Ethics, rules of conduct and professionalism L1 Flashcards
(154 cards)
1
Q
Why do you want to become a member of RICS?
A
1 - Status; - gives client confidence
2 - Recognition - promotion of your professional excellence to governments and markets
3 - Market advantage - gives me a competitive edge
4 - Knowledge - International practice standards and knowledge sharing
5 - Network - Access to 125,000 professionals worldwide
2
Q
What is the role of RICS?
A
The Royal Institution of Chartered Surveyors promotes and enforces the highest professional qualifications and standards in the development and management of land, real estate, construction and infrastructure.
To protect consumers thorough strict regulation of professional standards
To be the leading source of of information and independent advice on land, property, construction and associated environmental issues.
3
Q
What are the key functions of RICS?
A
1) Advancing the highest ethical and technical standards for professionals in land, property and the built environment
2) Protecting and providing benefits to consumers by enforcing standards and codes of best practice
3) Providing expert impartial advice to governments, business and the public
4) Equipping RICS members with leading edge advice, market insight and professional training
4) Promoting RICS status and standards in key worldwide markets as the mark of property professionalism.
4
Q
What is a Royal Charter
A
A royal charter is a document issued by the monarch that gives independent legal standing to an organisation and defines its objectives, constitution and powers to govern its own affairs.
5
Q
Who is the current RICS president?
A
RICS President Ann Gray FRICS
6
Q
What do you understand by the term self-regulation?
A
RICS self-regulates, meaning that it operates within it’s own published regulatory framework, rather than being legislated by Government.
7
Q
Can you tell me what you understand by the principles of better
regulation?
A
Proportionality - Regulators should intervene only when necessary; remedies should be appropriate to the risk posed, and costs identified and minimised
Accountability - Regulators should be able to justify decisions and be subject to public scrutiny
Consistency - Government rules and standards must be joined up and implemented fairly
Transparency - Regulators should be open and keep regulations simple and user-friendly
Targeting - Regulation should be focussed on the problem and minimise side effects.
8
Q
What is a Byelaw?
A
Byelaws are effectively local laws to deal with local issues. They are made by a body, such as a RICS, using powers granted by an Act of Parliament, and so are a form of delegated legislation.
9
Q
Give an example of one of the RICS Byelaws.
A
The RICS Rules of Conduct (bye-law 5.1)
To be eligible for admission as a Chartered member, a person shall demonstrate the attainment of the appropriate professional competence
10
Q
Explain to me the new RICS Rules of Conduct - what do they replace?
A
The new RICS Rules of Conduct, effective from 2nd February 2022 replaces the previous publication from 2007. In the new version, 5 rules of conduct are set out which apply to all RICS members and firms around the world.
11
Q
When do the new RICS Rules of Conduct take effect
A
2nd February 2022
12
Q
Who do the new Rules of Conduct relate to?
A
The Rules of Conduct apply to all members (as defined in Bye-Law 5.1) and firms regulated by RICS.
13
Q
What are the 6 ethical principles that the Rules of Conduct are based on?
A
Honesty
Integrity Competence
Service
Respect Responsibility
14
Q
What are the 5 Rules of Conduct
A
1) To act with integrity
2) To maintain and ensure services are provided by competent individuals
3) To provide a high quality and diligent service
4) To respect others and advocate for diversity and inclusion
5) To maintain public confidence in the profession
15
Q
Give an example behaviour for Rule 1 of the RICS Rules of Conduct
A
To act with integrity - I noticed a consultant had incorrectly invoiced my client, resulting in a lower than agreed fee for the scope of services agreed with my client. I advised the consultant of their error and requested they reissue a rectified invoice.
16
Q
Give an example behaviour for Rule 2 of the RICS Rules of Conduct
A
When undertaking a desktop study of the Motspur Park Gas Holders site, I advised my client that issues of contamination lay outside my area of expertise, and suggest a contamination study be instructed with a geotechnical consultant to clarify the level of risk.
17
Q
Give an example behaviour for Rule 3 of the RICS Rules of Conduct
A
To provide a high quality and diligent service - prior to any instruction, I ensure I engage with my client to understand their needs and objectives before undertaking the work, I also ensure timescales for the scope of service are agreed.
18
Q
Give an example behaviour for Rule 4 of the RICS Rules of Conduct
A
To treat others with respect and support diversity and inclusion - If I hear or see discriminatory behaviour in the workplace I know to challenge this and report the incident to my line manager or relevant senior.
19
Q
Give an example behaviour for Rule 5 of the RICS Rules of Conduct
A
To maintain public interest in the profession:
Members and firms cooperate with investigations into complaints or concerns, and provide information where it is reasonably requested and they can do so lawfully
20
Q
What are the mandatory professional obligations of firms and members to RICS?
A
Members must:
- Comply with the CPD requirements set by RICS
- Cooperate with RICS
- Promptly provide all information reasonably requested by the standards and regulation board, or those exercising delegated authority on its behalf
RICS-regulated firms must:
- Publish a complaints handling procedure approved by RICS
- Ensure that all previous and current work is covered by adequate and appropriate professional indemnity insurance
- If having a sole principal, make appropriate arrangements for their professional work to continue to event of their incapacity, death, absence or inability to work
- Cooperate with RICS
- Promptly provide all information reasonably requested by the standards and regulation board, or those exercising delegated authority on its behalf
Display on their business literature, in accordance with RICS published policy on designations, a designation to denote that they are regulated by RICS - Report to RICS any matter that they are required to report under the Rules for the Registration of Firms
21
Q
What disciplinary procedures can the RICS impose?
A
Regulatory compliance order
Reprimand
Fine
Impose an unlimited amount of fine per breach but it must be proportionate to offence
Impose conditions upon future continued RICS registration
Expulsion from membership or remove the firm
Require publication of the results of the hearing in the RICS modus magazine , on the RICS website and in the local newspaper where the firm is based
22
Q
In what circumstances can disciplinary procedures be imposed?
