RICS Core Material Flashcards
1
Q
What is the new category of core material replacing Professional Statements and Guidance Notes?
A
Professional Standard
This change is being implemented by RICS.
2
Q
What are the requirements included in RICS Professional Standards?
A
Expectations for RICS members and firms about how they provide services, which may include:
* Mandatory requirements using ‘must’
* Recommended best practices using ‘should’
These standards guide service delivery.
3
Q
What does RICS Practice Information provide?
A
Information to support the practice, knowledge, and performance of RICS members & firms, which includes:
* Good practice
* Information on processes
This information is advisory in nature.
4
Q
What is the purpose of RICS Practice Alerts?
A
To act as a warning of emerging areas of risk for the RICS
The first Practice Alerts were published in August 2023.
5
Q
What should RICS members avoid during fee negotiations?
A
Fee cutting, or collusion with competitors
Ethical guidelines are crucial for fair competition.
6
Q
How should fees be determined according to RICS guidelines?
A
Fees should be based on:
* The market
* Agreed ad-hoc
Aggressive fee cutting is discouraged.
7
Q
What must be stated in the Terms of Engagement?
A
Written confirmation of client’s agreement to proposed fee basis, payment of expenses, and a copy of the firm’s CHP
Written confirmation is essential.
8
Q
What are the three steps to follow before starting work on an instruction?
A
- Check professionally competent
- No conflicts of interest or personal interests
- Confirm terms of engagement in writing and get written approval from the client
These steps ensure ethical compliance.
9
Q
What statutory compliance is required for agency work?
A
Compliance with section 18 of the Estate Agents Act 1979 and money laundering checks (Money Laundering Regulations 2017)
These regulations protect against financial crime.
10
Q
Under what circumstances may it be appropriate to decline an instruction?
A
- Not competent to undertake the work
- Insufficient facts on the issue
- Proposed client will not sign terms of engagement
- Conflict of interest
- PII liability cap cannot be agreed
- Advice is for a friend on a pro bono basis
- Potential client is on UK Governments sanctions list
- Concerns about public scrutiny of actions
These situations safeguard professional integrity.
11
Q
What constitutes a conflict of interest?
A
A conflict of interest arises when a member or firm’s independence is threatened due to:
* A financial interest
* A personal interest
* Commercial relationships
* Acting on both sides of a transaction
Maintaining impartiality is key to ethical practice.
12
Q
What is conflict avoidance?
A
When you do not accept the instruction
13
Q
What is conflict management?
A
When the instruction is accepted and steps are agreed to manage the conflict
14
Q
When did the RICS Global Professional Standard: Conflicts of Interest come into effect?
A
1st Jan 2018
15
Q
What must a member not do regarding conflicts of interest?
A
Advise or represent a client where it involves a conflict of interest or significant risk, unless informed consent is provided
16
Q
What is informed consent?
A
Consent that may only be sought if the member is satisfied that proceeding is in the interests of all affected parties
17
Q
What are the three types of conflicts of interest?
A
- Paty Conflict
- Own Interest Conflict
- Confidential Information Conflict
18
Q
How can informed consent be given?
A
In writing, ensuring transparency about material factors
19
Q
What should you consider when handling a conflict of interest?
A
Transparency and openness, nature of the conflict
20
Q
What is the first step in conflict avoidance?
A
Consider if the conflict is irresolvable or can be managed
21
Q
What should be included in the written advice to both parties regarding a conflict of interest?
A
- Disclosure of the nature of the conflict
- Clear communication for decision making
- Request for written confirmation of informed consent
22
Q
What must be set up after receiving written consent for conflict management?
A
An information/ethical barrier in accordance with the provisions agreed
23
Q
What is required for the information/ethical barriers to be effective?
A
- Robust enough to prevent information passing
- Reasonable steps to operate effectively
- Different surveyors acting on each side
24
Q
What must be maintained for compliance in conflict management?
A
A clear audit trail of the conflict check process and all communications
25
What are some examples of conflict management?
information/ethical barriers with the written agreement of all parties
26
What are the three steps you should take in order to handle a conflict of interest?
