APC - Spring 2024 > Ethics > Flashcards

Ethics Flashcards

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1
Q

What are the five Rules of Conduct?

A
  1. Be honest, act with integrity and comply with their personal obligations, including obligations to RICS.
  2. Maintain their professional competency and ensure services are provided by competent individuals who has necessary expertise.
  3. Provide good-quality and diligent service.
  4. Treat others with respect and encourage diversity and inclusion.
  5. Act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in their profession.
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2
Q

What are the recommendations of the Bichard review?

A
  1. P - Renewed focus on the public interest, including amending the Royal Charter and creating a public interest panel to advise Governing Council.
  2. I - Maintaining self-regulation – greater independence for regulatory functions.
  3. D - Increased focus on diversity and inclusion
  4. S - Greater support for members, focusing on young members.
  5. S - A new simplified, clear, accountable governance structure.
  6. S – Greater leadership on issues like sustainability / climate
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3
Q

What is the purpose of the RICS Ethics Decision Tree?

A

Provides a framework of questions which members should ask themselves when faced with a potentially unethical situation.

Is it legal?

Most importantly – Would you be content if your action was made public?

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4
Q

5 Foundations Following Bichard Review (Nov 23)?

RICS Future Report (2023)

A
  1. Vision – Sustainable built environment – inclusive for all
  2. Mission – To inspire members and advance knowledge.
  3. Goals – D&I, Sustainability, Member engagement.
  4. Values – Professional, Collaborative, Inclusive, Ambitious
  5. World Class – Effective, efficient and inspiring body.
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5
Q

What are the Rules of Conduct for Members?

A
  1. C - Comply with CPD
  2. C - Cooperate with RICS
  3. R - Provide information reasonably requested by Standards and Regulations Board.
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6
Q

What are the Rules of Conduct for Firms?

A
  1. Publish complaints handling procedure, which includes alternative dispute resolution provider, and maintain complaints log.
  2. Ensure current and previous work is covered by PII.
  3. If sole principal, make appropriate arrangements.
  4. Cooperate with RICS
  5. Provide information reasonably requested by Standards and Regulations Board.
  6. A designated denote for RICS on all business literature.
  7. Report any matter to RICS under Rules for the Registration of Firms
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7
Q

What do you need to follow when starting a new practice (RICS)?

A
  1. Inform RICS
  2. Register with RICS regulatory board
  3. Nominate responsible Principal
  4. Make sure to be registered if over 50% of employees are RICS members. (if 25% to 50% they could be regulated).
  5. Complaints Officer and Log, Complaints handling procedure
  6. Clients’ money procedures
  7. PII
  8. Arrangements for succession
  9. Logo Kit
  10. CPD log and training
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8
Q

What do you need to follow when starting a new practice (Regulation)?

A
  1. Business Names Act 1985
  2. Equality Act 2010
  3. Financial services Act 2012
  4. Bribery Act 2010
  5. Money Laundering Regulation 2007 – appoint MLRO
  6. Health & Safety Act 1974
  7. Control of Asbestos Regulations 2012
  8. Fire safety reform
  9. Data protection Act 1998
  10. Inform HMRC – VAT threshold = £85k
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9
Q

What steps do you need to take when closing down your RICS regulated firm?

A
  1. Inform RICS
  2. Inform clients
  3. Return clients’ money
  4. PII – 6 years runoff – minimum £250k
  5. Retain clients’ files – 6 years
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10
Q

What information do you need to provide the RICS every year? (Annual return)

A
  1. Type of business / staff details
  2. Statutory regulated activities
  3. Nature of clients
  4. Complaints handling procedure
  5. PII details
  6. Client money details
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11
Q

What is the PII Minimum cover thresholds?

A

If Turnover is…

£100,000 or less = £250,000
£100,001 - £200,000 = £500,000
£200,001 and above = £1,000,000

Knight Frank is minimum £1m (I am not allowed to disclose amount)

If it is a new practice, you are required to estimate the turnover for the year. Then update PII provider with details

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12
Q

What is the Uninsured Excess for Firms?

