Ethics Flashcards

Question

How to handle clients money

Answer 1

- Regulated firms must ensure that they are registered with the RICS Client Money Protection Scheme if holding client money, last resort RICS pays with exceptions - Discrete account for single client and general account for multiple - Firms must as per Client money handling (2019): • Hold all client money in a client money account which firm has exclusive control over • Only client money held in account • Client accounts have ‘client’ and name firm in title and if discrete, include an identifier • Money is immediately available, even at sacrifice of interest • If client has money in high interest account with penalties for instant access, penalties are only paid out after receiving specific informed consent • Confirm bank operating conditions in writing • Ensure all money is paid into client account promptly • Account for interest • Ensure client money is returned to client when firm no longer needs to hold onto it • Obtain written consent from clients for direct debits/standing orders • Check sufficient funds are held before making payments • Confirmation client money will be held in client money account • Account details and if account is in name of regulated firm or third party provider • Advice to clients who pay fees in advance for surveying services that money is not protected by Client Money Protection Scheme • Firms written client money procedures, including how unidentified funds are dealt with, are published on website • Keep accurate records with running balance available • Complete regular bank reconciliation • Compliance with anti-money laundering legislation, record breaches and inform RICS

Answer 2

- When a member or firm has competing personal or professional interests making it difficult to fulfil duties impartially or with independence - Conflict of significant risk of conflict: Only act if there is informed consent and is in the interest of all those who are affected (i.e. so few firms in area have expertise) - 3 types of conflicts Party – 2 clients with competing interests Personal – Firm/member with competing interest to client Confidential information – Firm/member must provide all information to a client’s professional assignment but keep same information confidential to another

Answer 3

Robust barrier to ensure no chance of information passing between parties ‘Reasonable steps’ to operate barrier Surveyors must be physically separated (different buildings/floors) Virtual IT barrier All information securely stored Clear audit trail and firms compliance officer must oversee all actions

Answer 4

Confict avoidance and conflict management

Answer 5

In RICS Professional Standard Conflicts of Interest (2017)

Answer 6

‘Conflicts of interest – UK commercial property market investment agency (2017)’: Dual Agency (acting for both buyer and seller): should never be undertaken in UK Multiple introductions: Agent has competing relationships with multiple buyers. TOE must make it clear if agent is acting on exclusive or non-exclusive basis. If exclusive, other buyers must be informed agent is no longer able to advise. If non-exclusive, must get informed consent with information barriers. No individual should act for clients competing to purchase the same opportunity Incremental advice: where an agent is approached by another party to provide advice (i.e. planning, building surveying or valuation) related to a purchase or disposal that is incremental to an existing instruction (for example, an agent is acting for the seller but is approached separately by the buyer to provide a valuation). Information barriers must be in place to maintain confidentiality Where agent has exclusive instruction to purchase, informed consent must be obtained from client before provide advice to another prospective purchaser Where agent has a sale instruction, client must be notified before advice is provided to a prospective buyer, although informed consent is not required.

Answer 7

- Firms should avoid price fixing, aggressive fee cutting or collusion - Fees should be Market-based on ad-hoc basis with clients, with healthy competition allowed with competitors - Can renegotiate fee after initial fee proposal, with consideration of time/resources/profit - Must be transparent with fees, including referral/commissions

Answer 8

- Before accepting instruction consider, qualified, competent to meet client needs and conflicts - TOE must include: client, personal responsible, assignment, information requirement and assumptions, fee basis, payment of fees and copy of CHP available on request

Answer 9

- Agency work: Fees information must be compliant with Section 18 of the Estate Agents Act 1979 and AML checks - Consumer Rights Act 2015 cooling off period of 14 days from agreement date

Answer 10

Advantage given to influence a person in the carrying out of a function usually connected with their work or office. Intended to influence bribee to carry out function improperly which is illegal or a breach of trust

Answer 11

Making bribe Receiving bribe Bribery of foreign public official Failure of company to prevent bribery

Answer 12

Serious Fraud Office with max of 10 years prison and unlimited fine

Answer 13

Principle 1: Proportionate Procedures Principle 2: Top Level Commitment Principle 3: Risk Assessment Principle 4: Due Diligence Principle 5: Communication (including Training) Principle 6: Monitoring and Review

Answer 14

If they can show ‘adequate procedures’ were in place.

Answer 15

Reasonable, proportionate and appropriate gifts

Answer 16

Gifts over £100 must be reported to Compliance Director, who maintains Gifts & Hospitality Register.