A
An Interim Measure is considered by the Regulatory Tribunal (sitting as a Disciplinary Panel), and can be imposed where it is:
- necessary for the protection of the public and/or
- otherwise in the public interest and/or
- in the interests of the Regulated Member
23
Q
When did RICS last update their disciplinary panel rules?
A
The Version 2 of the RICS Regulatory Tribunal Rules came into force on 2 February 2022. In accordance with RICS Bye-Law B5.
24
Q
What are the different levels of action within the RICS disciplinary panel?
A
Action by head of regulation - first step is a formal investigation by the Head of Regulation who can initiate one of four actions upon completion of the investigation:
1) Serve a fixed penalty notice
2) Make a Regulatory Compliance Order
3) Refer the matter to a single member of the Regulatory tribunal for consideration
4) Refer the matter directly to the Disciplinary Panel
Disciplinary panel (drawn from the independent regulatory tribunal)
Appeal panel:
Appeal panels can consider a member’s or firm’s appeal against review of a decision relating to the above levels of disciplinary procedure
They will review the decision having made regard to the evidence previously presented and any new representations. The appeal panel can allow the appeal and vary the penalty imposed
25
What do you understand by the term professional practice?
Professional practice is a term which usually refers to the conduct as well as the work of someone from a specific profession. Professions are defined as occupations that need a extended period of tutoring and training.
26
What money laundering regulations or legislation are you aware of?
Terrorist Financing and Transfer of Funds (Information on Payer) Regulations 2017 (amended in 2022)
- money laundering is when the proceeds of criminal activities are disguised or converted and then realised as legitimate assets
- the regulations cover estate agency work and 'relevant financial work' inside and outside the UK by a firm
Key provisions:
- required to have a written money laundering and terrorist financing risk assessment
- Implement systems, policies and controls to address money laundering and terrorist financing risks
-adopt internal training
27
What is a red flag of money laundering?
1) Inability or unwillingness of parties to provide identity documents
2) Changes to parties involved in the transaction
3) Unusual transaction features, such as unexpected urgency, loss-making transaction, or unusual transaction
4)Payment of fees, purchase of monies in unusual currencies
28
What bribery legislation are you aware of?
The Bribery Act 2010
6 principles:
Proportionality
Top level commitment
Risk Assessment
Due Diligence
Communication
Monitoring and review
29
What is a bribe?
The giving, offering, promising or receiving of an advantage, often in the form of a gift or payment, in exchange for an action which is illegal or a breach of trust
30
What are the penalties for accepting a bribe?
The bribery act is policed by the Serious Fraud Office. The penalties included 10 years in prison as a maximum sentence and an unlimited fine
31
What are the penalties for being involved in money laundering?
Maximum 14 years and/or unlimited fine for assisting in money laundering
Maximum 5 years for tipping off someone that they are under investigation for money laundering, or for failing to report them
32
What constitutes an offence under the Bribery Act 2010?
1) Bribing
2) Receiving the bribe
3) Bribing a foreign public official
4) Failing to prevent bribery
33
What constitutes an offence under the current money laundering regulations? (Proceeds of Crime Act 2002)
1) Concealing criminal property
2) Arrangements - if you enter into an arrangement which you know or suspect facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person
3) Acquisition use and possession - if you acquire, possess or use criminal property
34
How long should you keep anti money laundering records for? (The Money Laundering Regulations - Terrorist Financing and Transfer of Funds Regulations 2017 (amended in 2022)
5 years - requirement of regulation
35
What is Professional Indemnity Insurance (PII)?
Professional Indemnity Insurance protects clients, surveyors and third parties against negligence claims when there is a duty of care breached and a claim for damages arises
36
Can you tell me about the RICS requirements in relation to PII?
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.
Minimum RICS requirements are:
Firms preceding turnover:
£100,000 or less - £250,000 PII cover
£100,001 - £200,000 - £500,000 PII cover
£200,001 and more - £1,000,000
37
What is a PII aggregation clause?
PI policies almost invariably contain an aggregation clause that allows or requires a number of, usually, similar or linked claims to be treated as a single claim
38
What does ‘claims made’ mean in terms of PII?
PII policies work on a 'claims made' basis - i.e. the policies cover claims that are made during the period of insurance regardless of when the negligent act occurred
39
Is a PII excess usually paid for per claim?
Yes - CHECK
40
In a negligence claim, what would help to show that you acted with consideration and due process?
1) Clearly understand the clients objectives and confirm precise instructions in writing on the terms of engagement
2) Ensure you are competent to undertake the instruction
3) Undertake the work in accordance with the relevant Professional Standards and Practice Information
4) Make detailed file notes and take photographs
5) Keep up to date with market knowledge and legislation and undertake and record your
6) Cap the professional liability excess on your policy in the Terms of Engagement
41
Can good record keeping help to provide a defence in a PII claim?
Yes - detailed file notes can help to show that you acted appropriately.
42
Avoidance of negligence?
1) Clearly understand the clients objectives and confirm precise instructions in writing on the terms of engagement
2) Ensure you are competent to undertake the instruction
3) Undertake the work in accordance with the relevant Professional Standards and Practice Information
4) Make detailed file notes and take photographs
5) Keep up to date with market knowledge and legislation and undertake and record your
6) Cap the professional liability excess on your policy in the Terms of Engagement
43
If you were providing services outside of your usual scope to a client, what might you need to do in relation to your PII cover?
Check it covers the work, or speak to your PII insurer or broker to extend cover if you need to
44
What is run off cover?
Run-off cover is insurance for claims made against a firm after it has stopped doing business.
45
What RICS requirements are there relating to run off cover?
For consumer claims - a minimum of £1m of aggregate cover over a period of 6 years
For commercial claims - firms must consider what is adequate and appropriate for a minimum of 6 years
Firms that are unable to obtain run-off cover from their insurer or on the open market will be able to apply for coverage to the RICS run-off pool.
