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L1 Ethics, Rules of Conduct and Professionalism Flashcards

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1
Q

Why do you want to become a member of RICS?

A

1.) Status - being prestigious. Demonstrate to clients I work to the highest professional and ethical standards. Clients know RICS members understand industry standards. People admit it’s a difficult qualification to gain.

2.) Knowledge - range of standards to follow, CPD training and best practice guidance provided. Continue development.

3.) Networking opportunities.

4.) Market advantage / Financial Reward - expected increase in salary.

5.) Recognition - globally

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2
Q

What is the role of RICS?

A

Promotes and enforces the highest professional qualification and standards in the development and management of land, real estate, construction and infrastructure.

“Positive change in the built and natural environments”.

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3
Q

What are they key functions of RICS?

A

RICS main roles comprise;
1.) advancing the standards for professionals
2.) enforcing the standards and codes of practice
3.) equipping RICS members with advice
4.) promoting RICS status

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4
Q

What is a Royal Charter?

A

Instrument of incorporation.

Granted by the monarch.

Allows independent legal personality (creation of law by creating rights and duties) and reflects the high status of the body.

Examples include the BBC, Bank of England and RICS.

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5
Q

Who is the current RICS president?

A

Clement Lau
Since September 2021

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6
Q

What do you understand by the term self-regulation?

A

Organisation or body regulating itself without intervention from external bodies.

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7
Q

Can you tell me what you understand by the principles of better regulations?

A

Ensures evidence-based and transparent law-making.

Based on the views of those that may be affected.

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8
Q

What is a Bye-Law?

A

Local laws made by local authority or organisations.

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9
Q

Give an example of one of the RICS Bye-Laws.

A

Rules of Conduct.

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10
Q

Explain the new RICS Rules of Conduct - what do they replace?

A

New RoC in a single document. Previously a separate document for firms and members.

Sets out 5 rules and professional obligations to RICS.

Replaced the old Rules of Conduct for firms and members in February 2022.

Respond to new risks and opportunities.

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11
Q

When do the new Rules of Conduct take place?

A

2 February 2022

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12
Q

Who do the new Rules of Conduct relate to?

A

RICS accredited firms and members

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13
Q

What are the 6 ethical principles that the Rules of Conduct are based on?

A

Honesty, Integrity, Competence, Service, Respect and Responsibility.

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14
Q

What are the 5 rules of conduct?

A

1.) Members and firms must be honest, act with integrity and comply with their professional obligations, including obligations to RICS.

2.) Members and firms must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise.

3.) Members and firms must provide good-quality and diligent service.

4.) Members and firms must treat others with respect and encourage diversity and inclusion.

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.

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15
Q

Give an example behaviour of each Rule of Conduct.

A

1.) identify actual and potential rules of conduct.

2.) Only undertake work that they have the knowledge, skills and resources to carry out competently.

3.) Understand client’s needs and objectives.

4.) Treat everyone fairly and do not discriminate.

5.) Respond to complaints promptly.

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16
Q

What are the core professional obligations of firms and members to RICS?

A

RICS firms:

  1. Must publish a complaint-handling procedure.
  2. Must ensure appropriate professional indemnity insurance cover in place (meets standards approved by RICS).
  3. Appropriate arrangements in their absence, inability to work or death (sole principal).
  4. Must cooperate with RICS.
  5. Must promptly provide all information requested by the Standards and Regulation Board.
  6. Must display denote that they are regulated by RICS.
  7. Report to RICS any matter that they are required to report under the Rules for the Registration of Firms.

RICS members:

  1. Must comply with CPD requirements.
  2. Must cooperate with RICS.
  3. Must promptly provide all information requested by the Standards and Regulation Board.
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17
Q

What disciplinary procedures can the RICS impose?

A

Head of Regulation will consider taking action;

Impose Regulatory Compliance Order.
Or refer to Regulatory Tribunal
(Single Member or Disciplinary Panel).

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18
Q

In what circumstances can the disciplinary procedures be imposed?

A

Breach of RICS standards and rules, where the public interest and the reputation of the profession is involved.

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19
Q

When did RICS last update their disciplinary panel rules?

A

2 March 2020.
Regulatory Tribunal Rules.

Replaces ‘Disciplinary, Registration and Appeal Panel Rules’.

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20
Q

What are the different levels of action within the disciplinary procedures?

