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RICS APC > Ethics, Rules of Conduct and Professionalism > Flashcards

Ethics, Rules of Conduct and Professionalism Flashcards

1
Q

What are the 5 principles of RICS Regulation for members?

A 
PACTT:
Proportionality
Accountability
Consistency
Targeting
Transparency
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2
Q

What are the 4 offences of the Bribery Act 2010?

A

Bribing or offering a bribe
Receiving a bribe
Bribing foreign public officials
Failing to prevent a bribe

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3
Q

Who is the current RICS president?

A

Clement Lau FRICS - Most recently Director and Head of Development and Valuations for Commercial Property at Hongkong Land Ltd.

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4
Q

What constitutes a bribe?

A

Broadly, the Act defines bribery as giving or receiving a financial or other advantage in connection with the “improper performance” of a position of trust, or a function that is expected to be performed impartially or in good faith.

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5
Q

Explain how you behaved ethically in one of your examples in your summary of experience

A

A client requested a fee quote for a valuation of a private hospital in London. Neither I nor any available surveyors had the competence to undertake such valuation, so I advised the client and politely declined.

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6
Q

Levitt Review?

A

Treasury Management Audit offered a ‘no assurance verdict’ on RICS internal finance control procedures - Meaning it is possible for fraud to have occurred.
Levitt Review was commissioned and recommneded:
- More oversight of the Governing Council.
- Governing Council oversee executive management bonuses.
- Greater transparency.
- Found no evidence that fraud had occurred.

Four Non-exec directors were informed they’d been terminated by the president - Review found that the execs should not have been fired and needed a public apology.

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7
Q

A client complaint about you lands on your desk. What do you do?

A

I would advise my manager and the ensure that the complaint is processed in accordance with my companies complaints handling procedure. Inform PII provider. Log the complaint in the complaints log. Advisory to respond in 28 days.

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8
Q

If you receive a complaint as a sole practitioner, what do you do?

A

You may review the complaint yourself, in the knowledge, if it cannot be resolved, it must be referred to an independent redress scheme.

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9
Q

What is run off cover?

A

PII requires run-off cover for a period of 6 years, in case a claim is made after a firm closes

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10
Q

What measures are put in place in the event of the death of a sole practitioner?

A

Firms which have a sole principle must make appropriate arrangements for their professional work to continue in the event of their incapacity, death, absence from inability to work.

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11
Q

What is the purpose of the new rules of conduct?

A

To simplify current regulations, merging rules for firms, members and 5 global ethical standards.

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12
Q

If I was a client of yours and you had shown me around a property and afterwards I suggested I take you over to Mcdonalds to buy a coffee, would you accept?

A

Yes, because it’s only a coffee. Hence acceptable due to proportionality.

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13
Q

If I had a portfolio of £2million of property and for the lenders value I needed you to change the value, would you do that for me?

A

I would ask when the portfolio was valued at £2million to determine whether the market value is likely to have increased. But otherwise I would not be willing to change the value without sufficient market evidence

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14
Q

Name two types of conflict

A

Party conflict, own interest conflict and confidentiality conflict.

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15
Q

You see that a colleague is having some unwanted attention from a male colleague and it has happened a few times, what action would you take?

A

I would speak to the female colleague to understand the situation, discuss plan of action and offer to speak to the male colleague privately, telling them that it’s harassment and not acceptable behaviour. I would escalate it to HR and/or management if it continued.

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16
Q

You go on holiday and a valuation comes in which you leave for a junior colleague to deal with, when you get back you discover the valuation is slightly incorrect (5% undervalued), what would you do?
Would you also speak to the colleague?

A

I would take responsibility, speak to the client and issue an amended report. However, Eddisons policy requires a director sign off on all reports which should help prevent such a scenario.
Yes, I would respectfully explain my reasoning for the changes, discussing their thought process before amending the report.

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17
Q

PII: what is claims made basis?

A

PII policies work on a ‘claims made’ basis. This means that the policy covers claims that are first made against the insured during the period of insurance regardless of when the negligent act occurred. If the retroactive date of the policy is stated as ‘none’ then the policy is fully retroactive and all former work carried out by the firm will be covered.

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18
Q

You set up your own business but you decide to go off skiing for two weeks. You break your leg and must have complete bed rest with no work. What you would do?

