Ethics Flashcards

Question

What should a firm consider when looking to take out Indemnity Insurance?

Answer 1

1. Ensure that the amount of cover purchased is consistent with the nature of your firm’s practice and proportionate to the risks taken by your firm 2. Always consult specialist insurance brokers in arranging your firm’s PII 3. VOA? Crown takes the risk

Answer 2

1. Inform the RICS 2. Inform Clients and make had over arrangements to the new firm 3. Return any monies held by Clients 4. Inform your insurer and procure professional indemnity insurance run off cover for a minimum 6 years and £250,000 cover (but RICS recommends 15 years) 5. Retain copy of Client files and records for a minimum of 6 years

Answer 3

Tort: 6 years from the days the Claimant suffered the loss Contract: 1. 6 years from date of the negligent act, breach of contract or omission OR 2. S14A - alternative limitation period of 3 years from date of knowledge of the damage subject to 15 year long stop from the negligent act or omission (Scotland: 20 years long stop)

Answer 4

1. From April 2019: RICS clarified that ‘adequate and appropriate’ to mean a minimum of 6 years for consumer claims. 2. Under the new policy, insurers will provide a £1,000,000 aggregate limit for consumer claims, included automatically in the minimum wording. No premium payment will be required to trigger this. 3. Firms can obtain run off for Longer periods than six years, or with higher cover levels, if they deem that ‘adequate and appropriate’ 4. Firms will still be required to take out “adequate and appropriate” cover for commercial claims, which RICS would normally expect cover six year after closure.

Answer 5

1. Proportionality 2. Top level Commitment 3. Risk assessment 4. Due diligence 5. Communication 6. Monitoring and Review

Answer 6

1. The giving, offering, promising or receiving of an advantage such as a payment, gift or a service for an action which is illegal or a breach of trust? 2. Applies in the UK and abroad 3. A new corporate offence of failing to prevent bribery - policed by Serious Fraud Office - unlimited fines / 10 years imprisonment 4. Companies responsible for their employees corrupt acts unless they can show adequate policies/procedures/training in place to combat it

Answer 7

1. Certain types of lavish corporate entertainment could be classified as bribery 2. But offering a client reasonable and proportionate hospitality will not constitute an offence as long as this is accurately recorded in a gifts / hospitality register eg sporting tickets; a meal 3. Never accept gifts/hospitality from a 3rd party supplier or contractor 4. Cash? Money Laundering Regulations 2007 (as amended) - no cash payment in excess of 10,000 Euros. Income tax liability?

Answer 8

1. Effective date on 10th January 2020 2. Builds on 4ALMD 3. Enhanced Due Diligence L 4. Enhanced Customer Diligence 5. Transparency of beneficial ownership 6. Implemented by The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (MLR 2019)

Answer 9

1. Terrorism Act 2000 (as amended by the anti terrorism, crime and security act 2001) 2. Proceeds of Crime Act 2002 3. Money Laundering Regulations 2007 onwards 4. Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 etc 5. RICS Professional Statement: Countering bribery and corruption, money laundering and terrorist financing (1st edition, effective from 1st September 2019)

Answer 10

Involves collecting standard evidence to verify the identity of different types of clients when assessing risks to your business. 1. Consider the three W’s ‘Who you act for, What you are doing and Why you are being asked to do something’ 2. Identify the transacting party/parties - who, from where, frequency? 3. Verify the identification is valid 4. Carry out the additional checks where necessary (risk assessed) 5. Look out for ‘Red Flag Indicators’ Simplified Due Diligence (SDD) Enhanced Due Diligence (EDD)

Answer 11

Business within the regulated sector must: 1. Perform Client due diligence (identify client and their assets and business relationship) 2. Keep records of checks undertaken 3. Maintain systems to identify and prevent money laundering 4. Nominate a money laundering reporting officer 5. Provide training for employees on money laundering regulations and internal procedures 6. Failure to comply with MLR can lead to an unlimited fine or two years imprisonment