46
What changes did RICS recently make to the Minimum Approved PII Wording?
The RICS minimum policy wording is broadly unchanged for 2023.
RICS has made some amendments to ensure clarity of drafting but none of these are material and there will be no impact on the breadth of cover available to RICS regulated firms in the UK.
47
What precedent has caselaw set in terms of keeping adequate site notes (and therefore providing a defence in a PII claim)?
Ryb v Conway Chartered Surveyors & Ors
The Claimant commissioned the Defendants to undertake a full building survey of a north London ground floor flat with gardens which he intended to purchase for £1.275m. The Claimant was visually impaired and the surveyors knew that he would rely on their evaluation.
The survey report was produced in September 2014, which expressed the surveyor’s opinion “…I have no hesitation in recommending it as a worthwhile investment…”
The Claimant proceeded to purchase the flat. The next summer his gardener found what he thought might be knotweed in the garden. An inspection in July 2015 by Environet UK Ltd identified 3 stands of the plant and stated that that it had been growing for more than 3 years.
Environet excavated the knotweed at a cost of £10,260 (incl. VAT) in November 2015, which inevitably caused damage and disturbance to the garden.
After the knotweed re-appeared in 2017 the Claimant pursued a claim against the surveyors for the cost of the remediation works and for the reduction in value of the flat.
Applying the dicta in Network Rail Infrastructure Ltd v Williams & Anor [2018] EWCA Civ 1514, the judge awarded £50,000 in damages, representing the diminution in value
48
Explain PII requirements relating to fire safety cover and cyber cover.
Fire - 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, on an aggregate, defence cost inclusive basis.
Cyber - The minimum terms now exclude claims relating to the use of, or inability to use, a computer system arising from the receipt or transmission of malware, or from so-called 'cyber acts' including damage to or destruction of programs, software or stored data.
49
How long can a PII claim arise after the work is undertaken?
Limitation Act 1980
Contract: - 6 years from the date of the negligent act, breach of contract or omission
Section 14A - provides an alternative limitation period of 3 years from the date of knowledge of the damage, subject to the 15 years longstop from the negligent act or omission
Tort - 6 years from the date the claimant suffered the loss
50
What is the Assigned Risks Pool (ARP)?
RICS Assigned Risks Pool is available at a cost for members who cannot arrange cover. It provides emergency cover for a period of up to two years so that firms can continue to practise.
51
Who might need to access the ARP?
where a firm may be unable to obtain PI
insurance and therefore render(s) it unable to comply with the RICS insurance requirements. This may be as a result of a poor claims record, the type of business being carried out or other risk factors, and may occur through no direct fault of the firm
52
Explain your understanding of the RICS Guidance Note Risk, Liability and Insurance (1st Edition).
This guidance note is intended to assist both members and their clients in understanding the main risks and liabilities associated with surveying. It guides members in the negotiation of equitable contracts with clients and the avoidance of major risks and pitfalls.
RICs recommends the use of liability caps to manage risks associated with professional work.
Be aware of third-party reliance and make it clear that advice can only be relied upon by the client named in their terms of engagement
53
Explain when you might agree a liability cap.
Within the Terms of Engagement prior to instruction
54
How would set out third party reliance in Terms of Engagement?
Regulated firms need to be aware of third-party reliance and make clear in their engagement terms that their advice may only be relied upon by the named client, so as to ensure that they are aware of and have control over future requests for third party reliance.
55
What are the three key terms that should be considered from a risk perspective in the context of every instruction you undertake?
1 - The scope of work
2 - The basis on which the fee will be calculated
3 - The liability cap
56
What is an annual return?
The annual return is a mandatory process that chartered surveyors and firms registered with RICS must complete each year.
The annual return typically includes information about a surveyor's or firm's activities, such as the types of work they have undertaken, the number of clients served, and details about any complaints, disciplinary actions, or professional indemnity insurance coverage. It is used by RICS to monitor and regulate the conduct and performance of its members and firms, as well as to maintain the integrity and reputation of the profession.
57
Tell me what you understand about Complaints Handling Procedures (CHP).
Complaints handling means the process of attending to and resolving complaints including ongoing interaction with complainants.
The Rules of Conduct specify that it is mandatory for all RICS-regulated firms to publish a complaints-handling procedure, which includes an Alternative Dispute Resolution (ADR) mechanism, and they must maintain a complaints log.
58
When and how can the RICS be involved in a complaint about a firm or member?
RICS regulated firm- must have a CHP which is approved by RICS.
The RICS will only become involved if a member fails to respond to the complainant or prevents the party gaining access to an independent redress mechanism.
RICS Guidance note on Complaints Handling (2016)
59
Can you tell me about the CPD requirements for members of RICS?
4 requirements:
1) Members shall undertake 20 hours of CPD in a calendar year
2) At least 10 of these hours must be formal, the remainder can be informal
3) All members must maintain a relevant and current understanding of the RICS Rules of Conduct during a rolling 3-year period
4) All members must record their CPD activity using the RICS CPD management system by 31st January each year
60
Why is CPD important?
CPD is important as it ensures members meet the Rules of Conduct requirement to remain competent. CPD is important as RICS is a standard based organisation and its members operate in a constantly changing environment e.g. new legislation.
61
Tell me about the RICS’ guidance on dealing with Conflicts of Interest.
RICS Global Professional Statement on Conflicts of Interest (2017) - mandatory statement that came into effect January 2018
- Members must not advise or represent a client where doing so would involve a conflict of interest or a significant risk of a conflict of interest, other than where all those who are or may be affected have provided their informed consent
- Informed consent may only be sought where the RICS member or regulated firm is satisfied that proceeding despite a conflict of interest is in the interests of all of those who are or may be affected and is not prohibited by law
62
What is double dipping (dual agency)?