1. conflict avoidance
2. written advice to both parties
3. conflict management
27
What does the RICS Professional Statement: Conflicts of Interest - UK Commercial Property Market Investment Agency 2017 relate to?
RICS Conflicts of Interest Professional Standard 2017 sets out high-level principles for the identification and management of conflicts, this additional mandatory professional statement relates only to UK commercial investment agency work where a specific risk has been identified
## Footnote
Specifically where a specific risk has been identified.
28
What is dual agency according to the RICS Professional Statement?
An agent has a contractual agency relationship with both the seller and the buyer at the same time
* **This practice must not be undertaken in any circumstances **
## Footnote
This practice is prohibited for RICS members from 1st January 2018.
29
What are multiple introductions in the context of the RICS Professional Statement?
Competing contractual relationships simultaneously with several buyers for commercial real estate investment opportunities
## Footnote
This can lead to conflicts of interest.
30
What is incremental advice as defined by the RICS?
Advice provided by an agent that is incremental to an existing instruction, such as valuation or planning
* E.g. where an agent is acting for the seller in relation to a disposal but is approached by the buyer or its lender to provide a valuation
## Footnote
E.g. acting for a seller but approached by a buyer for valuation.
31
Under what conditions can RICS members provide incremental advice?
Only if consent is given and an information barrier is put in place
## Footnote
This is to avoid conflicts of interest.
32
What is a personal interest/own interest conflict?
A conflict when acting for a family member, close business associate, or someone with a financial or personal interest
## Footnote
A connected person must be declared.
33
What is required regarding transparency in personal interest conflicts?
Full transparency is required, and facts must be declared promptly and in writing before accepting the instruction
*This is in accordance with Section 21 of the Estate Agents Act 1979.
## Footnote
This is in accordance with Section 21 of the Estate Agents Act 1979.
34
What does RICS Bye laws state about client confidentiality?
Client confidentiality must be maintained for all client affairs
## Footnote
This includes historic information and info provided prior to instruction.
35
What should a surveyor do if they accidentally find out confidential information about a non-client?
Inform the client and sender, and record the matter in a note to the firm’s compliance officer
## Footnote
Confidential material received in error should be disposed of securely.
36
What is the requirement for RICS firms regarding Complaints Handling Procedures (CHP)?
Firms must have a CHP that meets the requirements of the RICS Rules of Conduct 2021
## Footnote
CHP details should be issued to clients with Terms of Business.
37
When must RICS firms notify their PII insurers?
They must notify them as soon as there is a potential claim for negligence
## Footnote
This is part of the complaints handling process.
38
What must be maintained by RICS firms regarding complaints?
A complaints log must be maintained to show details, progress, and outcome of any complaints
## Footnote
This aids in transparency and accountability.
39
What mechanism must RICS firms include in their Complaints Handling Procedures?
An RICS approved Alternative Dispute Resolution (ADR) mechanism
## Footnote
This is necessary for effective complaint resolution.
40
What is the minimum requirement for members regarding Continuing Professional Development (CPD) per calendar year?
Members undertake min 20 hrs of CPD per calendar year, minimum 10 of which must be formal
## Footnote
This requirement ensures ongoing professional development and adherence to industry standards.
41
What is the minimum number of formal CPD hours required out of the total CPD hours?
Min 10 hrs formal CPD
## Footnote
Formal CPD includes structured learning with clear objectives.
42
What must all members maintain regarding TICS Rules of Conduct?
A relevant and current understanding during a rolling 3-year period
## Footnote
This is crucial for compliance and ethical practice.
43
What is the deadline for members to record their CPD activity using the RICS CPD Management System?
By 31st Jan each year
## Footnote
Timely recording is essential for maintaining compliance.
44
Define Formal CPD.
All forms of structured learning that has clear learning objectives and outcomes
## Footnote
Examples include structured online training and professional courses.
45
Define Informal CPD.
Any self-managed learning relevant to your job role
## Footnote
This includes private study and on-the-job training.
46
What is the standard procedure for handling a complaint in-house?
Quick, clear, transparent, and impartially implemented
## Footnote
This ensures fairness in the complaint handling process.
47
What must be provided to the complainant when a complaint is received?