Answer 12

RICS professional statement: Client money handling (1st edition, October 2019) Any money received and held by a firm that does not solely belong to it. For example: 1. Tenants deposits, Arbitration fees, Service charges 2. Fee money taken in advance, sale proceeds, rents 3. Money held by members appointed as a Receiver 4. Interest (if in an interest bearing client account) 5. Clients money held but due to be paid to contractors

Answer 13

1. Obligation to keep client accounts (separate & identifiable) 2. Obligation to keep accurate records 3. Reporting obligations (regular bank reconciliation & audit) 4. Payment of interest 5. Protect Clients’ Money against: insolvency, misappropriation by any party; death of a sole practitioner

Answer 14

1. Keep Client money in a designated account(s) 2. Include the name of the firm and the word “Client” 3. Obtain bank confirmation of account conditions 4. Agree terms of account handling in writing with Client 5. Ensure sufficient funds available for payments 6. Obtain clients written approval to make payments from their accounts

Answer 15

1. Countering bribery, corruption, money laundering and terrorist financing 2. RICS rules for the registration of firms 3. RICS rules of conduct for firms 4. RICS rules of conduct for members

Answer 16

1. Reconciliations 2. Review and sign off reconciliations 3. Overdrawn client ledger balances 4. Authorisation of client account electronic payments by non principals 5. Reconciliation issues - old uncleared, reconciling items and differences, plus or minus 6. The word ‘client’ not appearing in the bank statement title

Answer 17

1. Conflict Avoidance (irresolvable conflict which either cannot be properly managed or where you would not wish to proceed, for personal conflict, resolved by someone else doing case; for party conflict, by dropping the case) 2. Written advice to both parties (and written Informed Consent response required) 3. Conflict Management

Answer 18

RICS professional statement ‘conflicts of interest’ (1st edition - March 2017) 1. Effective from 1st January 2018 2. Identifies several different forms of potential conflict 3. Requirement for Record Keeping 4. Requirement for Informed Consent “An RICS member or regulated firm must not advise or represent a client where doing something would involve a conflict of interest, or a significant risk of a conflict of interest, other than where all of those who are or may be affected have provided their prior Informed Consent.”

Answer 19

Informed Consent may be sought only where satisfied that proceeding despite a Conflict of Interest is: 1. In the interests of all of those who are or may be affected and 2. Is not prohibited by law, and that the conflict will not prevent provision of competent and diligent advised to those that may be affected

Answer 20

1. Own Interest Conflict of Interest (personal) 2. Party Conflict of Interest (professional) When providing services to more than one untied Client 3. Party Conflict of Interest (professional) Between untied work and statutory / regulatory work 4. Confidential Information Conflict of Interest

Answer 21

The RICS note that a threat to a Valuer independence or objectivity may arise in many situations, including: 1. Valuing a property previously valued for another Client 2. Acting for two or more parties competing for an opportunity 3. Acting for the buyer and the seller of a property in the same transaction 4. Undertaking a valuation for third party consumption where the VOA has other fee-earning relationships with the Client 5. Duty of care and confidentiality extends to previous Clients as well as current Clients and this can compromise ability to give best advice 6. Confidential Information Conflict: If you have information gained from a first Client which is vital to the Valuation, it may not be possible to disclose that material information in later advice to someone else who subsequently asks you to act

Answer 22

1. Initial search when looking at a Case to determine whether the VOA is currently acting, or has previously acted, with regard to the property for another Client 2. History working sheet check, CDB, TRACS 3. Importance of ongoing communication between Valuers to help identify clashes 4. Notify Team Leader in first instance 5. Advice available from CVG PS Professional Guidance Team

Answer 23

1. Duty of care and confidentiality extends to previous Clients as well as current Clients and this can compromise the ability to give best advice 2. Confidential Information Conflict: If you have information gained from a first Client which is vital to the Valuation, it may not be possible to disclose that material information in later advice to someone else who subsequently asks you to Act

Answer 24

1. Correspondence with potentially both Clients (past & present) to notify them of the issue, suggest a way forwards, and obtain their Informed Consent in writing to act 2. Establish with earlier Client whether there is confidential material information not to be passed on; if yes; info will not be available for use. We would then consider whether or not we can properly act for the new Client in its absence 3. Otherwise where both parties content and informed consent obtained, proceed and manage the conflict through the life of the case 4. Always consider early on the potential for a joint appointment where public bodies are the parties (potential for a single independent valuation). Ensure it accords with government guidance for the public sector

