Ethics Flashcards

Question

What is the RICS' stance on social media?

Answer 1

In the Guidance for RICS members 2021, the importance of social media is recorded. The RICS reminds members the high standards of professional behaviour expected, and that the Rules of Conduct are always relevant. RICS will investigate social media posts for a variety of reasons including discrimination, dishonesty, bullying, or even if a post might ruin the reputation or trust in the profession.

Answer 2

At MSC, this is beyond my scope of involvement. However: * RICS firms should not fix prices, or aggressively cut fees, or collude with competitors o Fees should be market based and on ad-hoc basis with clients * You can enter into further fee negotiations after your initial fee proposal is submitted * If renegotiating, you can change levels of services and the fees will reflect this

Answer 3

Terms of engagement must be written in the client’s agreement to the proposed fee basis, payment of expenses (and how calculated) and a copy of the complaint handling procedure. Then follow the CIT method: 1. Check they are professionally competent 2. No conflict of interests or personal interests 3. Confirm terms of engagement in writing and get written approval from the client BEFORE you start instruction They have a cooling off period of 14 days from the Consumer Rights Act 2015

Answer 4

A conflict of interest exists between two parties when a member or firm’s impartiality is threatened due to the existence of a conflict. An example would be: * Any financial interests * Personal interests * Commercial relationships * Acting on both sides of a transaction

Answer 5

RICS - 'Members must not advise or represent a client where doing so would involve a conflict of interest or significant risk, unless there is informed consent' Informed consent can only be sought where the RICS member or firm is satisfied that proceeding regardless of a conflict of interest is in the best interests for everyone All conflicts must be managed according to the Professional Standard All RICS firms must have in place effective systems and controls to ensure compliance All firms must keep records to show their compliance Conflict avoidance - Do not accept the transaction Conflict management - Accept but have a management plan on how to manage the conflict

Answer 6

* A ‘party conflict’ is relating to work on the same or related instruction for two parties * An ‘own interest conflict’ is a personal interest conflict * A ‘confidential information conflict’ is relating to work between two parties which should be confidential

Answer 7

Informed consent can only be given after the party has explained the position clearly to the client. Surveyors should only seek informed consent if others will benefit from doing so

Answer 8

1. Avoidance 2. Written advice to both parties documenting the nature of the conflict and requesting informed consent 3. Conflict management - 'Reasonable steps' must be taken to manage the conflict, surveyors must be physically sperate, information securely stored, audit trail

Answer 9

RICS bye-laws state that client confidentiality must always be maintained o This includes historic information o Information provided by a client prior to instruction o If a third party wants access, they need the clients approval (unless it’s the police or HMRC, etc) o All old files should be held for 6 years then destroyed appropriately o If a RICS member or firms acquires confidential information, they cannot use it for their own purposes, but they must notify the sender and log it with the firm’s compliance officer

Answer 10

o A RICS firms CHP must be approved by the RICS o Always notify PI insurers as soon as there is a complaint possible to claim o Details of my CHP should be issued to a client at the same time as terms of business o A complaints log should be maintained o Firms must have a RICS approved alternative dispute resolution (ADR) within the CHP

Answer 11

1. Stage one (in-house) a. Details of the CHP should be issues whenever the firm receives a complaint from someone whom the firm owes a duty of care b. Procedure must be quick, clear and transparent c. Details of the nominated person dealing with the complaint (the CH officer) must be available in the first instance d. The complaint must be made in writing e. A strict timeline should be recorded for the investigation f. A complaint should be acknowledged within 7 days and investigated within 28 days 2. Stage two (ADR) a. If the compliant is not happy with the review, the second stage of the review would be to readdress the complaint with a scheme the firm has chosen to use b. The name of the relevant redress mechanism must be provided to the claimant, e.g. the centre for dispute resolution (CEDR) 3. Stage three (unlikely) a. The RICS will become involved if it is not resolved e.g. a member fails to respond to a claim or prevents access to the ADR b. If acting as a sole practitioner, you must nominate a surveyor in another firm to act as the complaints handling officer (CHO)

Answer 12

* Members shall undertaken a minimum of 20 hours CPD per year o Out of the 20 hours, 10 must be formal CPD – the rest can be informal o All members must record their CPD annually on the RICS CPD Management System by 31st January * All members must have a current and rolling understanding of the Professionalism module throughout 3 years

Answer 13

All structured learning with clear objectives e.g. online courses, seminars, etc

Answer 14

Any self-managed learning which is relevant to my role e.g. private study, on the job training

Answer 15

Professional indemnity insurance protects you against claims for loss or damage made by clients or third parties as a result of the impact of negligent services you provided or negligent advice you offered The terms are set out in the RICS Professional Indemnity Insurance Requirements 2022

