Ethics Flashcards

Question

When would it be appropriate to decline an instruction?

Answer 1

- Not competent to undertake instruction - Do not have sufficient facts on the issue - Proposed client will not sign terms of engagement or undertake AML checks - There is a conflict of interest or personal interest - A Professional Indemnity Insurance (PII) liability cap cant be agreed

Answer 2

A conflict of interest arises when a member or firms independence and impartiality is threatened due to the existence of a conflict between two clients when: 1. any financial interest 2. a personal interest 3. commercial relationships 4. acting on both sides of the transaction

Answer 3

Conflict avoidance is when you do not accept the instruction

Answer 4

Conflict management is when an instruction is accepted and steps are agreed and put in place to manage the conflict such as an information barrier with written agreement from all parties.

Answer 5

This is a mandatory statement that came into effect in January 2018 It states that a member must not advise or represent a client where doing so would involve a conflict of interest or significant risk of conflict of interest other than where all those who are or may be affected have given their written consent informed consent may only be sought where the RICS member or regulated firm is satisfied that proceeding is in the interests of those who are or may be affected and is not prohibited by law. All conflicts must be managed in accordance with the Professional Statement Every RICS firm must have in place effective systems and controls appropriate to the size and complexity of the business to ensure full compliance. All firms must keep their records to show compliance with the Statement.

Answer 6

1. Party Conflict – work on the same or related instruction for two different parties 2. Own Interest Conflict – personal interest 3. Confidential Information Conflict – work between two parties that is confidential

Answer 7

Can only be given in writing by the person explaining the position to them is entirely transparent about any material factors and sure that the party affected understands. Surveyors should only seek informed consent if satisfied that all relevant parties are best served by doing so.

Answer 8

1. Upon receipt of the full facts consider whether the inflict is irresolvable because your impartiality is compromised and should be avoided or whether it can be managed maintaining its transparency and openness. 2. Decide whether to accept or decline the instruction from Client A or B. 3. Assuming that you wish to accept the instruction set out in writing as soon as possible information to client A and B stating: - the nature of the conflict, how you intend to deal with the conflict (information barrier) - be as clear as you can - request written confirmation from both sides of their informed consent that your firm can act in accordance with the provisions of the procedure proposed. 4. Once you have received written consent to your declaration of the conflict and your proposals to manage the conflict set up an information barrier with the provisions agreed by both clients.

Answer 9

Ensure that the barrier is robust enough to offer no chance of information passing between the two parties Take reasonable steps to operate an effective barrier The surveyors acting on the two sides must be different and must be physically separated All information regarding the instruction should be stored securely Keep a clear audit trail, the firms compliance officer must oversee all actions.

Answer 10

This is additional mandatory professional statement only relating to UK commercial agency work where a risk has been identified Dual Agency o Where an agent has a contractual agency relationship with both the seller and the buyer at the same time o Must not be undertaken in any circumstances from 1st January 2018 by an RICS member Multiple Instructions o Where an agent has a competing contractual relationships simultaneously with several buyers for commercial real estate investment opportunities o An agent may make multiple introductions. When a client formally instructs on a exclusive basis following signed terms of engagement the agent must inform potential other clients that they are no longer able to advise them. o If non-exclusive basis the agent must obtain informed consent from the clients subject to the necessary information barriers Incremental Advice o When an agent is approached by another party to provide advise to include valuation, building survey or planning in relation to a purchase or disposal that is incremental to an existing instruction o E.g. agent acting for a for a seller but is approached to provide a valuation by the lender or buyer o Must only provide as much incremental advice if consent is given and an information barrier is put in place Personal Interest / Own Interest Conflict o When acting for a family member, a close business associate or someone with whom you have a financial or personal interest or benefit (connected person) o Must not let personal interest interfere with or influence your professional judgement – full transparency is required

Answer 11

* The RICS Bye Laws state that ‘client confidentiality must be maintained for all client affairs’ * Includes historic information and information provided by a client prior to instruction * Clients approval for third party access unless you are subject to a statutory duty overriding – HMRC or police investigation * Old files should be held for a minimum of 6 years before disposal and destroyed securely * If another surveyor overhears or receives confidential information this can not be used for their own purposes – client and sender should be advised and matter recorded in a note to the firms compliance officer * Any confidential information received in error should be disposed of

Answer 12

- Separate account - Appropriately labeled - Client gets the interest

Answer 13

Borrower Name, Client Name and Property Address normally unless any of the information is confidential & in which case no email and just check internally on the database.

Answer 14

Check the internal database; send a conflict email across the firm; wait a reasonable time for a response (1 week).

Answer 15

It bans dual agency - stops firms people acting for a buyer and a seller at the same time.