Answer 25

This is known as a Chinese Wall, where this must be embedded in a firms culture and ‘reasonable steps’ are not enough. 1. Needs to be robust enough to offer no chance of information passing through it 2. Individuals (& support staff) acting for conflicting clients must be different 3. Physical separation (different parts of building) 4. Information held must be inaccessible to the “other side” 5. Must be actively monitored In the VIA any Chinese Wall procedures will be carried out by the CVG PS Professional Guidance Team for approval. They are tough to achieve in practice and could lead to embarrassment. Team Leader will be required to set up the barrier and understand + oversee it.

Answer 26

1. Complaint Handling procedure must be approved by the RICS 2. Procedures must be captured in Client Terms of Engagement 3. Create, use and maintain a complaints log Stage 1: In House (Sole practitioner? Nominate CHO surveyor in other firm) Stage 2: ADR - Third party resolution (such as The Property Ombudsman; RICS Dispute Resolution Service) VOA has Tier 1 (Business Stream); Tier 2 (Agency CIT), then as a Government body it can be referred to an Ombudsman

Answer 27

1. Court proceedings (after pre-action protocols) 2. Arbitration 3. Expert determination 4. Mediation 5. Ombudsman

Answer 28

1. Data Protection Act 2018 2. General Date Protection Regulation (GDPR) from 25 May 218 3. Concerns the protection of personal data 4. Personal data: any information relating to an identified or identifiable living individual 5. Includes the address of a property and unique reference numbers 6. HMRC Data Protection Officer (DPO) responsible for the VOA, assisted by Team oDPO 7. HMRC Privacy Notice covers HMRC and VOA (HMRC is also the data controller for the VOA)

Answer 29

1. EU GDPR does not apply in the UK after the end of the Brexit transition period on the 31st December 2020 2. However, GDPR has been incorporated into U.K. data protection law as the “U.K. GDPR” - so in practice there is little change to the core data, protection principles, rights and obligations 3. Firms must comply with the DPA (Data Protection Act) 2018 and U.K. GDPR if processing domestic data. If providing services to the EU, then we must of course adhere to and comply with the EU GDPR legislation

Answer 30

Key text: RICS Surveyors acting as expert witnesses (Scotland have their own) Internally at the VOA: S17 DVS Principles & Practices Manual 1. RICS practice statement & guidance note follows the Civil Procedure Rules (CPR) 2. CPR 35.3: It is the duty of experts to help the Court with matters within their expertise 3. This duty overrides any obligation to the person from whom the expert has received instructions or by whom they are paid to give evidence. The expert must be impartial and uninfluenced by them. 4. An expert also owes his Client a duty to act with reasonable skill and care 5. Can be sued for negligence

Answer 31

1. Must be the independent, objective and unbiased product of the expert in relation to matters within their expertise 2. Must be impartial & influenced as to form and content by the Client who instructs or pays the expert 3. Must state the main facts and assumptions upon which their opinion is based 4. Must not omit material facts that could detract from their concluded opinion 5. September 2020: Additional wording to Statement of Truth following Victoria Insurance Co. Ltd v Zafar (2019) [re contempt of court for false statements] 6. Expert Witness should advise Client in writing of the nature of the experts obligation under the RICS expert witness guidance - in particular the overriding duty of the expert witness to the Tribunal 7. Offer to supply a copy of the RICS practice statement in the form of the Client Guide version 8. Client Guide intended by the RICS to reduce misunderstandings and remove potential Client pressures

Answer 32

1. Key text: Surveyor-advocate must have regard to RICS revised edition of ‘Surveyors acting as advocates’ 2. Surveyor is representing their Client at the judicial hearing / tribunal, promotions their case and interests 3. Surveyors duty is solely to instructing their Client 4. Surveyor must act in a manner that maintains integrity of the judicial process 5. Surveyor-advocate must not express expert opinion 6. Advocates argue an outcome for their Clients so their own opinion on any issue is irrelevant 7. Must avoid terms and expressions that signify any form of personal belief