Where an agent has a contractual agency relationship with both the seller and buyer at the same time
63
Why is double dipping (dual agency) an unacceptable practice?
A dual agency relationship can often be problematic. Because the agent's loyalty is split between both parties, it can be difficult for them to advocate for either the buyer or the seller. This can lead to a situation where both parties feel like they're not getting the best possible representation.
64
How would you close down a regulated firm?
The following actions are required by RICS:
1) Inform RICS of your retirement/closure
2) Ensure clients are informed at the earliest opportunity and handover arrangements made to a new firm
3) Return any monies held by clients to their own account
4) 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
5) Retain a copy of the client files and records for a minimum of 6 years
65
What is a conflict of interest
a conflict of interest arises when a member or firm's independence and impartiality is threatened due to the existence of a conflict between two clients.
E.g.:
1) Any financial interest
2) A personal interest
3) Commercial relationships
4) Acting on both sides of a transaction
66
What is conflict avoidance vs conflict management
Conflict avoidance - When you do not accept the instruction
Conflict management -
When the instruction is accepted, and steps are agreed and put in place to manage the conflict, such as an information/ethical barrier, with the written agreement of all parties
67
What are the three types of conflict of interest?
1) Party conflict - relating to work on the same or related instruction for two different parties
2) An Own Interest Conflict relating to a personal interest
3) A confidential information conflict relating to work between two parties that is confidential
68
What is informed consent in relation to conflicts of interest?
Surveyors should only seek informed consent where they are satisfied that proceeding with the instruction is in the best interest of all parties and is not prohibited by law
Must be given in writing by the party explaining the conflict clearly and transparently and make sure the party affected understands the situation
69
Other key areas of the RICS Global Professional Statement on Conflicts of Interest 2017
All conflicts must be managed in accordance with the professional statement
Every RICS firm must have in place effective systems and controls appropriate to their size to ensure full compliance.
All firms must keep records to show their compliance with the Statement
70
How would you handle a conflict of interest
1) Conflict Avoidance - consider whether the conflict if irresolvable, if my impartiality is compromised and and should be avoided or whether it can be properly managed through transparency and communication
2) Written advice to both parties - assuming that you wish to accept the instruction, set out in writing as soon as possible the following information:
a) Disclose the nature of the conflict and circumstances
b) Be as clear as you can and ensure each party and make their own decision (inform them to seek independent advice)
c) Request written confirmation from the parties (informed consent)
3) After receiving written consent set up an information barrier to ensure no information passes between the clients
(Surveys must be different and physcially separated, information securely stored, clear audit trail of the conflict check process, must take 'reasonable steps' to ensure the barrier is robust)
71
What can you tell me about RICS guidance relating to bribery, corruption or money laundering?
Professional standard on Countering Bribery and Corruption, Money Laundering and Terrorist Financing (effective from September 2019) - was reissued as a professional standard in July 2023
This standard sets out mandatory requirements for RICS members and RICS-regulated firms in relation to bribery, corruption, money laundering and terrorist financing. This took effect from 1st September 2019.
It is divided into three parts:
Mandatory requirements for anti-bribery and corruption and for anti-money laundering and terrorist financing
.
Guidance setting out supporting good practice regarding each of these areas.
Supplementary guidance on some key concepts described in parts 1 and 2.
This professional standard applies globally and to all RICS members and RICS-regulated firms involved in work where the potential for such activity exists. If the standard contradicts local legislation then the legislation takes precedence.
72
What status does the Professional standard on Countering Bribery and Corruption, Money Laundering and Terrorist Financing hold
RICS professional statements set out the requirements of practice for RICS members
and for firms that are regulated by RICS. A professional statement is a professional or
personal standard for the purposes of RICS Rules of Conduct.
RICS recognises that there may be legislative requirements or regional, national or
international standards that have precedence over an RICS professional statemen
73
What must/should firms/members do to comply with the RICS Professional standard on Countering Bribery and Corruption, Money Laundering and Terrorist Financing ?
Bribery:
RICS firms must;
- not offer or accept, directly or indirectly a bribe
- have plans in place to comply with applicable laws governing bribery and corruption, and ensure that they are followed
- report activity they are aware of that breaches anti-bribery and corruption laws to the authorities
act with due diligence and undertake risk assessment
Bribery - members must not:
- offer or accept a bribe
- ensure they have adequate knowledge of bribery and corruption to comply with the PD
- report any behaviour to the authorities
Money Laundering and Terrorist financing:
Firms must:
- not facilitate or be complicit
- report any suspicions of money laundering
- evaluate and review the risks periodically
- ensure their responses to the risks identified are appropriate, including checks on clients and customers
- use reliance only where this an appropriate level of confidence in the quality of the information provided by the third party
- take appropriate measures to understand the client and the purpose of the transaction
- verify the identity of their client
- record and retain information detailing how the firm has met the requirements of this professional statement
RICS members must (money laundering):
-Not facilitate or be complicit in money laundering
-Report any suspicions to the local authorities
- Where there is no local legislation, the activity should be record, and if possible reported to a senior manager
74
What are the current RICS rules for registration of firms?
RISC Rules for the Regulation of Firms 2022
- Firms providing surveying services to the public must register for regulation to ensure there is a recognised quality benchmark for all firms. Firms must annual make a return to RICS confirming their compliance with their obligations
The 2022 rules state:
1) If 50% pf principals of a UK firm are RICS members then it has to be regulated, and if at least 25% then it can apply to be regulated
2) Principals are sole practitioners, directors, partners or board member, or someone who is able too act autonomously without supervision in a firm
3) Each firm must nominate a 'Responsible Principal' who is obliged to ensure all reasonable steps are taken and systems are in place to ensure compliance with regluatory and RICS requirements, including to report to RICS as requested
-
75
When did the RICS rules for registration of firms last changes last change?
Feb 2022
76
What were the key changes in the RICS Rules for Registration of Firms in 2022?