Answer 16

Negligence is when duty of care exists to clients and/or third parties using ‘reasonable care and skill’. If this is breached, and there is a loss, claims can be made for the damages

Answer 17

* Yianni v Evans (1981) – mortgage purchaser was owed a duty of care from the valuer who was instructed by the mortgage lending institution * Scullion v Bank of Scotland Plc (2010) – Surveyor does not owe a duty of care to a borrower for a buy-to-let mortgage * Burgess v Lejonvarn (2020) – Pro bono work, even without a contract, still owes a duty of care in tort

Answer 18

Current limitation periods for negligence are: * Contract – 6 years from the date of the negligent act, breach of contract or omission, etc * Tort – 6 years from the date the claimant suffered the loss * Consider that MSC has a latent defects period of 12 years

Answer 19

* Clearly understand the client’s objectives and confirm this with writing in the terms of engagement * Ensure you are competent to undertake the instruction * Undertake any work in accordance with the relevant RICS standards/guidance notes * Make detailed notes, take photographs and file them all * Keep up to date with market knowledge and CPD * Cap the professional liability excess on the PI policy in the terms of engagement

Answer 20

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 21

To be RICS compliant, I’d need to: 1. Complete a Firm Details Form 2. Appoint a ‘Responsible Principle’ for all RICS communication 3. Register with RICS – this will become a regulation of the firm by the Regulatory Board 4. Arrange PI insurance and send details of this to RICS 5. Set up procedures for the requirements for client money handling, including a protection scheme 6. Register for the RICS valuer registration scheme if undertaking a Red Book Global valuation work 7. Obtain RICS approval for the complaints handling procedure a. Set up a complaints log b. Appoint a complaints handling officer (if sole practitioner, elect a surveyor from another firm) 8. Use a logo kit from RICS so all practice material complies with the designation ‘Regulated by RICS’ 9. If a sole practitioner, plan for future running of the business 10. Ensure my CPD is all logged online on the RICS CPD Management System a. Also, set up a staff training plan 11. Ensure I complete the RICS Annual Return every year

Answer 22

* Client accounts must be kept separately and be clearly identifiable o ‘Client’ must be labelled on the bank account/cheque book * A client must be able to access their monies whenever they demand to * Payment of interest is agreed with the client and accounts must be kept in credit * Regular bank checks to ensure payments are received/transferred to the bank account and expenditure records are checked (needs to be monthly) * Accurate records are kept with a running balance available * Annual audit and reporting obligations by a certified accounted employed by the RICS are met * Money can only be withdrawn from a client account if properly required * If cash receipts are made to settle transactions, all receipts must be kept * Signatories must be agreed with authorised staff and two signatures should be required * A ‘discrete account’ is for a single named client only * A RICS Regulatory Review Visit (inspection) can be undertaken by RICS usually every 3 years * All firms handling client money need to display their procedures document on their website

Answer 23

* Disclose the business name * Have a disability discrimination compliance (Equality Act 2010) * Be financial services compliant * Appoint a money laundering reporting officer * Organise health and safety compliance * Have an asbestos register * Organise fire safety compliance * Register for data protection * Have estate agency compliance * Inform HMRC for VAT and tax registration * Ensure compliance with current employment law e.g. national living wage * Ensure insurance compliance for both the employer and public liability

Answer 24

A scheme whereby claims can be made by those who had a claim against a RICS registered firm which cannot repay the clients’ money. This is a last resort

Answer 25

For example, if I retire or cease to practice do the following things: 1. Inform the RICS of retirement/closure 2. Ensure any clients are informed early and support their move to another firm 3. Return any monies to clients’ own accounts 4. Inform insurers and procure PI run-off cover for 6 years from the date of the expiry of policy 5. Retain copies of client files/records for 6 years then dispose safely

Answer 26

A bribe can be giving, offering, promising or receiving an advantage such as a payment, gift or a service which is illegal or a breach of trust

Answer 27

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

Answer 28

1. Bribing 2. Receiving a bribe 3. Bribing a foreign public official 4. Failing to prevent bribery

Answer 29

Companies are responsible for their employees’ actions, unless they can prove they had adequate policies and procedures in place to combat bribery The Bribery Act is policed by the Serious Fraud Office o If the Act is breached, the maximum penalty is 10 years and/or an unlimited fine for individuals or a company