Details of the nominated person who investigates the complaint
## Footnote
This person is typically the Complaints Handling Officer.
48
What is the maximum time allowed for acknowledging a complaint?
Within 7 days
## Footnote
Timely acknowledgment is important for effective complaint resolution.
49
What is the maximum time allowed for investigating a complaint?
Within 28 days
## Footnote
This timeframe helps ensure prompt resolution.
50
What must complainants do if they are not happy with the review of their complaint?
Use the ADR chosen by the firm
## Footnote
ADR stands for Alternative Dispute Resolution.
51
Name one relevant redress mechanism that must be provided to the complainant.
The Centre for Effective Dispute Resolution (CEDR)
GMW: Property Redress Scheme
## Footnote
Other options include The Property Redress Scheme and the RICS Dispute Resolution Service.
52
When does a duty of care arise?
* Duty of care exists to clients and third parties, using a ‘reasonable care and skill’
## Footnote
Breach of this duty can lead to claims for damages.
53
What case established that a residential valuer could owe a duty of care to a mortgagee purchaser?
Yianni v Edwin Evans (1981)
## Footnote
This case highlights the complexities of duty of care in valuations.
54
What did the Court of Appeal conclude in the case of Scullion v Bank of Scotland plc (2010)?
A surveyor providing evidence on value does not owe a duty of care to the borrower
## Footnote
This case clarified the limits of duty of care in property valuations.
55
What was established in Burgess v Lejonvarn (2020) regarding professionals providing pro bono services?
They owe a duty of care in tort
## Footnote
This case emphasizes that duty of care exists regardless of contractual agreements.
56
What does the Limitation Act 1980 state regarding the limitation period for negligence in contract?
6 years from the date of the negligent act; alternative 3 years from the date of knowledge of damage (subject to 15 yrs longstop from the negligent act)
## Footnote
Subject to a 15 years long stop from the negligent act.
57
What is the limitation period for negligence in tort?
6 years from the date the claimant suffered the loss
## Footnote
This period is critical for filing claims.
58
What should be confirmed in writing regarding client objectives?
Precise instructions in terms of engagement
## Footnote
This ensures clarity and understanding between the surveyor and the client.
59
What is necessary (regarding competence) to undertake work for clients?
Ensure you are competent to undertake the instruction
## Footnote
Competence is essential to avoid negligence.
60
What should be documented during the work process?
Detailed file notes and photographs
## Footnote
Documentation aids in accountability and transparency.
61
Why is it important to keep up to date with market knowledge?
To comply with legislation and provide informed advice
## Footnote
Staying informed helps in risk management.
62
What does CPD stand for?
Continuing Professional Development
## Footnote
Essential for maintaining competence in the profession.
63
What should be capped in the terms of engagement?
The professional liability excess on your PII policy
## Footnote
This limits potential financial exposure.
64
What insurance is mandatory for working surveyors?
Professional Indemnity Insurance (PII)
## Footnote
PII protects against negligence claims.
65
What does PII protect against?
Negligence claims when there is a duty of care breach and damages arise
## Footnote
Essential for safeguarding both clients and surveyors.
66
What is the minimum level of indemnity Insurance required for firms with a turnover of £100,000 or less?
£250,000
## Footnote
This is to ensure adequate protection against claims.
67
What should firms consider when deciding the level of necessary insurance?
Likely risk profile to negligence claims
## Footnote
This assessment helps in determining appropriate coverage.
68
What is the maximum level of uninsured excess for firms with a turnover up to £10 million?
The greater of 2.5% of the sum insured or £10,000
## Footnote
This limit is set by RICS for risk management.
69
What is required from PII policies regarding claims?
Policies should be retroactive and cover claims made during the insurance period
## Footnote
This ensures ongoing protection for past work.
70
What is the minimum run-off cover required for consumer claims?
£1,000,000 on six years
## Footnote
This protects clients even after cessation of trading.
71
What should be done if a firm is unable to obtain run-off cover?
Apply for coverage to the RICS run-off pool
## Footnote
This provides an alternative for securing necessary insurance.
72
What does RICS recommend to manage risks associated with professional work?