A

A locum agreement

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19
Q

What measures should be taken to avoid PII claims?

A

Sufficient due diligence on property and customer, Liability Caps to minimise the claim, optimal communication prior to instruction to ensure understanding by all parties.

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20
Q

A friend asks you for help on a private house extension (private matter), they ask for technical/professional advice for free outside of business hours. What would you do?

A

I would let them know that I would be happy to discuss the matter in a professional setting, I would give them my company details and ask them to contact during business hours. As my work is currently in valuation, there may be a conflict of interest in giving formal valuation advice to a friend. In this case, I may recommend some reputable firms.

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21
Q

What is money laundering?

A

A process in which illegally obtained money is ‘cleaned’ to appear as legitimately owned.

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22
Q

What flags would make you suspicious of money laundering?

A

Requests to make payment in cash, multiple bank transactions below £10,000 which avoid investigation.

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23
Q

What are the procedures for avoiding money laundering?

A

Check ID in two forms, verify who they are, due diligence. Be aware of Politically Exposed Persons.

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24
Q

What are the fines for money laundering?

A

Up to 14 years of jail time, unlimited fine.

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25
Q

What are the fines for breaching GDPR?

A

Up to 20 million euros or 4% of worldwide turnover.

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26
Q

When starting a RICS firm, what do you need to provide to RICS?

A

CHP, PII, Client Account Management, cirumstance in the event of death, type of business and staff details.

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27
Q

Structure of RICS?

A

The Privy Council awarded the RICS Royal Charter
Governing Council runs RICS
Regulatory Board, Audit Committee and the Management Board report to the Governing Council
17 specialist professional groups covering land property and construction.

May change following the Bichard Review.

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28
Q

Why have Bye-Laws?

A

RICS are self regulated. Bye-Laws provide foundation to management of RICS.

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29
Q

Three level of disciplinary actions?

A

Head of regs
appeal panel
Discipline panel

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30
Q

What is the fine for committing a Bribe?

A

10 years, unlimited fine.

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31
Q

What is the role of RICS?

A

Maintains highest standard of education and TRAINING
Protect consumers through REGULATION
Leading source of INFORMATION and advice on land, property, construction and associated environmental issues.

Training, Regulation, Information (TRI)

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32
Q

What are the benefits of being an RICS member?

A 
Status
Renegotiation
Market advantage
Knowledge
Network
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33
Q

Who is the RICS CEO?

A

Richard Collins

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34
Q

When was RICS established

A

1868

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35
Q

How to close a RICS firm?

A

Inform your clients
Inform RICS
Inform Insurers
Return client money
Ensure run off cover is in place for 6 years
Retain copy of records and client files for at least 6 years.

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36
Q

Principles of Bribery Act 2010?

A 
Proportionality
Top level commitment
Risk assessment
Communication
Due diligence
Monitor and review
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37
Q

How to start a RICS regulated firm?

A

Have to be regulated if 50% of the firms principles are charted
Over 25% you eligible to apply for registration.
or if the firm provides surveying advise to the public

  1. Inform RICS – complete Firm Detail Form
  2. Appoint – responsible principle for all RICS communication
  3. Register with RICS for regulations
  4. Arrange PPI and send to RICS
  5. Set up procedures for handling clients money (including clients protection scheme)
  6. Register with RICS Valuer Registration Scheme
  7. Obtain RICS approval for complaints handling – set up a log and appoint complaints handling officer
  8. Obtain logo kit
  9. Plan succession if sole practitioner
  10. Ensure CPD is logged
  11. Set up staff training plan
  12. Ensure completion of online RICS ANNUAL RETURN
  13. Have capacity to hold clients money.

Rules for the Registration of Firms 2022.

38
Q

What is PII and what are the turnover limits?

A

Professional Indemnity Insurance, which is a RICS requirement for firms.
£0 - £100,000 = £250,000
£100,000 - £200,000 = £500,000
£200,000+ = £1,000,000

39
Q

Can you tell me about recent news articles regarding RICS? (Levitt Review)

A

Cashflow irregularities flagged by non-exec directors
Review finds it is possible for fraud to have occurred
Nor provided with the information they requested (directors)
Four Non-exec directors were informed they’d been terminated by the president
Review found that the execs should not have been fired and need a public apology
Finance department presented a substantial threat to the RICS
Found no fraud had occurred but there was potential for it to have occurred

40
Q

Can you give me an example of a time when you have acted with integrity?

