does PII provide for a professional?
The professional is protected from financial loss
Does not have to meet the claim from their own assets and resources
151
What benefits does it provide for the client?
Can recover their financial loss
152
On what basis is PII underwritten in the UK? What does this mean?
On a claims made basis
This means it is the insurance policy that is in place at the time the breach is discovered that
is claimed under NOT the insurance policy in place when the breach was made
153
What is the key legislation in relation to Bribery?
- Bribery Act 2010
- Proceeds of Crime Act 2002
154
What is accepted (gifts and hospitality)?
Hospitality Promotional or other Low business expenditure which genuinely promotes and improves image of the firm is an acceptance
If required by the firm in accordance with anti-bribery procedures.
155
What is the Bribery Act 2010?
- Aims to reduce bribery in business in the UK and abroad
156
What is a bribe?
A bribe can be the giving, offering, promising or receiving of an advantage such as payment, gift, service for an action which is illegal or breach of trust.
157
What are the 6 principles of the Bribery Act 2010?
- Proportionality
- Top Level Commitment
- Risk Assessment
- Due diligence
- Communication
- Monitoring and Review
158
What are the four offences under the Bribery Act?
- Bribing
- Receiving a bribe
- Bribing a foreign public official
- Failing to prevent bribery
159
Who is responsible for corrupt acts?
- Companies unless they can show they had policies and procedures in place to combat bribery.
160
Is hospitality prohibited by the bribery act 2010?
Government Guidance states that hospitality is not prohibited so long as it is:
- proportionate
- accurately recorded in gift and hospitality register
161
Companies must meet certain criteria to prove they have taken steps to prevent bribery, what are they?
- Identify potential risks
- Staff training
- Clear policies and regular review
162
What is defence under the Bribery act 2010?
- If a company can show they have / had adequate procedures in place to prevent bribery.
163
What are the penalties of the Bribery Act 2010?
- max penalty 10 years imprisonment / unlimited fine
164
How is the Bribery Act policed?
Serious Fraud Offence
165
What are the Money laundering regulations?
Money Laundering, terrorist financing and transfer of funds regulations 2017 (amended 2019)
166
What is money laundering?
When proceeds of the criminal activities are disguised or converted and then realised as legitimate assets.
167
What do the Money Laundering Regulations cover?
- Estate Agency work
- Relevant financial business work inside and outside the UK by a firm
168
What are the key requirements of the Money laundering regulations?
- Requirement to have written Money Laundering and terrorist financing risk assessment
- Appropriate internal controls
- Staff training
- CDD and EDD checks
- Record keeping, policies and procedures
- AML check to confirm identity of purchaser and check source of funds before contract exchanges
- include additional high risk factors when seeking additional information and monitoring (transactions between parties in high risk 3rd countries
169
What are estate agents legal obligations?
- Register with HMRC if let individual properties for more than 10,000 euros a month (from May 2020)
- CDD checks on vendors, purchasers, LL and T for any new letting, re-letting or sale.
- EDD checks to be undertaken if red flags occur (high risk countries / non-face 2 face)
- Policies in place to scrutinise transactions which as (complex, large, unusual patterns, w/out apparent economic purpose)
- Firms must have group wide procedures to share relevant info and train capable persons to identify ML and TF.
170
What is terrorist financing?
An example is a person or entity are involved in fund-raising, use, or intend to use, or possess money or other property for the purposes of terrorism
171
What Money laundering checks do you undertake to verify a purchaser, vendor, landlord/ tenant?
- Client Due Diligence
- Enhanced Due Diligence if there are red flags.
172
What are CDD checks?
Background checks, and screening potential and existing customers.
173
What is the process of CDD checks?
1. Identify client and verify identity
2. Identify beneficial owners of the client (companies house)
3. Obtain company name, number, address of registered office
4. Names of directors
5. Information on purpose / intended nature of the business and proposed funding arrangements
174
What is the purpose of CDD checks?
Performing background checks, and screening potential and existing customers ensures they're not involved in illegal activity.
175
What is EDD checks?
Enhanced Due Diligence checks are additional checks required for any transaction or business relationship involving a person in a high risk 3rd country or politically exposed person (PEP).
A more detailed examination of the background evidence and monitoring.
176
What is a PEP?
A politically exposed person who presents a higher risk for potential involvement in bribery and corruption due to their position and influence they hold.
example: UK government ministers
177
Who is responsible for policing Estate Agency regulations?
HM Revenue and Customs (HMRC)
178
What are other key requirements for Money Laundering and Terrorist Financing?
- Firms must register with HMRC annually.
- Limit of 10,000 euros (equivalent) for acceptance of cash
- Ongoing business relationship w client should be monitored
- Surveyors should be aware of RICS red flags
- Record keeping and procedures
- Nominated person (ML reporting officer) to report any suspicions with a suspicious activity keeper (SAR) to National Crime Agency
- Firm to maintain records for min of 5 years and report to Companies House any discrepancies.