Check
77
Who is a ‘qualified member’ of RICS?
A qualified member of the RICS is an individual who has met the educational and professional requirements set by RICS and has been officially admitted to the institution as a member.
This is most commonly through the Assessment of Professional Competence
78
What is a phoenix firm?
A phoenix firm is where an RICS regulated firm closes in a disorderly way and then re-registers quickly as a new trading entity. This typically relates to firms with 1 to 4 partners and happens where a firm becomes insolvent or closes without having sufficient run-off cover in place.
As the opening of phoenix firms poses a significant risk to former clients, employees, creditors and the public interest, RICS have a range of powers available including:
Refusing registration for the new firm
Holding registration in abeyance pending the outcome of any outstanding disciplinary proceedings
Requiring risk mitigation measures to be implemented to avoid a repeat business failure
Imposing licence conditions to require the firm to apply risk mitigation controls
Requiring staff training in areas of concern
Monitoring on an ongoing basis
Providing additional support and guidance to the firm
79
When must a firm register for regulation?
If:
- the firm provides surveying services to the pubic
- the firm is operating in Regulated Area A (the UK)
- at least 50% of the Firm's principals are RICS members
80
What are the registration eligibility criteria?
If:
4.1a the firm provides surveying services to the public, AND
4.2b at least 25% of the Firm's principals are RICS members
a firm is also able to register if it meets 4.1a and either:
a) the Head of Regulation is satisfied that the Firm is implementing a plan to secure compliance with 4.1b with a reasonable time period
b) the Head of Regulation is satisfied that the Firm is appropriately support and supervised by another RICS-registered firm or firms that fulfill 4.1
81
Who is a Responsible Principal?
A Firm that is registered or registering with RICS must at all times have a Responsible
Principal.
A Responsible Principal will have primary responsibility for ensuring the Firm complies with its regulatory and statutory obligations, including:
- implementing policies and procedures to ensure compliance
- ensuring all information provided to RICS is truthful and adequate
- ensuring that there are processes and systems to record any failure to comply with RICS requirements
82
What happens if a firm cannot comply with the eligibility criteria?
Find a way to - another surveyor to oversee the firm and meet eligibility criteria? Recruit?
83
What are the rules around use of the RICS logo and ‘Regulated by RICS’ designation? and when did they last change?
There are strict rules that came into practice on the use of the logo which came into effect in April 2020, including a restriction to the use of the designation 'Chartered Surveyors' by firms to the trading name only. Only RICS Members and registered firms can use the logo.
84
What changes were made to the use of logo
The key changes are:
Use of the RICS logo is restricted to Regulated Firms only
Use of the designation 'Chartered Surveyors' is restricted to trading names only of firms
Regulated Firms must include prescribed text in their terms of engagement to explain what being Regulated by RICS means to clients
85
Tell me about the restrictions to the use of the designation ‘Chartered Surveyors’ by firms.
When using the RICS logo; the chartered surveyor designation a firm must:
a) RICS branding
guidelines for Members and Registered Firms
b) Rules of Conduct and Rules for the Registration of Firms
c) RICS’ Royal Charter and Bye-Laws
d) not alter the RICS logo or RICS Registered Firm designation without permission
e) not use the RICS logo in a manner that could have an adverse impact upon its status as a
registered trademark
f) not use the logo or designation(s) in a manner that could bring the profession into disrepute and
g) not use the chartered surveyor designation in a manner that could have an adverse
impact on its status as a registered trademark
86
What must be included in ToE relating to firm regulation?
An explanation to the client of what it means for a firm to be regulated by RICS
87
What is a locum and who might need one?
A locum is effectively another professional who is appointed to ‘stand in’ for the surveyor if they are unable to work, e.g. in the event of an accident/illness, unforeseen circumstances, prolonged absence (e.g. holiday or a sabbatical) or death.
Typically, a locum will be another Chartered Surveyor, although they could also be aa solicitor or accountant by trade, i.e. a trusted professional.
88
How could a sole trader set up their CHP using a locum?
A locum should be appointed formally in writing, documenting the following::
- Appointment details
- Confidentiality clauses
- Any conflicts of interest
- Fee basis
- Termination
- Professional Indemnity Insurance (PII) requirements
- Process for the locum to act independently or if they need to seek instructions before proceeding
89
What RICS guidance relates to handling client money?
RICS Professional Statement 'Client Money Handling' (2019) effective from 1st January 2020
90
When was the RICS Professional Statement 'Client Money Handling' last updated?
Reissued as a professional statement in October 2022 to reflect the new rules of conduct that came into effect February 2022
91
What do the RICS Rules of Conduct say about client money?
The Rules of Conduct require that "firms eep client money safe and have appropriate accounting controls" . Clients' money can include holding deposits, rent service charges and retentions.
92
What RICS guidance is there relating to handling client money and what are the 6 main areas of good practice set out
RICS Professional Statement on Client Money Handling (201) Effective from January 1st
1) Holding client money
2) Providing information to clients
3) Receipts of client money
4) Payments from client accounts
5) Accounting records and controls
6 Compliance
93
There are numerous procedures Chartered surveyors need to be aware of for handling client money. What are they?
1) Keep client accounts separate and identifiable
2) Label as 'client' on the bank account and cheque book
3) Give client money on their demand
4) Payment of interest is agreed with client and accounts must be kept in credit
5) Regular bank reconciliation check
6) Accurate records
7) Annual audit and reporting obligations
8) Only be withdrawn from a client account if properly required
9) Records must show all cash transactions
10) Signatories must be agreed with authorised staff
11) A discrete account is for a single named client account only
12) RICS regulatory review visits of inspection can be undertaken by RICS annually
13) Firms must show client money handling procedures on their website
94
Explain your understanding of the RICS Scheme Rules relating to client money protection.