A

I identified a conflict of interest for a property which I was asked to provide a quote to value. I highlighted the conflict of interest to my client.

41
Q

Can you give me a time you acted responsibly?

A

I have recently been undertaking more responsibility by completing all tasks required for valuations prior to review by my supervisor.

42
Q

Are you aware of some of the aims highlighted within the RICS Business Plan for 2021-22?

A

▪ Continue to support the profession as economies recover from Covid-19 and seek to minimise any increases in the cost of subscription levels.
▪ Utilise any surplus in cash generation to pay back furlough monies received via the UK government’s Coronavirus Job Retention Scheme.
▪ Maintain and increase demand for RICS qualifications with a primary goal to ensure RICS qualifications remain relevant for future generations and that increased numbers of members use RICS to meet their knowledge and training needs.

43
Q

Explain your understanding of Rule Number 1?

A

▪ Having reviewed the example behaviors in adhering to Rule 1 RICS Members and firms should not allow themselves to be influenced improperly through the acceptance of work referrals, gifts or hospitality.
▪ Members and Firms must also be sure to identify conflicts of interest and not provide services or advice where these conflicts of interest occur.
▪ This could be a scenario where you have reduced impartiality due to an existing relationship, for example being friends with a Main Contractor who has subsequently been selected to submit a tender would form a conflict of interest.

44
Q

Explain your understanding of Rule Number 2?

A

▪ To ensure compliance with Rule 2, Members and firms must only act for clients where they have the necessary knowledge, skills and resources to carry out the work competently.
▪ Firms must supervise any employees or subcontractors undertaking work on their behalf, for example requesting that a Junior Surveyor undertakes a complex valuation due to resourcing issues would create problems in achieving compliance with this Rule. Instead an experienced and suitably qualified surveyor should be asked to undertake the valuation.

45
Q

Why did the previous Rules of Conduct change?

A

▪ The previous rules had been in place since 2007.
▪ Following research and consultation with RICS Members, Firms and Members of the public, the majority voted in favour of replacing the existing Rules of Conduct and separate Global Professional and Ethical Standards.
▪ This was to provide a single document to enable greater clarity for RICS members and firms.
▪ There is now a greater focus on clearer example behaviours, understanding evolving technology and tackling climate change.

46
Q

Talk us through your understanding of the changes to the Rules of Conduct?

A

▪ The Rules of Conduct October 2021 Global Practice Statement will overhaul the previous separate documents:
• Rules of conduct for Members.
• Rules of Conduct for Firms.
• Global Professional and Ethical Standards.
• Appendix A of the Rules of Conduct now contains the professional obligations of Members and Firms.

47
Q

What is the Levitt Report?

A

▪ The Levitt Report was commissioned by the RICS following a Treasury management audit in 2018.
▪ Prior to the Audit the RICS had to extend its overdraft facility by circa £3m due to inaccurate cashflow forecasting.
▪ The treasury management audit offered a ‘no assurance verdict’ on RICS internal financial control procedures and following this the Levitt report was commissioned as an independent review.
▪ Following the report, the RICS accepted each of Levitt’s recommendations including:
• The RICS Governing Council are to have more oversight over internal dealings of the RICS.
• The RICS Governing Council are to be briefed by the Management Board as opposed to a single CEO.
• The RICS Governing Council are to oversee executive management bonuses.

48
Q

What are the professional obligations of members?

A

▪ 1. Members must comply with the CPD requirements set by the RICS which requires 20 hours of CPD for each calendar year, 10 hours of which must be formal CPD.
▪ 2. Members must cooperate with RICS.
▪ 3. Members must promptly provide all information reasonably requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf

49
Q

Explain your understanding of Rule Number 3?

A

▪ As an RICS member or regulated Firm we must also be sure to understand a clients’ project specific requirements before acting on their behalf.
▪ The clients’ scope of services should be agreed along with any exclusions and timescales for achieving each of the deliverables before signing up to formal terms of engagement.

50
Q

Explain your understanding of Rule Number 4?

A

▪ The RICS also expects its members to respect the rights of others and treat others with courtesy.
▪ We need to ensure that everyone is treated fairly and look to eliminate any instances of discrimination on the basis of age, disability, gender, pregnancy, race, religion or sexual orientation.
▪ RICS members and firms also need to adopt a no tolerance policy of bullying or harassment.