179
What are the penalties for failure to comply with the regulations of Money Laundering and Terrorist Financing (amended) 2019?
- Max 14 years in prison and or unlimited fine for assisting with ML
- Max 5 years and or unlimited fine for tipping off someone suspected of ML or failing to report this.
180
What are the requirements (evidence) for CDD checks for a public limited company?
London stock exchange listing
181
What are the requirements (evidence) for CDD checks for a public accountable body?
Government ownership / control
182
What are the requirements (evidence) for CDD checks for a private limited company?
- Certificate of incorporation
- Company name, number and registered office / business address
- Names of all directors and shareholders with 25% or more
183
What are the requirements (evidence) for CDD checks for a private individual?
- Passport / Driving licence
- Proof of address (i.e. Bank statement, utility bill - not more than 3 months old)
184
Law and procedures for Money laundering are...
...constantly evolving
185
What EU Anti Money Laundering Directive has the UK implemented into UK regulations?
5th EU Anti Money laundering directive into regulations
The UK has decided not to implement 6th EU AML directive as many of its requirements are already covered by existing UK law.
186
What is set out in the 5th EU Anti Money laundering directive into regulations
and what is it's purpose?
- EDD for high risk 3rd party countries and PEP.
Designed to bring more transparency and sets out additional regulatory controls across more sectors to reduce ML and TF.
187
What are the red flags of ML?
- Inability or unwillingness to provide identity documents
- Changes to parties involved
- Unusual transactions (unexpected urgency required by parties or potential loss making)
- Payment via unusual currency.
188
What is the Proceeds of Crime Act 2002?
Provides a set of criminal offences
intended to combat money laundering.
Provides powers for UK enforcement authorities to recover money and other assets in criminal and civil proceedings.
189
What are the three main areas of offence under the Proceeds of Crime Act 2002?
- Concealing Criminal Property
(disguise, convert or transfer of criminal property)
- Arrangements
(someone enters into an arrangement of buying, using or controlling criminal property on behalf of someone else)
- Acquisition, use or possession of a criminal property
190
What is the RICS statement on Money laundering?
RICS Professional Statement: Countering bribery, corruption, money laundering and terrorist financing, 2019
191
What is the purpose of the RICS Professional Standard: Countering bribery, corruption, money laundering and terrorist financing, 2019?
Sets out mandatory, global requirements for RICS members and firms.
Prev professional statement until 2022 (now standard)
Divided into 3 parts
- mandatory requirements on bribery, corruption, ML and TF
- guidance/good practice for above
- supplementary guidance on parts 1 and 2.
192
As set out in the Professional Standard, what must RICS firms do in relation to Bribery and Corruption (Part 1)?
For bribery and corruption, firms must:
- Not offer or accept anything that could constitute a bribe
- Have procedures in place to comply with the law
- Report suspicion to relevant authority
- Act with due diligence to perform periodic written evaluations of the risks the firm faces
- retain records to show the firm has met the requirements of the Professional Standard
193
As set out in the Professional Standard, what must RICS firms do in relation to Money laundering and terrorist financing (Part 1)?
For money laundering and Terrorist financing, firms must:
- Do not facilitate ML or TF
- Have systems in place to comply with law
- Report suspicions
- Evaluate and review risks to the firm
- 3rd party reliance for checks
- Appropriate measures to understand the client and the purpose of the instruction
- Verify the client using basic ID checks
- Retain records to set out complied with Professional Standard
194
What is the guidance (Part 2) set out in the RICS Professional Standard for Bribery and Corruption, ML and TF?
Practical guidance is provided such as:
- Written policy in place for procedures
- Publish a code of behaviour for staff and provide staff training
- Encourage transparency
- Gifts register
- Keep up to date on legislation
195
What is the supplementary guidance set out in the RICS Professional Standard for Bribery and Corruption, ML and TF (Part 3)?
Supplementary guidance sets out:
Provided a range of issues including:
- Establishing a risks based approach (i.e. 3 W's, who acting for?, what are you doing?, why are you doing it?)
- Dealing with PEP - Higher risk as they hold political influence and enhanced DD required
- Need to identify the beneficial ownership of a company, partnership or trust - i.e. such as requesting a recent certificate of incorporation or annual return for a company.
196
If asked about the acceptance of any cash, gift or hospitality, what should be considered?
- Bribery Act 2010
- RICS Professional Standard Bribery, corruption, money laundering and terrorist financing, 2019
- organisations procedures
- transparency and openness
- proportionality
197
If asked about AML what should be considered?
- Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017
- RICS Professional Standard Bribery, corruption, money laundering and terrorist financing, 2019
- Government guidance for estate agents
- DD procedures
- transparency and openness
- Red Flags