A

Where a member admits allegations, the Head of Regulation may impose Regulatory Compliance Order (after October 2019), with their agreement. Include a number of requirements, but avoid public hearing. This is too ensure future compliance.

Where member does not admit the allegations, but the case may not warrant a hearing, the case may be referred to a Single Member of the Regulatory Tribunal to determine the disciplinary outcome.

Most serious cases, Head of Regulation may refer a case to a Disciplinary Panel. Conduct a hearing to hear the evidence and determine the outcome.

Sanctions include;
Caution
Fine
Conditions
Expel/de-register member.

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21
Q

What do you understand by the term professional practice?

A

Use of knowledge in a particular profession.

Behaviour in workplace.

Holds professional responsibility.

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22
Q

What money laundering regulations or legislation are you aware of?

A

Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulation 2017.

Money Laundering and Terrorist Financing Regulations 2019.
Terrorism Act 2000.
Crime Act 2002.

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23
Q

What is a red flag of money laundering?

A

Warning signs.

Examples include politically exposed persons (hold position of influence), large amounts of cash and unwillingness to provide information.

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24
Q

What bribery legislation are you aware of?

A

Bribery Act 2010.

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25
What is a bribe?
A benefit given, promised or offered in order to influence an improper performance.
26
What are the penalties for accepting a bribe?
Under the Bribery Act, an individual accepting a bribe may be liable to imprisonment, fine or both. Also RICS disciplinary as would likely be against the public interest.
27
What are the penalties for being involved in money laundering?
Criminal prosecution- substantial fine, custodial sentence.
28
What constitutes an offence under the Bribery Act 2010.
1.) Bribing another person. 2.) Accepting bribe. 3.) Bribing a foreign public official. 4.) Failure to prevent bribery.
29
What constitutes an offence under the current money laundering regulations?
Breach one of the relevant requirements under the legislation e.g. failure to carry out customer due diligence checks or reporting suspicious activity or not registering with HMRC.
30
What is Professional Indemnity Insurance?
Insurance for professional firms and people to cover them in the event of errors made in the workplace.
31
Can you tell me about the RICS requirements in relation to Professional Indemnity?
All RICS-regulated firms need to ensure they have adequate and appropriate PI insurance, that complies with the requirements of UK RICS PIII requirements (version 9 - effect from 1 April 2022). Must carry run-off when ceasing to trade. Claims-made basis. Minimum limit of indemnity. Maximum level of uninsured excess.
32
What is a Professional Indemnity aggregation clause.
Per claim basis - insurer would not have to pay in respect of each claim, even if total exposure exceeds cover provided in the policy schedule.
33
What does claims made mean in terms of professional indemnity.
PII policies work on a ‘claims made’ basis. Covers claims that are first made against the insured during the period of insurance, regardless of when the negligence act occurred.
34
Is a professional indemnity excess usually paid for per claim?
Usually covered in a claims made basis. Save for aggregation clause.
35
In a negligence claim, what would help to show that you acted with consideration and due process?
Evidence including; Terms of Engagement. Correspondence and conversations documented. Money laundering documents.
36
Can good record keeping help to provide a defence in personal insurance claim?
Yes. Proper records of work and decisions to demonstrate any advice.
37
If you were providing services outside of your usual scope to a client, what might you need to do in relation to your professional indemnity insurance cover?
If unsure work is covered, check the policy. If not covered, work to be declined.
38
What is run off cover (PI)?
Provides indemnity for unknown claims and/or circumstances that may arise from your previous business activities and during the period of Run off. It only provides cover for prior activities and does not cover any future activities after the run off date.
39
What RICS requirements are there relating to run off cover?
Firms ceasing to trade requires fully retroactive run-off cover.
40
What changes did RICS recently make to the Minimum Approved PII Wording?
Included greater fire protection for surveyors.
41
Would a dictated report avoid the need to have any written site notes?
No. May be transcribed incorrectly.
42
Explain PII requirements relating to fire safety cover and cyber cover.
Check the UK Professional indemnity insurance requirements (version 9) for details.
43
How long can a PII claim arise after the work is undertaken?
6 years.
44
What is the Assigned Risks Pool (ARP)?
Market facility to ensure RICS firms can obtain professional indemnity insurance.
45
Who might need to access the ARP?
RICS firms that are unable to obtain PII which meets the minimum RICS requirements.
46
