Ethics etc. Flashcards

Question

RICS Client Money Protection (CMP) requirements

Answer 1

RICS requires firms to: - Maintain one or more Client Money Accounts - Clearly designate the account as a client account - Ensure the account is separate from firm funds Firms must: - Keep accounting records showing all dealings with client money - Demonstrate at all times that client monies are fully accounted for RICS also notes firms must conform to the Professional Statement on Client Money Handling, which includes specific information that must be provided to clients.

Answer 2

o Inform the RICS o Return client money o Inform insurers (PII) o Maintain run-off cover, typically for a minimum of 6 years o Note that under Tort and Latent Damage Act, claims can occur up to 15 years o Return client files for run off period

Answer 3

1. Surveying Safely (Health & Safety Guidance) - Type: Professional Standard (mandatory) - Sets out requirements for risk assessments, lone working, site risks, asbestos, CDM interfaces, and safety management. 2. Conflicts of Interest (Global Professional Standard) Type: Professional Standard (mandatory) - Building surveyors must identify, manage and record actual or potential conflicts. 3. Countering Financial Crime (2025 Update) - Type: Professional Standard (mandatory) Building surveyors must comply with: - Anti‑bribery rules - AML obligations - Fraud and sanctions compliance

Answer 4

1. Actual - a current situation whereby your duties to one client conflict with another or your own interests conflict with your clients. 2. Potential - could reasonably arrise in the future 3. Pecevied - a 3rd party could believe that your ability to act impartially might be compromised.

Answer 5

A. Party Conflict - Duties owed to multiple clients whose interests differ. B. Own‑Interest Conflict - A surveyor’s personal or corporate interest conflicts with their client’s interest. C. Confidential Information Conflict - When a duty to keep one client’s information confidential conflicts with the duty to disclose information to another.

Answer 6

- To protect the company and its employees from legal and reputational risks - Because disclosure helps identify and manage risk exposure (identify > manage > mitigate) - Because acting with transparency and integrity builds trust and reflects our ethical values - Our COC stipulates that we must avoid all COI and completely and truthfully disclose them all in a timely manner.

Answer 7

1. Safety 2. Integrity 3. Collaboration 4. Innovation 5. Excellence

Answer 8

RICS disciplinary action begins with a complaint or regulatory review, followed by triage (preliminary assessment) and a formal investigation. Minor cases can result in a Regulatory Compliance Order if the member admits the allegation: - May include fines, cautions, training requirements, or conditions on membership. Avoids the need for a formal hearing. More serious or disputed cases are referred either to a 1) Single Member decision (private hearing) 2) or to a full Disciplinary Panel hearing (full hearing, public) (the Head of Regulation decides). - panel composed of 3 tribunal members, at least one chartered surveoyr & one lay member - Panels determine facts, liability and impose sanctions ranging from cautions to expulsion. - Appeals may be made to an Appeal Panel under the Regulatory Tribunal Rules

Answer 9

The RICS Head of Regulation manages the disciplinary and regulatory regime. They decide whether complaints should lead to disciplinary action, impose Regulatory Compliance Orders for less serious admitted cases, or refer cases to the independent Regulatory Tribunal for Single Member (private) or full Panel (public) hearings. An RCO can include: - A caution - A fine - Conditions placed on membership - Training or supervision requirements - They can issue administrative fines or interim measures and ensure decisions are transparent and taken in the public interest.

Answer 10

RICS treats bribery and improper influence as serious misconduct. Surveyors must act ethically, transparently and in a manner that avoids any perception of undue influence. The RICS standard requires regulated firms to have: - Clear anti‑bribery and anti‑corruption policies - Gifts & hospitality procedures - Staff training to identify risks - Mechanisms to report suspicious behaviour - Controls to prevent the misuse of gifts and hospitality Gifts, hospitality and promotional activity is generally acceptable and considered a part of doing business, however, RICS requires that members must not accept or offer gifts or hospitality if: - It could influence their professional decisions - It could appear to influence their decisions - It creates a conflict of interest - It breaches anti‑bribery laws (e.g., Bribery Act 2010)