RICS runs a Clients' Money Protection Scheme for claims from clients which provides last resort protection where an RICS regulated firm is unable to repay a client's money.
There are a number of limits and exceptions set out in the scheme rules which apply to Surveying Services and Property Agents These include how client money should be handled and compensation limits amongst other things
95
What are the main Client Money Protection schemes available to firms? and when were these last updated
"Client Money Protection Services for Surveying Services" - general client money protection, covering money held by firms undertaking any surveying activities
"Client Money Protection Services for Residential Agents" - Residential agent activity in England protection, covering areas under the Client Money Protection Scheme for Property Agents
Last updated June 2020
96
What is the current compensation limit for the RICS Client Money Protection Scheme?
Limit per claim - £50,000
Total aggregate limit available to pay claims is £20.3m
97
What does the annual regulatory review fee relate to?
All regulated firms who hold clients' money pay a regulatory review fee on an annual basis. The income generated from these fees covers the operational costs of the client money regulatory review visit programme. The fee is set based on the number of directors/principals in each firm, which includes both RICS members and non-member individuals.
98
What might client money include?
Clients' money can include holding deposits, rent, service charges and retentions.
99
How does client money differ to office money?
The client account is for client funds only. The office account is the law firm’s money.
100
What are some of the key principles of the RICS Professional Statement relating to client money protection?
RICS Professional Statement Client Money Handling (2019)
1. Holding client money - label account "client" and meet requirements for holding client money
2. Providing information to clients - commission charges should be clearly identifiable
3. Receipts of client money - identify whether any receipt is office or client money and pay it into an account appropriately
4. Payments from client accounts - money that has been paid into a client account incorrectly should be withdrawn and transferred promptly on discovery
5. Accounting records and controls - Accounting records and systems should be appropriate to the nature and volume of client account transactions. The firm should keep evidence that the client bank account is under the exclusive control of the firm and of who can authorise transactions on the account readily available.
6. Compliance - to comply with anti-money laundering standards, firms should
ensure that all client money held is linked to a surveying activity being undertaken by the
firm and that their client money account is therefore not being used as a banking facility for
third parties, whether they are clients or not
101
Explain the key themes from the RICS Futures 2020 Report.
The Royal Institution of Chartered Surveyors (RICS) set out an action agenda to keep the chartered surveying profession at the heart of the built and natural environment amidst unprecedented change such as the COVID 19 Pandemic
The action plan revolved around three key areas:
Data and technology - RICS needs to be able to adopt technological change that can enhance the professionalism of members
Talent & skills - increasing the number of routes into the RICS and property profession to secure more people from a diverse background
Sustainability - standards should be reviewed and new mandatory requirements developed around sustainability for RICS professionals to ensure all members champion such initiatives.
102
Explain the potential implications of the Hart v Large case.
Mr Large had been instructed to provide a Level 2 HomeBuyer Report (HBR) on a newly refurbished property in Devon.
Mr Large’s HBR reported minor issues relating to drainage, gutters and pipework. The property was valued at £1.2m and Mr & Mrs Hart proceeded to purchase the property at this figure.
The High Court held that Mr Large was negligent because his inspection and report failed to identify the significant issues relating to damp. Mr Large also failed to advise, both within his report and during subsequent correspondence, to advise that Mr & Mrs Hart obtained a Professional Consultant’s Certificate (PCC) prior to purchase.
The Hart v Large case emphasises the importance for surveyors of:
Being clear and advising clients on the survey level and scope of inspection, limitations and caveats
Recommending justifiable further investigation
Considering whether any new information provided after inspecting or reporting affects their original advice, and updating their advice if it is justified to do so
103
Explain your understanding of precedent set in Burgess v Lejonvarn
It established that professionals providing professional services pro-bono and without a contract, still owe a duty of care in tort to act with reasonable care and skill in respect of services they provide. However, the Court of Appeal also determined that they are not under a duty to advise or give warnings , and nor are they liable for work they do not do
104
What is the new maxim of RICS in relation to compliance?
RICS have removed this page from their website. Compliance by RICS is currently about being proportionate and self-regulating / correcting where possible, unless a serious breach requires disciplinary action.
105
When might RICS investigate a social media post and what guidance has been published in relation to the use of social media
Use of Social media; Guidance for RICS members (2021)
- Discrimination
- dishonesty
- abusive / threatening
bullying
- pattern/large number of concerning communications
- ignoring previous advice about concerns
106
Explain your understanding of the RICS Levitt review.
An independent review by RICS to investigate articles in the press that alleged RICS 'tried to supress a critical internal report into its finances in 2018/2019 and then unfairly dealt with those who sought to explore the issue".
In short, sound governance principles were not followed by RICS.
The Independent Review found that the non-Executive Board members’ concerns were legitimate and that they were wrongly dismissed.
A key contributing factor was a lack of clarity around the roles and responsibilities of the various RICS Boards, senior leadership and management. This led to a lack of scrutiny over the actions of the RICS Chief Executive and Chief Operating Officer
107
What were the recommendations of the RICS Levitt review?
1 ) Commission an independent review into governance
2, 3, 4, 5 ) Related to the sharing of minutes and access with Governing Council from various Boards and Committees
6 ) Increase the frequency of management board meetings (8 per year)
7 ) Exclusion of members of the Presidential team from the management board
8 ) Access of board members to raise issues and concerns with Governing Council
9 ) All members of Boards and Committees should be subject to regular reviews
10 ) Values statement - overarching RICS values and cultures
11 ) Reviews of rewards and executive bonus structure
12 ) Overhaul of RICS whistleblowing structure
13 ) Clarification of the circumstances in which the Chair of Governing Council is entitled to take decision such as dismissing non executives, on behalf of the council
14, 15, 16, 17) Overhaul of legal advice procurement and framework
18) Public apologies
108
What is whistleblowing?
Whistleblowing is about raising concerns relating to wrongdoing risk or malpractice that you witness in the workplace.