A

Firms Turnover in Previous Year - Max uninsured Excess

Up to £10,000,000 - Greater of 2.5% of the sum insured or £10k

Over £10,000,000 - No set limit

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13
Q

What goes into the Terms of Business?

A

Terms of Business includes…
1. Client Engagement
2. Definitions
3. Fees, expenses
4. Client Obligations
5. Measurements
6. Confidentiality
7. Data Protection and Data Handling
8. Documents and Reliance
9. Service Quality
10. Conflicts of Interest
11. Liability and insurance
12. Termination

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14
Q

What are the 6 Key Principles of the Bribery Act 2010?

A

P – Proportionality
R – Risk Assessment
D – Due Diligence
C – Communication
T – Top level commitment
R – Monitoring and Review

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15
Q

What does the RICS Global Professional Standard on Conflicts of Interest 2017 outline?

A

Provides clear rules for RICS members and regulated firms to identify and manage potential conflicts of interest.

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16
Q

What does the RICS Professional Standard on Complaints Handlings 2016 outline?

A

Sets out the mandatory requirements by the RICS for members / firms in relation to the complaints handling procedure to undertake.

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17
Q

What does the Bribery Act 2010 outline?

A

Sets out the procedures to put in place to prevent bribery. Hospitality is not prohibited by the act.

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18
Q

What does Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 outline?

A

Outlines rules to prevent money laundering and terrorist financing.

It requires businesses to verify customer identities, assess risks, keep records, report suspicious activities, train staff, and comply with regulatory supervision.

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19
Q

What is the RICS Motto?

A

There is measure in all things

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20
Q

What year was the RICS Founded

A

1868

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21
Q

Who is the President and CEO?

A

Tina Paillet is President and Justin Young is CEO

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22
Q

What does the RICS Governance structure comprise of?

A

1) Privy Council
2) Governing Council
3) Standards and Regulations Board
4) Management Board

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23
Q

What are the 3 main roles of the RICS?

A

1) M - Maintain the highest standard of education and training.

2) P - Protect consumers through strict regulation of professional standards.

3) L - Leading source of information and independent advice on land, property, construction and associated environmental issues

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24
Q

Why do you want to be a chartered surveyor?

A

I want to be part of a prestigious organisation which allows me to progress my career in an industry I am passionate about. It will give me the recognition and status to work with clients on a greater level.

  • Market advantage – MA
  • Professional recognition – R
  • Knowledge – International Practice Standards – K
  • Status – S
  • Global network – N

(MA-R-K-S-N)