Explain your understanding of the RICS Guidance Note Risk, Liability and Insurance (1st ed.).
Effective from April 2021. Understand the risks associated with providing professional advice and service, provided by RICS members. Assist avoidance of major risks, including entering contracts with clients. Examples include; Liability caps and Third-party reliance.
47
Explain when you might agree a liability cap.
To regulate risk in a client relationship. Incorporate in the terms of engagement.
48
How would you set out a third party reliance on Terms of Engagement?
Due to the higher risk, a RICS member should be as specific as possible about who the permitted third party is. Ensure the third party is bound by the terms and conditions of the firm’s contract with its client. Done by; Third part to sign a letter stating the basis on which they will be entitled to rely on the advice.
49
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.
50
What is an annual return?
Summary of the company, sent annually to Companies House.
51
Tell me what you understand about Complaints Handling Procedures.
Each RICS accredited firm must have one in place under their professional obligation. States the procedure and any contact details.
52
When and how can the RICS be involved in a complaint about a firm or member?
In the public interest or affects reputation of profession.
53
Tell me about CPD requirements for members.
20 hours in a calendar year. 10 of which must be formal. Until 31 January to record online.
54
Why is CPD important?
Update skills and knowledge, as the profession is constantly changing. E.g new policies, new rules.
55
Tell me about RICS guidance on dealing with Conflicts of Interest.
Professional Statement Conflicts of Interest. 1st ed., January 2018. Every member must identify and manage conflicts of interest. Keep records of the decisions.
56
What is double dipping (dual agency) and unacceptable practices?
Unethical action, unallowed by the RICS conflict of interest rules. Relationship with both buyer and seller at the same time.
57
Why is double double dipping (dual agency) an unacceptable practice?
Influence buyer and sellers to agree sale price.
58
How would you close down a regulated firm?
Agree closing date. Insolvent? Inform staff. Inform clients and other parties affected. Professional indemnity insurance- run off cover. Outstanding Client money.
59
What can you tell me about RICS guidance relating to bribery, corruption or money laundering?
Professional standards - Countering bribery and corruption, money laundering and terrorist financing. February 2019. Lays out requirements and guidance to firms and members.
60
What are some of the key principles of RICS guidance relating to bribery, corruption or money laundering?
Mandatory requirements and supporting guidance for anti bribery, corruption and for anti-money laundering.
61
What must/should firms/members do to comply with RICS guidance relating to bribery, corruption or money laundering?
Not facilitate money laundering. Not offer or accept bribes. Report any suspicious activity. Verify client identity. Firms should; 1.) have a written policy 2.) appropriate systems in place 3.) Provide clear guidance to staff. 4.) Appoint a contactable person. Members must 1.) declare certain items to their employer 2.) Attend relevant training. 3.) Comply with employer’s policy.
62
What are the current RICS rules for registration of firms? When did these last change? What were the key changes?
Rules for the Registration of firms. Version 8. Effective from 2 February 2022.
63
Who is a ‘qualified member’ of RICS?
Members that have passed there assessment of professional competence (APC).
64
What is a Phoenix firm?
Insolvent firm - which is to be closed.
65
When must a firm register for regulation? What are the registration eligibility criteria?
Must register for RICS regulation if the firm offers surveying services to third parties and at least 50% of the firm’s principals are RICS members. Criteria is set in Rules for the registration of firms Version 8.
66
Who is a Responsible Principal?
Each firm must have a Responsible Principal. And satisfies the conditions under Rules for the registration of firms.
67
What happens if a firm cannot comply with the eligibility criteria (registration)?
Head of Regulatory will investigate and may decide to register. (Minimum 25% of firm’s principal’s must be RICS)
68
What are the rules around use of RICS logo and ‘Regulated by RICS’ designation? When did these rules last change? What changes were made?
RICS logo may only be used by RICS member and firms. Rules set out in the RICS logo and designation by firms. Version 6. Effective from 2 February 2022.
69
What must be included in the ToE relating to firm regulation.
State the firm is regulated by RICS. Comply with Rules of Conduct and RICS standards.
70
What is a locum and who might need one.
Person who might stand in temporarily for someone unable to work. E.g. maternity/paternity leave.
71
How could a sole trader set up their CHP using a locum?
Will meed to sign an agreement. Will need to seek legal advice.
72
What RICS guidance relates to handling client money?
Client Money Handling. 1st ed. October 2019.
73
Explain your understanding of the RICS scheme Rules relating to client money protection.