109
What does good governance mean to you?
Good governance should be:
1) Professional - skills/expertise to achieve excellence in governance
2) Responsive - respond quickly to a changing environment
3) Transparent - clarity, simplicity should be prevalent in governance structures
4) Trusted - operate transparently and independently to gain trust
5) Resilient - designed for the long term and shock proof
6) Diverse - diversity of thought and broad relevance
7) Inclusive - the direction should be informed through active engagement of all stakeholders
8) Ethical
9) Efficient
110
Explain what the Pandora Papers are and the ethical issues raised within them.
The Pandora Papers are a release of nearly 12 million leaked documents that reveal the hidden and sometimes unethical or corrupt dealings of the global wealthy and elite
The papers reveal the offshore interests and activities of such individuals along with their tax sheltering schemes.
111
Explain what you understand by the RICS Bichard Review.
The Bichard Review was an independent review of the RICS’ purpose, governance and strategy.
It was commissioned by RICS Governing Council in December 2021 following the Levitt Review
112
Explain some of the recommendations of the Bichard Review.
36 recommendations in 7 key areas:
1) Renewed and increased focus on the public interest remit of RICS (including amending the Royal Charter)
2) Maintaining self regulation through greater independence for regulatory functions
3) Increase D&I focus
4) Empowering members through greater support for regional boards and increased member engagement
5) Undertaking an independent review of RICS governance and effectiveness at delivering against its charter
6) A new simplified, clear, accountable structure
7) Showing greater leadership on issues that matter the most to society (sustainability, climate change)
113
How will these recommendations be implemented by RICS?
Bichard sets out a quick and phased approach to the adoption of the proposed responsibilities
114
How do professional integrity and professional ethics differ?
Professional integrity is a broader, personal commitment to ethical behaviour, while professional ethics, as defined by RICS and similar professional organizations, are specific guidelines and standards that members must follow in their professional practice.
115
What is modern slavery and how would you identify red flags of it?
Modern slavery encompasses slavery, servitude, human trafficking and forced labour.
Red flags - someone might:
- appear under control and reluctant to interact with others
- have few personal belongings, wear the same clothes everyday or wear unsuitable clothes
- Not be able to move freely or no personal ID
- reluctant to take to officials
- appear frightened or withdrawn and show signs of abuse
- picked up/dropped off for work in the same way
116
What legislation is there in relation to Modern Slavery
Modern Slavery Act 2015
The Modern Slavery Act gives law enforcement the tools to fight modern slavery, ensure perpetrators can receive suitably severe punishments for these appalling crimes and enhance support and protection for victims
Consolidated existing offences into a single act
117
Explain the implications of the Sanctions and Anti-Money Laundering Act 2018.
The act covers the UK’s powers to enforce its own sanctions. It is now easier for the UK to impose sanctions than under previous legislation which required adherence to EU legislation which was much stricter
The Act also addresses concerns over the transparency of ownership of foreign companies, requiring the Secretary of State to publish regular reports on the progress made in creating a register of beneficial owners of overseas entities.
118
What is the Sanctions List and why should you be aware of it?
Wider sanctions have been issued in light of the Ukraine conflict. The RICS Anti-Money Laundering sanctions update March 2022 - sets out the role of estate agents in enforcing sanctions
119
Why was the Register of Overseas Entities introduced?
The UK’s Register of Overseas Entities came into force on 1 August 2022. The register is part of a long-awaited effort by the UK government to combat the use of UK land for criminal purposes and increase transparency and public trust in overseas entities that own land in the country.
120
What are the six RICS values published as a result of the Levitt review?
Integrity, Transparency, Inclusion, Collaboration, Advocacy, Passion - RICS Values Statement 2021
121
Explain the impact of the Economic Crime (Transparency and Enforcement) Act 2022.
The new measures include:
a beneficial ownership register for overseas entities holding UK real estate
strengthening of unexplained wealth orders (UWOs)
making it easier to prosecute anyone involved in sanctions-busting
122
What are the 4 levels of RICS membership
1. FRICS
2. MRICS
3. AssocRICS
4. Trainee/Student
123
What do you need to become a FRIC
Evidence of achievement of FOUR Fellowship characteristics:
5 or more years at MRICS,
leadership role,
professional/technical achievement
Academic achievement
Raising the profile of RICS
124
What is the current governance structure of RICS
RICS is currently governed under the terms of its Royal Charter by various internal councils and boards.
Governing Council runs the RICS - provides management and strategic direction
The Standards and Regulation Board and Management Board report to governing council
17 specialist professional groups covering property, land and construction - each group is responsible for outlining standards of competence and practice
125
What information is required by the RICS for Registration
1) Type of business and staffing details
2) Name of the responsible principal
3) Statutory regulated activities - such as for financial services
4) Nature of clients
5) CHP details and records
6) Professional indemnity insurance details
7) Whether the firm holds client money
126
Describe the RICS Ethics Decision Tree
The Decision tree provides a framework of questions which members should ask themselves when facing a situation in which they are asked to act in a potentially unethical manner or situation.
It encourages considering the legality of ones actions and their consistency with the Rules of Conduct, as well as to consult with appropriate people before making decisions.
The ultimate test is whether members would be content to have their decisions or actions made public
127
What are the stages of the RICS decision tree?
Do you have sufficient facts on the issue?
Is it legal - unsure - get more advice
Is it in line with the Rules of conduct
Have you consulted with appropriate people to make an informed decision
Do you have clear reasoning in reaching your decision
Is your decision informed
Would you be content for your actions to be made public?
Decide what action to take
Act - and reflect on the outcome
Record - the decision and reasoning for it
128
What must Terms of Engagement include?
The client's agreement to the proposed fee basis, payment of expenses (and how calculated), and confirmation that a copy of the firms CHP is available upon request
129
What are the three steps prior to engagement in services
1) Check COMPETENT
2) Check for NO CONFLICT OF INTEREST
3) Confirms ToE in writing and get written approval from client before you start the work
130
When might it be appropriate to decline an instruction?