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25
What are the 3 disciplinary procedures?
1. Action by Head of Regulation – serve a fixed penalty notice, make a consent order, refer matter to a disciplinary panel 2. Disciplinary Panel – more serious breaches, Lay members on panel 3. Appeals Panel – regard to new evidence previously presented and any new representations –Lay members
26
Factors to consider when handling client's money?
1. Keep accounts separate / identifiable (use word “client”) 2. Client must be able to have monies on demand 3. Agree interest payment procedures 4. Keep accurate records
27
What are the different types of disciplinary penalties (From the disciplinary panel / head of regulation)?
1. Consent Order 2. Unlimited fine – proportionate to offence 3. Future registration conditions 4. Expulsion from RICS 5. Publish results of hearing
28
Why should you be careful with social media?
RICS will investigate concerns over posts, where they involve: * Discrimination * Dishonesty * Bullying, Abusive or Threatening behaviour RICS will not investigate, where they involve: Professional and respectful language and critical views
29
What are the four offences with of bribery?
1. Bribing 2. Receiving a bribe 3. Bribing a foreign public official 4. Failing to prevent bribery
30
What is bribery?
Giving or receiving a payment / gift for an illegal action or breach of trust.
31
What is the penalty of bribery?
Policed by Serious Fraud Office 10 years in prison and/or unlimited fine
32
What is the penalty of Money Laundering?
Proceeds of Crime Act 2002 – 2 areas of offence: 1. Tipping off (5 years) 2. Assisting (14 years)
33
Who is KFs MLRO?
Jayna Hirani
34
What are the steps to take to prevent money laundering?
1. Cash limit of €10,000 2. Enhanced Due Diligence on ‘high risk countries’ & PEP 3. Check purchaser as well as vendor 4. Seek evidence of funds 5. Maintain records for at least 5 years Due Dilligence – Customer, Enhanced (for PEPs), Simple PLC – Certificate, registered number, office and address, directors Private – Proof of ID, proof of address
35
What is the complaints handling procedure?
* Acknowledge in 7 days, investigated within 28 days - Issue details to CHO - This procedure must be quick and clear. If the complainant is not happy - must be referred to * Third party resolution – RICS dispute resolution service CHP should be in ToE *PII cover should be notified. Complaint log must be maintained with complaint outcomes.
36
What does the RICS Professional Statement - Conflicts of Interest – UK Commercial Property Market Investment Agency 2017 outline?
* Dual agency prohibited (working on both sides of transaction) after 2018. * Multiple introductions allowed if on “non-exclusive basis” – informed consent given from all clients * Incremental advice allowed, information barrier must be in place * Personal interests must be declared (s21) of the Estate Agency Act 1979.
37
What is included in a Terms of Engagement?
* Proposed fee basis * Scope of work * Copy of the complaints handling procedure * PII cover Needs to be signed and returned before undertaking any work
38
Do you owe a duty of care to the client?
* Surveyors have a duty of care to clients and parties * Must use “reasonable care and skill” * Negligence = breach of this, where damages arise * Limitation Act 1980 = 6 years from date of negligent act / 3 years from date of knowledge / 15 years long stop date * Margin of Error can vary – KS Lincoln vs CBRE = 10% margin for commercial property
39
Why is CPD important?
It is in the rules of conduct for firms and member. It ensures that members are up to date with information in an everchanging market
40
Are you aware of any new changes in the guidance?
RICS Guidance Note on Surveying Safely 2nd edition is now... RICS Professional Standard on Surveying Safely 2nd edition 2018
41
What is double dipping (dual agency)? Why is it banned?
Double dipping is where an agent acts for both the seller and buyer. It is banned because it is evident conflict of interest.
42
Explain your understanding of precedent set in Burgess v Lejonvarn.
Burgess v Lejonvarn (2020): * Providing a professional service pro bono and without a contract you still owe a duty of care in tort to act with reasonable care and skill
43
Tell me about an instance of when you have handled client’s money.
I personally have not directly held client’s money. However, if I did I would ensure that it was kept in a separate clients account, clearly identified with the name of the client. I would ensure that the client has access to the account at all times.
44
What does competence mean to you?
Competence to me means the ability to do something successfully and efficiently. It is a key skill required.
45
What is run-off cover?
Run-off cover is an insurance policy that protects surveyors, after they stop practicing. It covers any claims made against them for work done before they stopped practicing,
46
Apart from RICS Professional Standard on Conflicts of Interest (2017). What other documents did you have regard to?
RICS Professional Statement - Conflicts of Interest – UK Commercial Property Market Investment Agency 2017
47
48
What do you do in the instance of a conflict?
In the instance that my impartiality is threatened due to a conflict that could arise from. Personal interest Financial Interest Commercial Relationship Acting on both sides I would either avoid (conflict avoidance) and decline the instruction. or I would manage (conflict management) the conflict via implementing information barriers. I would first need to obtain informed consent for this.