Answer 33

1. Prohibited by many tribunals as dual role considered incompatible and creating a conflict of interest. 2. Permitted in lower tribunals as it can be proportionate to the circumstances and needs of the Client, giving access to justice in a manner and at a cost which permits such cases to be brought forward 3. Vital to distinguish at all times which role is being undertaken at any time 4. Be aware that the weight attached to the evidence given by you as an expert witness and to the submissions made as an advocate, could be adversely affected if the dual role is undertaken

Answer 34

1. Case involves difficult points of law which are material 2. One or both parties regard initial hearing as 1st step to a higher tribunal 3. Other party will be legally represented 4. Numerous issues of fact / opinion requiring evidence from several witnesses 5. Amount at stake is substantial

Answer 35

Professional Indemnity Insurance

Answer 36

RICS members MUST comply with RICS Practice/Professional Statements, maintaining the highest professional standard and yes they are mandatory.

Answer 37

Standard, approved by the RICS, and endorsed by another professional body, that provides users with recommendations for accepted good practice as followed by conscientious practitioners The document itself will confirm whether it is Mandatory or good recommended practice

Answer 38

Document that provides users with recommendations for accepted good practice as followed by competent and conscientious practitioners? No, it is Recommended good practice

Answer 39

Practice based information, that provides users with the latest information and/ or research No, it is there for information and/or explanatory commentary

Answer 40

1. Behaving ethically is at the heart of what it means to be a professional, it distinguishes professionals from others in the marketplace 2. The RICS have created a clear and streamlined set of professional and ethical standards to guide members and ensure that all those we deal with have confidence in us. 3. The Five Ethical Standards (now part of the Rules of Conduct): (Service, Trust, Integrity, Respect, Responsibility)

Answer 41

They apply to all RICS members worldwide. The rules focus on our regulatory goals and adopt the five principles of better regulation (PACTT): 1. Proportionality (making the penalty proportional to the breach) 2. Accountability (to all members and the public) 3. Consistency (treat all members the same) 4. Targeting (serious breaches) 5. Transparency - To all members, Clients and the Public

Answer 42

1. The Royal Institution of Chartered Surveyors 2. Global leading professional body promoting the highest standards in the property industry. Gold standard of professional regulation. 3. Incorporation by Royal Charter 4. Consumer protection, influence policy, set standards, accredit professionals, quality assurance and self regulation

Answer 43

1. Protect firms from financial loss in the event of a negligence claim and consequences to pay third party damages and to protect Clients from financial losses which the firm cannot meet 2. Firms must have adequate PII cover under Rule 9 of the Rules of Conduct for Firms. 3. Includes the RICS minimum policy wording. Provides a minimum level of indemnity based on turnover. Provided a maximum level uninsured excess. Underwritten by an RICS approved insurer. Covers past and present employees, includes run off cover when a firm or member ceases to trade

Answer 44

1. Minimum of 20 hours CPD each year (completed by 31st December and recorded online by 31st January) 2. At least 10 hours must be formal, eg structured learning with clear objectives and outcomes 3. Every three years, members must undertake CPD relating to professional ethics, eg the RICS online ethics walkthrough

Answer 45

1. Up to 10 years in prison 2. Excluded from the RICS 3. Unlimited fine 4. Banned from being a director of any company

Answer 46

The ARP is open to all UK RICS regulated firms that are unable to obtain PII, which meets the minimum requirements of the RICS (insurance facility). Can stay in the scheme for a maximum of 3 years.

Answer 47

1. Bribing another person 2. Being bribed 3. Bribing a foreign public official 4. Failure by a commercial organisation to prevent bribery

Answer 48

An information barrier

Answer 49

Based on turnover. Turnover less than £100k - PII £250k. Turnover between £100k-£200k - PII £500k. Turnover over £200k - PII Minimum £1m.

Answer 50

1. If there is a conflict of interest 2. If you are not qualified to complete the instruction, refer them to the Chartered Surveyors Voluntary Service (CSVS)

Answer 51

1. Property 2. Land 3. Inspection

Ethics Flashcards

(75 cards)