Answer 11

Gifts, hospitality and promotional activity is generally acceptable and considered a part of doing business, however, RICS requires that members must not accept or offer gifts or hospitality if: - It could influence their professional decisions - It could appear to influence their decisions - It creates a conflict of interest - It breaches anti‑bribery laws (e.g., Bribery Act 2010) Gifts and Hospitality Must Be Reasonable, Proportionate, and Transparent. Meaning: - Gifts/hospitality are token or modest - There is a legitimate business purpose - Anything significant or unusual must be declared, recorded, and justified -Firms maintain policies and registers to track offers and acceptance

Answer 12

The Bribery Act 2010 is the UK’s primary anti‑corruption law. Under the Act, a bribe is any financial or other advantage intended to: - Induce improper performance - Reward improper performance - Influence a foreign public official Act Prohibits 4 key offences: 1. Offering, promising or giving a bribe to gain a business advantage (active bribery) 2. Requesting, receiving or accepting a bribe to gain a business advantage (passive bribery) 3. Bribing a public official 4. Not preventing/ reporting bribes or implementing systems and mitigate bribes (corporate offence) The Act applies worldwide, meaning bribery does not need to occur in the UK to be prosecuted if: - The offender is a British citizen or UK resident - The organisation carries on business in the UK - facilitation payments (small unofficial payments to speed up routine actions) are illegal under UK law. Individuals may face: Up to 10 years’ imprisonment, Unlimited fines Companies may face: Unlimited fines, Disqualification of directors, Serious reputational damage

Answer 13

The Bribery Act 2010 does not ban gifts or hospitality, nor does it set financial limits. Instead, it criminalises gifts or hospitality that are intended to influence improper performance or secure business advantage. - Acceptable hospitality must be reasonable, proportionate, transparent and have a legitimate business purpose. - Organisations must have adequate procedures — including gifts & hospitality policies — to prevent bribery

Answer 14

the core anti‑money laundering (AML) rules in the UK. * Money Laundering means exchanging money or assets that were obtained criminally for other money/assets that are ‘clean’. Also means money to fund terrorism * Money laundering regulations apply to all regulated sectors Requirements: - Every regulated firm must prepare a written risk assessment identifying how the business may be used for money laundering or terrorist financing. o Undertake customer due diligence oKeep records (for 5 yrs from when relationship ends) oMaintain internal procedures to identify and prevent laundering oReport suspicious activity (SAR= suspicious activity report) - Internally to a nominated money laundering officer - Externally – report to serious organised crime agency (SOCA) o Train employees Breaches may also lead to criminal liability under the Proceeds of Crime Act 2002.

Answer 15

Applies to everyone and facilitates Money Laundering Regulations making it illegal to be involved in concealing or transferring criminal property/assets.

Answer 16

Makes it an offence if you have reasonable cause to suspect to be involved in financial activity involved in financing terrorism o Penalty up to 14 years

Answer 17

Negligence is a failure to exercise the standard of skill and care that a reasonably competent professional in the same field would have exercised. - If it is breached and there is a loss, then a claim for damages arises. To prove negligence in English law, all three elements must be satisfied: 1. Duty of Care - The surveyor must owe the claimant a duty of care. - This duty arises automatically when you provide professional services or advice. 2. Breach of Duty - The surveyor must have fallen below the standard of a reasonably competent surveyor. 3. Loss Caused by Breach The claimant must prove: Actual loss or damage, AND That this loss was caused by the breach, AND The loss was reasonably foreseeable.

Answer 18

1) RICS has introduced its first-ever global standard on responsible use of AI in surveying, effective 9 March 2026. 2) RICS is piloting a new firm‑level Valuation Compliance Framework (VCF) aimed at improving consistency and quality in valuation practice. 3) RICS has partnered with the Chartered Institution of Civil Engineering Surveyors (CICES) to launch a new chartered designation for civil engineering surveyors.

Answer 19

Covered under the RICS Client Money Handling Professional Standard 2019: RICS requires client money to be held in a designated client account with a regulated bank, kept separate from firm funds, properly recorded, promptly banked, regularly reconciled (at least monthly), and protected through a Client Money Protection scheme, with a written CMHP, strong internal controls and annual reporting to ensure transparency and safeguard clients. specifics: - account name must contain 'client', bank must acknowledge in writing that the money is held in trust. - firms must keep individual client ledgers, cashbook, audit trails. - records retained for at least 6 yrs. - payment should be supported by written instruction & made by client or nominated recipient only. - overdrawn accounts are prohibitted & must be corrected immediately. - firms must have written client money handling procedure.