Answer 30

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

Answer 31

o There is a requirement to have written money laundering/terrorist financing risk assessment o Implement systems or controls to address the above risks and meet the requirements under the legislation o Adopt appropriate internal controls o Provide staff training – check MS training o Comply with new customer, enhanced and simplified due diligence methods o Comply with any requirements to politically exposed people (PEPs) o Ensure appropriate record keeping o AML checks must be taken to confirm the identity of a proposed buyer o To include additional high risks e.g. if transaction is in a high-risk vulnerable country

Answer 32

* Must let HMRC know if they rent properties above £10k/per month – May 2020 * Individuals and businesses need to register with HMRC to trade * CDD checks on vendors, purchasers, landlords, etc with regard to new sales or letting * EDD with be undertaken if red flags occur * Firms must have group-wide procedures and train anyone who might identify a risk * Firms must have processes to scrutinise transactions when: o Sums are unusually large o Contain unusual patterns o Are without apparent economic of legal purpose

Answer 33

Sanctions have been issued because of the Ukraine/Russia conflict * RICS provided an update in March 2022 which reminds about sanctions and an estate manager’s role in enforcing these o Eg what to do if your client is on a sanctions list – contact the Office of Financial Sanctions Implementation

Answer 34

* Identify client and ratify their identity e.g. with a passport, license, etc * Make ‘reasonable’ endeavours to identify the owners of the client e.g. at Companies House * Get all relevant information e.g company name, number, director names * Get information relating to the purpose and intended nature of the relationship * Information below for typical requirements for money laundering checks

Answer 35

Additional procedures when any transaction is in a ‘high risk country’ or a politically exposed person ‘PEP’, or a PEPs family member or associate o PEPs are vulnerable to due diligence as their position means they are higher risk for potential involvement in bribery or corruption due to their position

Answer 36

There is a maximum of 14 years in prison and/or an unlimited fine for assisting with money laundering There is a maximum 5 years in prison and/or an unlimited fine for tipping someone off/informing them that they are under suspicion OR for failing to report a suspicion

Answer 37

Client does not wish to give identification documents Changes to parties involved in transactions Unusual transactions Payment in unusual currencies

Answer 38

This Act allows for enforcement authorities in the UK to recover money in criminal/civil proceedings which are the proceeds of crimes The Act sets out three main areas of offence: o Concealing criminal property o Arrangements o Acquisition of use and possession – person acquires or uses criminal property

Answer 39

* Strengthens investigation powers into unexplained wealth orders (UWO) * Easier prosecution of those involved in sanctions-busting, or unwillingness of parties to provide identity documents

Answer 40

1. Mandatory requirements for anti-bribery, corruption, anti-money laundering and terrorist finance 2. Guidance which sets out good practice for the above points 3. Supplementary guidance for concepts set out in 1 and 2 above

Answer 41

a. RICS firms must: i. Not offer or accept anything which could be a bribe ii. Always have procedures in place to comply with the law iii. Report any suspicion to the relevant authorities iv. Act with due diligence and record risks to their firm v. Retain records to highlight the firm is in line with requirements of the RICS PS For money laundering and terrorist financing, RICS firms must: i. Not facilitate or be compliant ii. Have systems in place to comply with all laws iii. Report suspicion iv. Evaluate and review risks presented to the firm v. Use third party reliance checks when necessary vi. Take time to understand the client and the purpose of the instruction vii. Verify the client with ID checks viii. Retain records to show how the firm has met the requirements of the PS

Answer 42

i. Have a written policy in place ii. Push a code of behaviour/ positive culture for staff, including staff training iii. Encourage transparency iv. Set up a gifts register v. Keep up to date with legislation

Answer 43

o All policies must be underwritten by a RICS insurer o The current minimum levels are based on turnover the firm o Certificate of a firms PI cover must be sent to the RICS every year as part of the firm’s returns to RICS o If a new business, estimate the turnover and adjust PI levels accordingly

Answer 44

If turnover is £100,000 or less it is £250,000 If turnover is £100,001-200,000 it is £500,000 If turnover is £200,001 then PI minimum level is £1,000,000

Answer 45

Firm’s turnover in the preceding year is up to £10m then the maximum uninsured excess is the greater of 2.5% of the sum insured or £10,000 If over £10m, there is no set limit - this is MSG

Answer 46

As soon as a claim is expected, notify the insurers PI policies should be retroactive. PI cover works on a ‘claims made’ basis e.g. policies cover claims that are made during the period regardless of when a negligent act occurred

Answer 47

Run off cover is to insure claims made after a business has stopped trading. o For consumer claims, a minimum of £1,000,000 of aggregate cover over a minimum of 6 years o For commercial claims, firms must consider what run off is appropriate for the last 6 years o Firms who cannot get run-off insurance from their insurers can apply for coverage in the RICS run-off pool