Answer 16

Chartered surveyors are at risk of being sued by their clients or other parties in the event that negligent advice is given. A PII policy should meet any genuine claim, protecting the assets of the client, the professional and a firm (if applicable) whilst also providing funds to pay the claim.

Answer 17

1. Inform RICS of your new practice by completing a Firm Details Form 2. Appoint a Responsible Principle for all RICS communication 3. Register with RICS for regulation of the firm 4. Arrange PII and send details to RICS 5. Set up procedures got the requirements for Client Money Handling, including Protection Scheme 6. Register for the RICS Valuer Registration Scheme (VRS) if undertaking Red Book Global Valuations 7. Obtain RICS approval for the Complaints Handling Procedure 8. Set up complaints log 9. Appoint Complaints Handling Officer 10. Use logo kit from the RICS for all practice material to comply with the designation ‘Regulated by RICS’ 11. Plan for succession / future running of the business 12. Ensure CPD is logged online 13. Ensure completion of an online RICS Annual Return at the end of each year

Answer 18

 Requirement to disclose business name  Disability discrimination compliance – Equality Act 2010  Financial services compliance – Financial Services and Markets Act 2000, Financial Services Act 2012  Bribery Act 2010 compliance  Appoint a Money Laundering Reporting Officer – Money Laundering Regulations 2017, as amended  Health and Safety compliance - Health and Safety Act 1974, as amended  Asbestos Register – Control of Asbestos Regulations 2012  Fire Safety compliance – Regulatory Reform (Firs Safety) Order 2005) et al  Register for data protection – General Data Protection Regulation 2016 & Data Protection Act 2018  Estate Agency Compliance – Estate Agents Act 1979, Consumer Protection Regulations 2008, Misrepresentation Act !967 et al  Inform HMRC for VAT and Tax registration - VAT registration threshold is currently £85,000 pa turnover  Ensure compliance with current employment law – National Living Wage, working hours, stakeholder pensions, gender pay gap reporting  Ensure insurance compliance for employer and public liability

Answer 19

* Inform the RICS of your retirement / closure * Ensure clients are informed at the earliest opportunity and hand over arrangements made to a new firm * Return any monies held by clients to their own accounts * Inform insures and PII run-off cover for a minimum of 6 years from the expiry of the policy in force at the time of cessation in accordance with RICS requirements * Retain a copy of the client files and records for a minimum of 6 years

Answer 20

* It is a globally recognised organisation * Ensures a high standard in the surveying professional * Highly regarded /reputation * Career development and career long learning * Market advantage / trusted guidance

Answer 21

- Rolling out IPMS - Increasing diversity and improving inclusion - Sustainability

Answer 22

There are 10 of them, governed by the privy council which provide the framework to be self-regulatory rather than needing to be governed by government. The input by the privy council in essence provides a ‘quality assurance’. Bye Law 2 outlines membership and Registration and Bye-Law 3 outlines designations and how they should be used. The Regulations then go into further detail about each of these which are governed by the Governing Council.

Answer 23

1. Where your complaint is initially made orally the Client will be requested to send a written summary of their complaint to the person dealing with it. 2. Once we have received the written summary of the complaint, we will contact them in writing within seven days to inform them of our understanding of the circumstances leading to the complaint. The client will then be invited to make any comments that they may have in relation to this. 3. Within 21 days of receipt of the written summary, the person dealing with the complaint will write to the client, in order to inform them of the outcome of the investigation into the complaint and to let them know what actions have been or will be taken 4. If the client is dissatisfied with any aspect of our handling of the complaint, they should contact our Senior Partner 5. If the complaint still can not be resolved surveying the Client may use the Centre for Effective Dispute Resolution an independent redress provider as approved by the RICS Regulatory Board.

Answer 24

This policy allows reasonable and appropriate hospitality or entertainment given to or received from third parties for the purposes of: establishing or maintaining good business relationships; improving or maintaining our image or reputation; or marketing or presenting our products and/or services effectively. The giving and accepting of gifts up to the value of £150 is allowed if the following requirements are met: It is not made with the intention of influencing a third party to obtain or retain business or a business advantage, or to reward the provision or retention of business or a business advantage, or in explicit or implicit exchange for favours or benefits; it is given in our name, not in your name; it does not include cash or a cash equivalent(such as gift certificates or vouchers); it is appropriate in the circumstances, taking account of the reason for the gift, its timing and value. For example, in the UK it is customary for small gifts to be given at Christmas; it is recorded in the Gifts and Hospitality Register it complies with any applicable local law Gifts with a value in excess of £150 should be declared to your department head.