Included within the RICS Client Money Protection - Version 1 (1st April 2019). Sets out rules of the RICS client money protection scheme for surveying services and for property agents. Rules for property agents relate to letting agency work and property management work.
74
What are the main schemes (client money) available to firms?
Client money protection scheme for surveying services. Client money protection scheme for property agents.
75
When were these schemes (client money) last updated?
1st April 2019.
76
What is the current compensation limit?
Limit per claim: £50,000. Cap on liability: £10,300,000 in one financial year.
77
What does the annual regulatory review fee relate to?
All regulatory firms who hold clients money pay a regulatory review fee annually.
78
What might client money include?
Rents, auction sales proceeds where firm is held as an agent, compensation payments.
79
How does client money differ to office money?
Money a firm holds for or receives on behalf of another person. This money is not payable on demand to the firm’s own account. Unlike office money, which belongs to the firm.
80
What are some of the key principles of the RICS Professional Statement relating to client money protection.
To keep client money safe. Ensure client accounts are used appropriately.
81
Explain the key themes from the RICS Futures 2020 Report.
Change and how we adopt. For example drones and the use in surveying for capturing data. Technology has limits. Urbanisation.
82
Explain the potential implications of the Hart v Large case.
Surveyor’s negligence. Highlights keeping advice under review. Home Buyer Report ➡️ full buyer report
83
Explain your understanding of precedent set in Burgess v Lejonvarn?
Professionals who provide Free advice, without a contract owes a Duty of care. However, not liable for work they do not do. Full details on BAILII website.
84
What is the new maxim of RICS in relation to compliance?
Rule of Conduct - Rule 2.
85
What do RICS set out as good practice for the use of social media in their Regulation document (June 2021)?
Use of Social Media: Guidance for RICS members - Version 1 (June 2021). Expect members to follow same high standards.
86
Explain your understanding of the RICS Levitt review.
Review carried out in 2021 by an independent, external reviewer to address issues. Included 18 recommendations, which Governing Council has accepted.
87
What is whistleblowing?
Person provides information to an employer / other person relating to a wrongdoing. RICS whistleblowing policy launched in August. Important to safeguard others at risk.
88
What does good governance mean to you?
Process of monitoring public bodies, and strengthening the resources.
89
What are the key values of the interim Governing Council statement relating to ethics, behaviour and culture?
Integrity Transparency Inclusion Collaboration Advocacy Passion
90
Explain what the Pandorra Papers are and the ethical issues raised within them.
Leaked documents of offshore data. Emphasis role property plays in transfer of money, which could facilitate money laundering.
91
Explain what you understand of the RICS Bichard Review?
Independent review on Purpose, Governance and Strategy of RICS. published June 2022 by Lord Michael Bichard. Following the Levitt Review, one of her recommendations was to examine the purpose and strategy of RICS.
92
Explain some of the recommendations of the Bichard Review.
Key theme is to provide the members with more decision-making powers, bringing the focus back to them Summarised in Appendix 2 of The Bitchard Review.
93
How will these recommendations (Bichard Review) be implemented by RICS?
New leadership roles including new President role to oversee the Governing Council. Boosting numbers of members on the Governing Council. New panels include public interest panel, diversity and inclusion panel.
94
How do professional integrity and professional ethics differ?
Integrity is an ethical principal. Rules of conduct demonstrates ethical principles. Rule 1 States that firms must act with integrity.
95
What is modern slavery and how would you identify red flags of it?
Recruitment, movement or receiving of individuals without their consent and use of force for the purpose of exploitation. No personal identification and look uneasy.
96
Explain the implications of the Sanctions and Anti-Money Laundering Act 2018.
Enables the UK to continue to implement United Nations sanctions regime. Enables anti-money laundering and counter-terrorist financing measures to be kept up to date.
97
What is the Sanction List and why should you be aware of it?
Sanctions are given to organisations or individuals suspected or proven to be involved in illegal activities, such as money laundering. Important to prevent involvement with financial crime.
98
Why was the Register of Overseas Entities introduced?
The ROE was created following Russia’s invasion of Ukraine. Designed to increase transparency of ownership of overseas entities in an attempt to tackle financial crime. It’s a public register showing the actual owners of UK property.
99
What are the six RICS values published as a result of the Levitt review?
Integrity Transparency Inclusion Collaboration Advocacy Passion
100
Explain the impact of the Economic Crime (Transparency and Enforcement) Act 2022.
Introduces the Register of Overseas Entities. Requires oversees entities to register with Companies House and disclose details.

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