51
Q

Explain your understanding of Rule Number 5?

A

▪ Members and firms are required to question practices and decisions that they suspect are not right and raise concerns with colleagues, senior management, clients or the RICS.
▪ When making public statements we need to ensure these do not undermine public confidence in the profession.
▪ When receiving and processing complaints, we need to ensure these are dealt with promptly, openly and professionally.
▪ In complying with Rule 5, a useful sense check to ensure compliance is to ask ourselves if we would be comfortable in standing behind our actions if these were brought into the media or a public forum.

52
Q

What procedures can companies put in place to prevent bribery on their behalf?

A 
▪ There are six principles of prevention companies should put in place:- 
• 1. Proportionate Procedures. 
• 2. Top Level Commitment. 
• 3. Risk Assessments. 
• 4. Due Diligence. 
• 5. Communication.
• 6. Monitoring & Review
53
Q

Are you aware of any RICS Guidance notes on Covid-19?

A

▪ I am aware of the RICS ‘Covid-19 Guide to Surveying Services’ which contains a range of guidance notes to work safely and in line with government guidelines through the Pandemic.
▪ This provides specific guidance on:-
• Physical Inspections for Residential Properties.
• Physical Inspections for Non-domestic Properties.
• Residential Valuations and Surveys.
• Reopening of the Housing Market.
• Reopening of Commercial Buildings

54
Q

What impact has Covid-19 had on your area of surveying?

A

The initial change caused material uncertainty in valuations as outlooks changed significantly following the lockdown.
Inspections require greater preparations to ensure safety measures are put in place.

55
Q

What precautions do you take in your day to day surveying concerning Covid-19?

A

▪ I practice inline with the RICS Covid-19 guide for Inspections and Visits for non-domestic properties which requires me to:-
• Maintaining Social Distancing.
• Minimising physical contact with building occupiers where possible.
• Ensuring I comply with the H&S procedures being operated by the site team.
• Securing as much information as possible from the client prior to the visit and as part of the pre-inspection research.
• Sanitise equipment in line with current Public Health Guidance, periodically and as often as practical.

56
Q

Following the Grenfell Disaster are you aware of any guidance the RICS has published to support fire safety?

A

▪ I am aware that the RICS has published the Guidance note ‘Cladding for Surveyors 1st Edition March 2021’ to support surveyors working on Multi-storey and multi occupancy residential buildings.
▪ The document aims to improve surveyors knowledge of external wall cladding systems that may be considered within the External Wall Fire Review.
▪ Whilst the document is useful and provides illustrated examples of cladding systems, I appreciate that fire safety is of great importance and ultimately falls outside my area of expertise. If my clients do ask for advice on fire safety I would always recommend that they seek advice via a professional fire risk assessment.

57
Q

What is ACM cladding?

What is the significance of ACM in relation to Grenfell?

A

▪ ACM standards for aluminum composite material ▪ It consists of two skins of aluminum bonded to either side of a lightweight core of materials such as polyethylene or a mineral core aimed to provided insulating properties.

▪ The ACM cladding in use was thought to contain combustible materials that contributed towards the spread of fire across the external elevation of the building.
▪ As a result the UK government has now banned the use of combustible materials on high rise homes from 29th November 2018.
▪ The ban means that combustible materials are not permitted on the external walls of new buildings above 18m.
▪ Local authorities also need to undertake remediation works to replace dangerous ACM cladding on existing buildings.

58
Q

What is an EWS1?

A

▪ An EWS1 is an External Wall System Fire Review Certificate.
▪ They are applicable when a multi-storey residential property is either being bought, sold or re-mortgaged. ▪ It is not a building safety certificate but a re-mortgaging valuation tool.
▪ The RICS and mortgage lenders jointly formed the EWS1 form as a way of mortgage lenders assessing the external wall safety of buildings over 18m in height

59
Q

What is the New Fire Safety Act 2021?