Answer 25

To protect clients, surveyors and third parties against negligence claims where there is a duty of care breaches and a claim for damages arises. All policies must be underwritten by an RICS approved insurer.

Answer 26

100k or less turnover - £250k level of indemnity 100k - 200k turnover - £500k level of indemnity £200k + turnover - £1m level of indemnity

Answer 27

Firms turnover of up to 10 million = maximum uninsured excess the greater of 2.5% of the sum insured of £10,000 Firms turnover of over 10 million = no set limit of uninsured excess

Answer 28

Duty of care exist to client and third parties using reasonable care and skill. When breaches and there is a loss a claim for damages arises.

Answer 29

1. clearly understanding the clients objectives and confirm precise instructions in terms of engagement 2. ensure you are competent to take on an instruction 3. undertake work in accordance with the relevant Professional standards and Practice information 4. Make detailed notes and take photographs 5. Keep up to date with market knowledge, carry out and record CPD

Answer 30

1. Holding Client Money 2. Providing information to Clients 3. Receipts of Client money 4. Payment from client accounts 5. Accounting records and controls 6. Compliance

Answer 31

Residential valuer instructed by a mortgagor lending instruction could owe a duty of care in tort to a mortgagee purchaser relying on the valuation

Answer 32

Breach of duty of care owed to Mr Scullion in relation to a valuation report of a flat in Cobham. The Court of Appeal held that a surveyor who provides advice on a value to a lender in respect of a buy-to-let purchase foes not owe a duty of care to the borrower

Answer 33

- Established that professionals providing professional services pro bono and without a contract owe a duty of care in tort to act with reasonable care and skill in respect of services they provide. - Not under a duty to advise or give warnings and nor are they liable for work they do not do.

Answer 34

Client accounts must be kept separately & clearly identifiable The word ‘client’ is on the bank account and cheque book A client must be able to have their monies on demand Payment of interest is agreed with a client and accounts must be kept in credit Regular bank reconciliation checking that payments received are transferred to the bank account and expenditure records are checked at least monthly Accurate records are kept with a running balance available Annual audit and reporting obligations by certified accountant if employed by the RICS are met Money can only be withdrawn from the a client account if properly required If cash receipts are made to settle transactions, make sure your records show all cash transactions Signatories must be agreed with authorised staff and two signatures should be required A discrete account is for a single named client account only RICS Regulatory Review Visits of inspection can be undertaken by RICS usually on a routine 3 yearly basis by an accountant employed by the RICS All firms handling client money need to display their procedures document on their website.

Answer 35

Aims to reduce bribery in business in UK and abroad A bribe can be 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 Based on 6 principles: 1. Proportionality 2. Top level commitment 3. Risk assessment 4. Due diligence 5. Communication 6. Monitoring and review The four offences: 1. Bribing 2. Receiving a bribe 3. Bribing a foreign public official 4. Failing to prevent bribery Companies are responsible for their employees’ corrupt acts unless can show that they had adequate policies and procedures in place to combat bribery Certain forms of lavish corporate entertainment can be classified as bribery Government guidance: Offering a client reasonable and proportionate hospitality will not constitute an offence, such as sport tickets and taking clients for meals as long as recorded in gift register Companies must meet criteria to prove they have taken steps to prevent bribery - Identification of potential risks - Staff training - Provision of clear policies - Regular reviews There is a defence if you can show that you have adequate procedures put in place to prevent bribery

Answer 36

The Bribery Act is policed by the Serious Fraud Office Maximum penalty of 10 years imprisonment and / or an unlimited fine for individuals Companies face an unlimited fine

Answer 37

1. When faced with a situation that may involve bribery, I would use the RICS decision free to evaluate the potential legal, financial, and reputational. This allows for informed decision-making. 2. My response to a bribe would be swift and unequivocal rejection. I would firmly communicate my refusal to accept the bribe and make it clear that such actions are unacceptable under the law and within the organization. 3. In accordance with the Bribery Act 2010, I would promptly report the incident to the appropriate authorities within my organization, such as the designated compliance officer or senior management. This ensures that the matter is investigated and addressed internally. 4. I would cooperate fully with any internal or external investigations, provide any necessary documentation or information, and support the prosecution of wrongdoers as required by law. 5. Beyond reacting to a bribe I would take proactive steps to prevent bribery within my organization. This includes promoting a culture of transparency, providing training and education on anti-bribery policies, and implementing robust internal controls to reduce the risk of bribery.