Answer 20

you should repeat this back to the client in writing.

Answer 21

The Levitt Report (2021), Author: Alison Levitt QC, Commissioned by RICS Governing Council, To investigate the 2018–19 governance scandal involving concerns raised by 4 non‑exec members of the RICS Audit Committee. RICS leadership failed to act on an internal report highlighting financial risks. When Audit Committee members pushed for transparency, they were dismissed. - The Levitt Report exposed serious governance failings at RICS, including poor leadership, lack of transparency, a culture of defensiveness and unjustified dismissal of Audit Committee members. - The Levitt Report triggered a loss of member trust. - The Bichard Review (2022) Author: Lord Michael Bichard, then set out a comprehensive institutional reform programme to rebuild trust, strengthen governance, return control to members and refocus RICS on its public‑interest purpose. key recommendations: - a member-led institution - clearer governance structure (reformed Governing Council struture, president became a formal member of the GC in 2023) - refocus on public interest - cultural change (to improve trust, transparency, accountability) - regular independent reviews ( full every 5yrs, external performance evaluations every 3yrs)

Answer 22

The Bichard Review (2022) Author: Lord Michael Bichard, Commissioned by RICS Governing Council because the Levitt Report (2021) showed that RICS governance was not fit for purpose and triggered a loss of member trust. Set out a comprehensive institutional reform programme to rebuild trust, strengthen governance, return control to members and refocus RICS on its public‑interest purpose. key recommendations: - a member-led institution - clearer governance structure (reformed Governing Council struture, president became a formal member of the GC in 2023) - refocus on public interest - cultural change (to improve trust, transparency, accountability) - regular independent reviews ( full every 5yrs, external performance evaluations every 3yrs)

Answer 23

A Regulatory Compliance Order is a binding direction issued by RICS requiring a member or firm to take specific steps to remedy a breach of RICS rules, standards or regulatory requirements. It is a proportionate enforcement tool used before disciplinary action, and failure to comply can lead to escalation (disciplinary action, regulatory tribunal referral, fines or sanctions, removal of registration, expulsion from membership). The order will include: - Specific actions - Deadlines - Evidence requirements Issued by RICS Regulation—either by regulatory staff under delegated authority (Lower-level breaches) or by the Regulatory Tribunal Panel (more serious or escalated cases).

Answer 24

The Annual Return is a mandatory yearly submission that every RICS‑regulated firm must complete, confirming key information about its governance, activities, professional standards compliance, and regulatory obligations: - confirming a firm’s PII, client money arrangements, complaints procedure, areas of practice and regulatory compliance. - It enables RICS to monitor risk and ensure firms meet their professional obligations, and failure to submit can lead to regulatory action. 1. Firm details: Legal structure, Ownership, Office locations, Key personnel 2. Areas of practice: professional services, any regulated activities (e.g., valuations) 3. PII: Insurer details, Policy limits and excess, Run‑off cover if applicable 4. Client Money Handling: Client account details, Compliance with Professional Standard, Whether an accountant’s report is required 5. Complaints Handling: Confirmation of a compliant Complaints Handling Procedure (CHP), Details of the Alternative Dispute Resolution (ADR) provider 6. Staff and competence: Number of RICS members, Number of trainees, Confirmation that staff meet competency and CPD requirements 7. Regulatory compliance: Any significant issues, breaches, or changes, Confirmation that the firm continues to meet RICS Rules of Conduct

Answer 25

A step‑by‑step framework (thinking tool, not a rulebook) that guides RICS members through ethical decision‑making by helping them identify issues, consider options, assess risks, and choose an action that aligns with RICS ethical principles and the public interest. Six key steps: 1) identify the issue - COI, confidentiality, risk to public? 2) check laws, rules and standards If it breaches law or RICS rules → stop and escalate. 3) consider the stakeholders - who is affected and how? 4) evaluate your options 5) seek advice if needed 6) make a decision and record it “I followed the RICS Ethics Decision Tree by identifying the issue, checking the Rules of Conduct, considering stakeholders, evaluating options, seeking senior advice, and choosing the action that best protected the public interest.”

Ethics etc. Flashcards

(51 cards)