A

▪ The First Safety Act commenced on May 2021 and holds significant legal obligations of organisations deemed to be responsible persons.
▪ It is introduced as an update to the Fire Safety order 2005.
▪ The main focus of the act is the amendment of the Fire Safety Order to clarify that it will apply to the structure and external walls as well as anything attached to external walls such as doors, windows and cladding.
▪ Under the previous regime it was unclear who was responsible for fire safety compliance for these elements of the building.
▪ This will force owners, landlords and managing agents of multi- occupied residential buildings to take precautions to identify any dangerous cladding on those buildings and remediate any dangerous materials whilst introducing interim measures to ensure the building can be occupied safely.

60
Q

What legislation or regulations relate to inclusive environments?

A

▪ The main legislation within the UK that applies to Equality, Diversity and
Inclusion are the Equality Act 2010 and The Human Rights Act 1998.

61
Q

Please explain your understanding of inclusion within the workplace?

A

▪ Inclusion within the workplace is creating an environment and culture where all company employees feel like they belong in the organisation.
▪ This results in every employee being comfortable to voice their opinions and that no one person feels excluded on the basis of their identity.

62
Q

How would your complaints handling procedure work?

A
  1. Lay out timescales for response.
  2. Inform who will be dealing with the complaint.

Acknowledge within 3 days (not a RICS requirement, company specific).

  1. Investigated by line manager and response within 15 days.
  2. Investigated by director who is not directly connected to service complained about, a report is produced describing the complaint, remedies and changes that have been implemented within a further 15 days.
  3. Property Ombudsman is still not satisfied
63
Q

Do you know any negligence case law?

A

Marrett v Babb - Employees are personally liable for professional advice given
Hart v Large - Level 2 Homebuyers failed to identify or make any recommendations on a defect. Take aways for surveyors:
1. Being clear on the report about the scope of inspection including limitations, caveats and actions available to the client;
2. Recommending justifiable further investigation;
3. Taking all reasonable steps to ensure clients understand the differences between the levels of service, including the extent and limitations of each option

64
Q

Changes to PII under UK Professional Indemnity Insurance Requirements updated in April 2022?

A

UK Professional Indemnity Insurance Requirements updated in April 2022.

Key changes are the removal of a maximum uninsured excess for firms with turnover of more than £10,000,000. 2.5% or £10,000 for smaller firms.

Fire Safety Exclusions - Under new terms, insurers are not permitted without specific dispensation to exclude fire safety claims on a property four storeys or less and fire safety coverage must be provided as a minimum.

65
Q

What are the Bye-Laws?

A

The Bye-Laws set out the rules regarding:
Membership and Registration
Designations
Contribution to Funds - Professional Fees
Conduct
Governing Council, Offices and Staff
Subordinate Boards, Committees and Groups
Procedure for General Meetings and Voting
Accounts and Audit
And other General Matters

66
Q

Appedix A of Rules of Conduct?

A

Members:
Comply with CPD requirements
Cooperate with RICS
Promptly provide all information reasonable requested by the Standards and Regulation Board

Firms:
publish complaints handing procedure
PII
Sole principals must make arrangements for incapacity.
Cooperate with RICS
Promptly provide all information reasonable requested by the Standards and Regulation Board
Include RICS designation on business literature.
Report any matters that they are required to under Rules for the Registration of Firms

67
Q

What do the new rules of conduct replace?

A

Rules for firms
Rules for members
Global and ethical standards

68
Q

When did RICS last update their disciplinary panel rules?

A

2019

69
Q

AML regulations and legislations?

A

Countering Bribery and Corruption, Money Laundering and Terrorist Financing 2019

70
Q

What is included in RICS Guidance Note Risk, Liability and Insurance (1st Edition)?

A

The courts approach to professional liabilities
Liability Caps - They are enforceable and should be included in ToE to protect RICS members and firms.
Third Party Reliance on Reports - valuers should understand the increased risk in allowing this.
Contractual Terms
PII
Appendix includes valuations for commercial lending.

71
Q

What is an annual return?

A

PII insurance, accounts, registered members, CHP etc. All details of the firm.

72
Q

When and how can the RICS be involved in a complaint about a firm or member?

A

If you don’t respond to the complainant.

73
Q

What are the current RICS rules for registration of firms?

A

required if 50%+ RICS staff

must be at least 25% to register

74
Q

What is a Responsible Principle?

A

Someone nominated by the firm to be the go to person for RICS and RICS matters.

75
Q

What types of insurance are there?

A

PII. Per claim basis, run-off cover.

76
Q

Do you know of any alternative dispute resolution?