Answer 48

RICS runs the members support service (MSS) for members facing claims for work carried our by an employer who has gone into administration

Answer 49

From May 2021, insurers must provide cover for fire safety claims on a property of 4 storeys and under RICS recommends liability caps to manage risks associated with professional work Make it clear to the client that advice can only relied upon from the client named in the terms of engagement

Answer 50

This isn’t something I do in my role, but if I was a surveyor, I would … * Identify client and ratify their identity e.g. passport * Make ‘reasonable’ endeavours to identify the owners of the client e.g. at Companies House * Get all relevant information e.g company name, number, director names * Get information relating to the purpose and intended nature of the relationship * Information below for typical requirements for money laundering checks * Check if they’d need enhanced due diligence

Answer 51

* MSC has an anti-bribery and corruption e-learning module * MSC has a ‘bribery prevention policy’ which is in accordance with the Bribery Act 2010 o Part of this is the anti-bribery management system – aligned to ISO 37001 * Risk assessments are carried out appropriately o Categories are business risk, transactional risk, sector risk o There are forms for each which determine the action needed e.g. negligible, medium or high * Contacts include the Head of Audit, General Counsel or Director of Legal Services * There is also ‘Raising Concerns’ – whistleblowing helpline – Safecall operate this * We ask our supply chain whether they have policies in place which align to ISO 37001 – if answers are not satisfactory, further due diligence is done by the business unit

Answer 52

MSC has a strict gift policy (HR policy 09). It includes all employees. Cannot accept gifts or hospitality if the ‘intent of the giver’ means that they expect the employee to take actions which are not in good faith, or breach trust and have potential to damage MSCs’ reputation. * Even trivial gifts must be recorded. Gifts must be recorded no later than 2 weeks after the event. However, if a gift is over £200/per head must be approved by the local MD * If an employee is unsure, they can resort to the Code of Ethics in the Workplace or the HR Director for advice * All gifts and hospitality, whether accepted or declined must be recorded on our register which is called ‘Gifty’

Answer 53

* MSC have procedures in place to comply with the law e.g. due diligence procedures * Anonymous reporting system * Has a good culture/promotes best practice

Answer 54

Follow the principles set out by the RICS PS in that I follow MSC’s policy, I would report anything suspicious, align myself with company culture

Answer 55

When working with clients, I ensure I do not have any personal conflicts, confidential conflicts, financial conflicts and if one arises, I follow the RICS procedure of avoidance and management if necessary

Answer 56

* APC candidates must do 48 hours of CPD per year with at least 50% being formal * Members must do 20 hours CPD per year (10 must be formal), record by 31st Jan * Show knowledge of keeping current with professionalism every 3 years

Answer 57

On the RTwin project, I was asked by a stakeholder to guestimate energy efficiency of the building. This was outside of my scope of competence and I asked a senior member of staff who then discussed with Atkins to get the correct data

Answer 58

Depending on the project, this makes the data more robust. For example, we encourage all of our businesses to complete CarboniCa audits whereby another member not on the project goes through a checklist or MSES completes it. This is to ensure the quality of the data

Answer 59

I would require informed consent from the party, then a confidentiality assurance or NDA from the third party

Answer 60

Pros: Time efficient, easy way for small fixes, illustrates the problem to the reviewer, created a systemised approach so it is consistent for the client (can expect action within 24 hours) Cons: Sometimes need a follow up call if a complex topic, sometimes human error gets submitted as a fix which bugs MSES

Answer 61

Internal – Raising concerns or HR Policy 08 which states that complaints need to be made in writing, investigation, request a full grievance meeting if not resolved internally External – Managed by the MD. Overhead is the Quality Management Plan which contains the Complaints Handling Process. 1. Complaint received a. If not shown to local site of office, done so to resolve 2. If not resolved by the local office or site, acknowledge receipt of the complaint within 7 days 3. Apologise but do not accept liability until facts are known 4. Appropriate MS colleague interview complainee 5. Send to the Head of Internal Audit 6. Action the complaint to resolve it within 28 days – organise a follow up 7. Record in Complaints Log 8. Monitor Complaints Log

Answer 62

1. Vision - built and natural environments are sustainable for all 2. Mission - Inspire members, advance knowledge, uphold standards 3. Strategic Goals - Lead and influence sustainability, attract the next generation, strengthen trust in the profession 4. Values - Professional, collaborative, inclusive, ambitious 5. A world class organisation There were 36 recommendations across 7 key areas in the review

Answer 63

Status Recognition Market advantage Knowledge Network

Answer 64

1. Is it legal? 2. Is it in line with the RICS Rules of Conduct? 3. Would you want it to be publicised?

Ethics Flashcards

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