The use of liability caps
## Footnote
Liability caps help limit potential financial exposure.
73
What are the six main areas of good practice set out in the RICS Professional Standard for Client Money Handling 2019?
* Holding client money
* Providing information to clients
* Receipts of client money
* Payments from client accounts
* Accounting records and controls
* Compliance
## Footnote
These areas guide surveyors in managing client funds.
74
What must be kept separately and clearly identifiable?
Client accounts
## Footnote
This ensures transparency and proper handling of client funds.
75
What should the bank account and cheque book which hold clients money clearly state?
The word 'client'
## Footnote
This identification is crucial for managing client funds properly.
76
What must be agreed with a client regarding interest?
Payment of interest
## Footnote
This agreement ensures fairness in handling client funds.
77
What does the RICS Clients’ Money Protection Scheme provide?
Last resort protection for clients when a firm cannot repay their money
## Footnote
This scheme helps safeguard clients' financial interests.
78
What is the first step in starting a new practice according to RICS guidelines?
Inform RICS, Firm Details Form
79
What must be appointed for RICS communications?
Reasonable Principle
80
What type of insurance must be registered with RICS?
PII Insurance
81
What procedures need to be established regarding client money?
Client money handling procedures
82
What must a firm register for if undertaking Red Book work?
RICS Valuer Registration Scheme
83
What is required for complaints management in a new practice?
Set up complaints log
84
Who should be appointed to manage complaints?
Complaints handling officer
85
What should be used to represent the firm visually?
RICS logo kit
86
What plan should be made for the future of the business?
Plan for succession of business
87
What must members log online annually?
CPD
88
What must be completed by firms yearly regarding RICS membership?
RICS Annual Return
89
What must be disclosed as part of statutory compliance?
Business name
90
Which act ensures compliance with disability discrimination?
Equality Act 2010
91
What financial legislation must be complied with?
Financial Services and Markets Act 2000, Financial Services Act 2012
92
Which act addresses bribery compliance?
Bribery Act 2010
93
What officer needs to be appointed under Money Laundering Regulations?
Money Laundering Reporting Officer
94
Which act regulates health and safety compliance?
Health & Safety Act 1974
95
What regulations control asbestos management?
Control of Asbestos Regulations 2012
96
What act governs fire safety compliance?
Fire Safety Act 2021
97
What regulations must be followed for data protection?
General Data Protection Regulation and Data Protection Act 2018
98
What acts govern estate agency compliance?
Estate Agents Act 1979, Misrepresentation Act 1967
99
What must be informed to HMRC?
VAT and Tax registration
100
What laws must be complied with regarding employment?
National living wage, working hours, pension
101
What should be done first when closing a practice?
Inform the RICS
102
What must clients be informed about when closing a practice?
Ensure clients are informed
103
What arrangements need to be made during the closing of a practice?
Handover arrangements
104
What must be returned to clients when closing a practice?
Clients' monies
105
What should insurers be informed about when closing a practice?
Adapt PII
106
How long should client files be retained after closing a practice?
6 years
107
What legislation addresses bribery?
Bribery Act 2010
108
What are the six principles based on the Bribery Act 2010?
* Proportionality
* Top level commitment
* Risk assessment
* Due diligence
* Communication
* Monitoring and review
109
What are the four offences under the Bribery Act 2010?
* Bribing
* Receiving a bribe
* Bribing a foreign public official
* Failing to prevent bribery
110
Full list of obligations when closing a practice
* Inform the RICS
* Ensure clients are informed
* Handover arrangements
* Return clients monies
* Inform insurers, adapt PII
* Retail a copy of client files for 6 years
111
Full list of obligations when starting a new practice
* Inform RICS, Firm Details Form
* Appoint Reasonable Principle for RICS Comms
* Register with RICS
* PII Insurance and send to RICS
* Client money handling procedures
* Register for RICS Valuer Registration Scheme (if undertaking Red Book work)
* RICS approval for CHP
* Set up complaints log
* Appoint a complaints handling officer
* Use an RICS logo kit
* Plan for succession of business
* Log CPD online
* Complete yearly online RICS Annual Return