A

Court Proceedings/Litigation - Most thorough but costly, timely and public.
Arbitration - Similar thoroughness to court, but done privately. Usually quicker and cheaper too
Expert Determination - Less formal than arbitration, also can be less thorough.
Mediation - a form of negotiation, facilitated by a mediator
Ombudsman - Financial Services Ombudsman has jurisdiction to hear and award financial redress.

As stated in RICS Guidance Note Risk, Liability and Insurance (1st Edition)

77
Q

Can you name 3 conflicts of interest?

A

Party conflict, own interest conflict and confidentiality conflict.

78
Q

Can you name 2 or 3 of the new rules of conduct and explain how you’ve demonstrated one of them?

A

Rule 1: act with honesty, integrity and transparency.
Rule 2: always act within you competence.
Rule 3: Provide good-quality and diligent service.
Rule 4: encourage inclusivity and diversity.
Rule 5: act in the interest of the public.

I have demonstrated rule one by identifying a conflict of interest where my company had recently valued a property for another client. I informed my client of the conflict and did not quote for the valuation.

79
Q

What is The Property Ombudsman?

A

An ombudsman is an independent official (usually appointed by the government) whose duty it is to investigate complaints and attempt to resolve them. They look into complaints made by consumers against agents registered with the scheme. The consumer must give the company a chance to resolve the matter themselves (within eight weeks).

80
Q

What is CEDR?

A

An independent adjudication scheme for RICS: disputes between customers and companies regarding surveying activities.

81
Q

What is the Bichard Review?

A

An independent review into RICS purpose governance and strategy, led by Lord Michael Bichard. Aims to:
Return control to RICS members,
Re-affirm that it is first and foremost a professional organisation rather than a commercial enterprise,
Create a governance structure which is clear, simplar and more accountable.

82
Q

What did the Bichard Review conclude?

A

The role of president and chair of the governing council should be merged to prevent blurred accountability. CEO should be renamed director general to better convey the responsibilities.
A new membership service committee to increase satisfaction levels.
Fees will be reviewed and more transparent.
More representation for specialisms on governing council, as well as younger members.
Introduction of independent governors from other sectors with experience and understanding of corporate governance.
Independent reviews every five years.
New panels for public interest and sustainability.

83
Q

What is an information barrier?

A

An information barrier is a physical and virtual barrier between colleagues and/or departments which may allow a company to proceed despite a conflict of interest. Consent for this must always be provided by the client.

84
Q

What are you companies values?

A

We are inclusive. We value difference and a culture where everyone belongs.
We are driven. Drive keeps us decisive and agile.
We succeed together. Individually, we’re good, but together, we’re great.
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Cushman and Wakefield Values

85
Q

Maximum levels of uninsured excess on PII?

A

UK Professional Indemnity Insurance Requirements, April 2022:
Firm Turnover in preceding year £10,000,000 or less, maximum uninsured excess is the greater of 2.5% or £10,000.
No limit set for firms with turnover of £10,000,001 or above.

86
Q

What is the Assigned Risk Pool?

A

The Assigned Risk Pool is open to RICS UK firms who are unable to obtain sufficient PII in the insurance market.

87
Q

What are the requirements for run-off cover?

A

Minimum limit of £1,000,000 in all for a period of 6 years from time of cessation.

88
Q

RICS Registered Valuer Scheme?

A

RICS Valuer Registration Scheme is a risk monitoring and quality assurance programme which checks compliance with the RICS Red Book. Ensure members meet the highest standards, offering protection and confidence to valuers and their clients, as well as a competitive advantage.

89
Q

What would you do if you receive a notice of PII claim from a client or their solicitor?

A

Let employer know, let insurers know, investigate matter and seek legal advice.

90
Q

What should firms do to manage risks of money laundering and terrorist financing?

A

Firms should have a written policy addressing the risk and covering issues such as:

  • Understanding the source of funds in high risk situations.
  • Identifying politically exposed persons and people of significant control.
  • The process to be followed for customer due diligence.
  • The situations in which simplified, standard, or enhanced due diligence would be appropriate.

Firms should also have appropriate governance and systems in place, and reoccurring staff training. They should also keep reports of suspicious activity confidential, and appoint a senior member of staff to be responsible for ensuring policies are in place and complied with.

RICS APC (14 decks)

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