49
How would you establish a conflict of interest?
I would undetake a search on my firms internal software. I would also send out an email to all relevant departments to establish if there are any conflicts. If there was an active agency instruction, I would decline the instruction for the valuation. If there was a previous involvement ie a letting then I would inform the client and obtain informed consent that they are happy to proceed and also include this within the TOE document.
50
What information would you require to be compliant with money laundering requirements?
For PLC: Require London Stock Exchange listing. For LTD company: Company name. Address. Registered headquarters address. Names and addresses of shareholders with over 25% ownership. Registered company number. For private individual: Passport or driving licence. Copy of bank statement, credit card bill, or utility bill (not older than 3 months).
51
What penalties might be applied to a member who is in breach for the rules of conduct?
Penalties could include: Cautions Fines Expulsion Removal
52
If you were working with a Client and you were concerned about the source of their money, what would you do?
Verify the source of funds, including: * Bank statements. * Recently filed business accounts. * Documents confirming sources like: o Sale of a house. o Sale of shares. o Personal injuries award. o Bequest under an estate. o Winnings from gambling.
53
What would you do if the client offered to pay in cash?
You are able to accept a maximum amount of 10,000 euros in cash. Although Knight Frank has a no cash policy.
54
Are you aware of any guidance relating to social media?
RICS Guidance Note - Use of Social Media 2021. Outlines that members must remain responsible for their actions when posting on social media.
55
What are the 5 ethical obligations, and provide an example for each
1. Integrity, 2. Standard 3. trust in profession 4. respect 5. responsibility. 1. Client asked me to reconsider my valuation and increase its value. I replied and said that I cannot without evidence. 2. I adhered to relevant standards of the RICS. e.g. following the Red Book 3. If I am not competent enough to undertake work, I would refer to someone that is. 4. I am always respectful to others and encourage diversity and inclusion 5. I take responsibility in my work and make sure that it is always the best it can be
56
Why is it important for a chartered surveyor to remain solvent?
It is important that a surveyor remains solvent as it links with the first rule of conduct (remain honest and act with integrity). An insolvent surveyor is more susceptible to being bribed due to their financial position.
57
What is incremental advice?
Incremental advice is information sought by another party during a purchase or disposal that is incremental to an existing instruction. Agents must maintain confidentiality, Information barriers must be in place if information is given. Obtain informed consent.
58
What is the difference between terms of business and terms of engagement
Terms of business outlines the contractual terms of the relationship between the surveyor and the client Terms of engagement outlines the specifics of a particular instruction.
59
How do you avoid being negligent?
1 - Understanding the clients objectives 2 - Ensure that I am competent enough to undertake the work 3 - Follow the relevant professional standards 4 - Keep up to date with market knowledge and legislation 5 - Cap PII excess on the ToE
60
What steps should a member/firm undertake to reduce the risk of money laundering?
1 - Have written money laundering / terrorist financing risk assessment 2- Have systems, policies and procedures in place to address the risk 3 - Adopt internal controls 4 - Provide staff training 5 - Comply with CDD and EDD 6 - Follow requirements relating to politically exposed persons (PEP) 7 - Ensure record keeping 8 - Request proof of identification and proof of funds 9 - Additional checks when assessing for EDD - more monitoring
61
Disciplinary Action 3 levels:
Action by Head of Regulation: 1 - Serve a fixed penalty notice - i.e. information not being provided to RICS 2 - Consent order - low level breaches - i.e. not completing CPD 3 - Referring matter to disciplinary board Action by Disciplinary Board 1 - Consent order 2 - Unlimited Fine 3 - Temporary suspension or expulsion from RICS 4 - Publication of results to e.g. MODUS Appeals Panel - Considers appeals against - Usually when new evidence is found 1 - Fixed penalty notice 2 - Disciplinary panel findings 3 - Conditions placed on registration
62
Who is the Knight Frank Complaints Handling Officer
Philip Gardner
63
Outline 3 types of conflicts?
A 'Party Conflict' - Working on the same instruction with 2 separate parties A 'Own Interest Conflict' - Relating to a personal interest A 'Confidential Information Conflict' - Relating to work between two parties that is confidential
64
Who policies the Bribery Act 2010?
Serious Fraud Office
65
Who policies Terrorist Financing and Transfer of Funds Regulations 2017?
National Crime Agency
66
If information you hold of a company differs to the information that is on Companies House, what would you do?
That firm would need to contact Companies House and inform them of the discrepancies.
APC - Spring 2024
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