1) Not competent
2) Do not have sufficient facts
3) Client wont sign ToE
4. Conflict of interest
5. PII cap cannot be agreed
6. Advice is for a friend or on a pro bono basis and PII wont cover the work
7. Client is on the sanctions list
8. Would you be happy for the actions to be made public?
131
What compliance is required for agency work in regard to Terms of Engagement?
Compliance with Section 18 of the Estate Agents ACt 1979 and money laundering checks (Money Laundering Regulations 2017
132
What does the Consumer Rights Act allow for ToE
A cooling off period of 14 days from the date of the agreement
133
What should firms avoid in relation to fee negotiations and how should fees be set
Price fixing, aggressive fee cutting or collusion with competitors
Fees should be market based and agreed on ad-hoc basis with clients. You should not be seen to be undercutting another firm and you must be completely transparent with your clients and consumers.
134
What is meant by multiple introductions?
Where an agent has competing contractual relationships simultaneously with several buyers for commercial real estate investment opportunities - dealt with in RICS Professional Statement Conflicts of Interest
135
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
136
What RICS guidance provides advice on CHP
RICS Guidance note on Complaints Handling (2016) (reissued as PS in Sept 2023)
137
What are the standard minimum procedures for the handling of a complaint?
1 - In House:
- Details of CHP should be shared widely
- Procedure should be quick and clear
- Complaints Handling Officer should be organised
- Complaint must be made in writing
- Record process of complaint being made
- Complaint should be acknowledged within 7 days and investigated within 28
Stage 2 - ADR Third Party Resoluiton
- If complainant not happy with review:
- Use independent redress scheme that the firm has chosen to use - the name must be given to the complainant
138
How long should files be held for to maintain client confidentiality
6 years
139
What do RICS Bye Laws say about confientiality
Client confidentiality must be maintained for all client affairs
140
If a third party wants to access your files what do you do?
Get client approval unless you are subject to statutory duty overriding client confidentiality (police)
141
What do you do if a surveyor find our a confidential piece of info regarding a party who is not their client
This cannot be used for their own purposes.
The client and source of info should be advised of the error.
The matter should be recorded in a note to the firm's compliance officer
142
What do you do if confidential information falls into your hand by accident
Do not use it for my own purpose
Inform a client/party who may be relevant and also the compliance officer
Dispose of it securely
143
Is PII mandatory
Yes
144
Where can you find PII requirements?
RICS Professional Indemnity Insurance Requirements Version 9 - April 2022
145
What is the maximum level of PII uninsured excess required by RICS?
Turnover:
Up to £10m - No greater than 2.5% of the sum insured, or £10,000
Over £10m - no set limit
146
What does your PII need to be?
Retroactive - take affect from a date in the past (historic claims)
147
What is the limitation act and what does it do
It is a statute of limitations which provides timescales within which action may be taken for breaches of the law
Contract: - 6 years from the date of the negligent act, breach of contract or omission
Section 14A - provides an alternative limitation period of 3 years from the date of knowledge of the damage, subject to the 15 years longstop from the negligent act or omission
Tort - 6 years from the date the claimant suffered the loss
148
What are the RICS requirements when starting a new practice
- Firm details form, informs RICS
- Appoint responsible principal for all RICS communication
- Register with RICS for regulation
- Arrange PII and send details to RICS
- Set up procedures for Client Money Handling, including a protection scheme
- Obtain RICS approval for CHP
- Set up complaints log
- Appoints CH officer
- Use logo kit from RICS
- Plan for locum if sole practionioner
- Ensure CPD logged online
- Ensure completion of an online RICS annual return at the end of each year
149
What are statutory requirements when starting a new practice?
- Disclose business name
- Disability discrimination compliance (equality act 2010)
- Financial services compliance (Financial Services and Markets Act 2000)
- Bribery Act 2010 compliance
- Appoint AML officer
- H&S compliance
- Asbestos register
- Fire safety compliance
- Register for data protection
- Estate agency compliance
- Inform HMRC for VAT and Tax registration
- Ensure compliance with current employment law
- Ensure insurance compliance for employer and public liability
150
What is the Proceeds of Crime Act 2002
Provides powers for authorities to recover in criminal and civil proceedings money and other assets which are deemed to be the proceeds of crime
Also creates a set of criminal offences intended to combat money laundering
151
What RICS regulation is there on bribery, corruption, AML? and what three parts is it divided into?
RICS Professional Statement: Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019)
Set outs mandatory requirements for RICS members and firms in relation to the above
Three parts:
1) Mandatory requirements for anti-bribery, corruption, AML, and terrorist financing
2) Guidance setting out good practice
3) Supplementary guidance on concepts in sections 1 and 2
152
Can you describe some of the mandatory requirements of the RICS Professional Statement: Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019)
Bribery and Corruption:
-Not offer/accept a bribe
-Have procedures in place to comply with the law
-Report suspicious behaviour to the authorities
-Act with DD to review the risks
-Retain records to show you met the requirements of the PS
AML and terrorist financing
-Dont be complicit
- Systems in place to comply with law
-Report suspiciosn
-Evaluate risks
-Use third party reliance for checks only where you are confident the quality of the 3rd party is good
-Understand the client
-ID checks
-Retain records
-
153
Can you describe some of the practical guidance of the RICS Professional Statement: Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019)
Guidance
Written policy in place
Publish code of behaviour
Encourage transparency
Set up gifts register
Keep up to date with the legislation
154
Can you describe some of the supplementary guidance of the RICS Professional Statement: Countering Bribery, Corruption, Money Laundering and Terrorist Financing (2019)
Establish a risk based approach (who you act for, what you are doing, why you are being asked to do it)
Dealing with politically exposed persons
Need to identify the beneficial ownership of a company