Answer 17

When proceeds of financial crime are disguised and the realised as legitimate assets

Answer 18

Launch of the new updated RICS Professional Standard: Countering Financial Crime. Changes include: 1) AI – Standard recognises AI may assist due diligence processes, identification checks and operational efficiencies 2) Digital currencies – Standard recognises real estate is being paid for this way and imposes requirement for enhanced due diligence checks when request for funds to be paid in this way, including verification of source of funds, compliance with regulatory requirements and transactions legitimacy 3) Expressly highlights use of gold and timber is increasingly present in money laundering practices

Answer 19

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017

Answer 20

1. Requirement to have a written money laundering and terrorist financing risk assessment 2. Implement systems, policies and procedures to address money laundering and terrorist financing risks 3. Adopt appropriate internal controls 4. Provide staff training 5. Comply with new customer, enhanced, and simplified due diligence requirements 6. Comply with the requirements relating to politically exposed persons (responsible for prominent public function) 7. Ensure appropriate record keeping, policies and procedures 8. AML checks must be undertaken to confirm the identity of the proposed purchaser of a property and check the purchaser's source of funds by the vendor's agent before contracts are exchanged. 9. To include additional high-risk factors when assessing the need for enhanced due diligence, and seek additional information and monitoring in certain cases, e.g. where there are transactions between parties based in high-risk third world countries

Answer 21

Identify client and verify identity (e.g passport) Make reasonable efforts to identify beneficial owners of client and verify identity of the person managing it If a company, name, number and address is required. If individual, proof of address Names of the directors unless listed on stock exchange Obtain information on purpose of business relationship and proposed funding arrangements

Answer 22

Additional procedures if high risk country or politically exposed person, requiring additional evidence and monitoring. More risk of bribes and corruption

Answer 23

Monitor ongoing business relationships and detailed record keeping of procedures Have Money Laundering Reporting Officer must report any suspicions to National Crime Agency with Suspicious Activity Report. Maintain records for minimum 5 years and report to Companies House when information they have doesn’t match register.

Answer 24

Inability/unwillingness to provide identification Changes to parties involved in transactions Unusual transaction features, such as urgency or loss-making Payment of fees in unusual currencies

Answer 25

Enforcement authorities can recover money and assets

Answer 26

Register with HMRC if they let single property for more than EUR10,000 a month

Answer 27

RICS Draft Professional Standard: Responsible Use of Artificial Intelligence - Key topics: Use of AI disclosed in ToE Communication with clients regarding AI Privacy, confidentiality, governance and risk management Reliability of AI

Answer 28

Conflict of Interest check Prior to commencing a loan security valuation instruction, I carried out a Conflict of Interest check. This was done by searching my firm’s internal database to ensure there were no client, property or borrower conflicts. I also contacted my firm’s local office to confirm there had not been any commercial relationship. Once I had confirmed there was no conflict, I issued the Terms of Engagement.

Answer 29

Confidentiality Whilst instructed by a landlord to lease a retail unit, a national coffee operator expressed their interest. Upon request of their latest financial accounts, I was notified that a Non-Disclosure Agreement (NDA) would have to be signed before release of such information. I ensured that my client, my director and I had signed the NDA following the review from my firm’s internal legal team. This information was securely saved on file, which was password protected, with permission to view granted only to my director and I internally. This ensured confidentiality was maintained.

Answer 30

Conflict of Interest Whilst marketing a property, I received an offer from a colleague in the occupier team, who was acting on behalf of a potential tenant. I noted this would pose a potential conflict. I always adhere to the RICS Professional Standard Conflicts of Interest (2017) and notified my client of the potential conflict. I advised the client on the measures I would implement to guarantee a strict information barrier was in place, ensuring all information remained confidential. Whilst my client verbally consented, I advised that informed written consent was required, and that my colleague would need to obtain the same from their respective client. Once these were received, I saved my client’s written and signed consent on file so there was a record of it and ensured that the procedures had been adhered to.

Answer 31

Valuation Whilst undertaking a loan security valuation, the borrower contacted me to request the draft Market Value figure and a copy of the draft valuation report. I advised the borrower that, in this instance, the lender was my client and therefore I was unable to share any information without their consent. I advised the borrower to discuss the report with my client once the instruction had been completed, demonstrating integrity and trust in line with Rule 1 of the RICS Rules of Conduct. I also advised my client of this request so they could liaise with the borrower directly.

Answer 32

Question 1 – do you have sufficient facts on the issue? Question 2 – is it legal? Question 3 – is it in line with RICS Rules of Conduct? Question 4 – Have you consulted with appropriate people to make an informed decision? Question 5 – Do you have clear reasoning in reaching your decision? Question 6 – is your decision informed? Question 7 – Would you be content for your actions to be made public – in the newspapers or internet?

Ethics Flashcards

(57 cards)