Answer 38

Money laundering is when proceeds of criminal activities are disguised or converted and then realised as legitimate assets

Answer 39

A requirement to have a written money laundering and terrorist financing risk assessment Implemented systems, policies, controls and procedures to address money laundering and terrorist financing risks and meet the requirements under the regulations Adopt appropriate internal controls Provide staff training Comply with new customer, enhanced and simplified due diligence requirements Comply with the requirements relating to politically exposed persons Ensure appropriate record keeping, policies and procedures AML checks must be undertaken to confirm identity of the proposed purchaser of a property and check the purchaser’s source of funds by the vendors agent prior to exchange Include additional high-risk factors when assessing the need for enhanced due diligence, and seek additional information and monitoring in certain cases e.g. high risk third countries

Answer 40

Identify the client and verify them via a passport, driving license or electronic identification Make reasonable endeavours to identify the beneficial owners of the client For a company – its name, company number and address of the registered office is required The names of the company directors are required unless listed on a regulated market e.g. London Stock Exchange Obtain information on the purpose and intended nature of the business relationship and proposed funding arrangements as appropriate

Answer 41

Require additional evidence and monitoring PEPs generally presents a higher risk for potential involvement in bribery and corruption by virtue of their position and the influence they may hold. More detailed examination of the background and purpose of the transaction and increased monitoring

Answer 42

Inability or unwillingness of parties to provide identity documents Changes to parties involved in transactions Unusual transaction features, e.g. unexpected urgency required by parties, potential loss-making of an unusual transaction for a client Payment of fees, purchase or rental monies in unusual currencies

Answer 43

Rules of Conduct specifically state that RICS members/firms must not facilitate money-laundering and financial crime.

Answer 44

they are a set of regulations in the United Kingdom that aim to protect consumers from unfair commercial practices and deceptive marketing.

Answer 45

Prohibition of Unfair Commercial Practices: The CPRs prohibit unfair commercial practices, which include any commercial practice that is misleading, aggressive, or otherwise unfair to consumers. Misleading Actions: The regulations define misleading actions as any act or omission that deceives or is likely to deceive the average consumer. This includes false advertising, false information about products or prices, and any other form of deceptive marketing. Misleading Omissions: These regulations also cover misleading omissions, which occur when important information is omitted or concealed, and this omission causes or is likely to cause the average consumer to make a transactional decision they would not have made otherwise. Aggressive Commercial Practices: The CPRs address aggressive commercial practices, such as using harassment, coercion, or undue influence to pressure consumers into making purchases. These practices are also prohibited.

Answer 46

Consider the risks a business as part of your AML procedure, nothing that the sanctions lists include UK citizens and people who live in the UK Understanding risk factors and red flags Use software as part of due diligence if a firm is likely to engage with higher risk clients or assets Check individual clients of a higher risk against the HM Treasury’s ‘consolidated list’ Check existing clients regularly where they present a higher risk – e.g. HM Treasury’s Sanction Notices What to do if your client is a possible match on the sanctions list, including contacting the Office of Financial Sanctions Implementation (OFSI) for assistance

Answer 47

if a person conceals, disguises, converts or transfers criminal property if a person enters into or becomes concerned in an arrangement which they know or suspect facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person if a person acquires, uses or has possession of criminal property

Answer 48

It is Mandatory Professional Standard Globally applicable requirements for RICS members and firms in relation to bribery, corruption, money laundering and terrorist financing It is divided into three parts: Part 1 Bribery and corruption: Regulated firms must: Not offer or accept anything that could constitute a bribe Have procedures in place to comply with the law Report suspicion to the relevant authority Act with due diligence to perform periodic written evaluations of the risks the firm faces Retain records to show how the firm has met the requirements of this Professional Statements Not facilitate or be complicit in ML or TF Have systems in place to comply with the laws Report suspicion Evaluate and review the risks presented to the firm Use third party reliance for checks only where there is a level of confidence for the quality of information provided by the third party Take appropriate measures to understand the client and the purpose of the instruction Verify the client by undertaking basic ID checks Retain records to show have the firm has met the requirements of the Professional Statement Part 2 Guidance Have a written policy in place for and senior management to take control of the procedures Publish a code of behaviour for staff and provide staff training Encourage transparency Set up a gifts register Keep up to date with legislation Part 3 Supplementary guidance Establishing a ‘risks-based approach’: consider the 3 w’s – who, what, why Dealing with politically-exposed persons: enhanced due diligence The need to identify the beneficial ownership of a company, partnership or trust – e.g. requesting a recent Certificate of Incorporation Annual Return for a company

Answer 49

To provide financial cover in the event a client suffers financial loss as a result of a breach of professional duty e.g. neglect, error.

Answer 50

May be acceptable to receive gifts of low value or for marketing purposes and hospitality received in the course of a business meeting that can be reciprocated like a working lunch. Anything that affects professional opinion is not acceptable.

Ethics Flashcards

(74 cards)