Ethics Level 3 Flashcards

Question

What is the difference between a breach of a duty of care and an honest mistake?

Answer 1

The key distinction between breach of duty of care and genuine mistake lies in the legal standard of reasonableness and whether the professional acted within accepted standards of competence. Breach of Duty of Care A breach occurs when a professional fails to meet the standard of care that a reasonably competent practitioner would demonstrate in similar circumstances. This involves falling below the accepted professional standard, regardless of intent. The legal test focuses on whether the actions (or inactions) were reasonable given the professional's expertise, the information available, and established industry practices. Key characteristics of breach include failing to follow established procedures, ignoring obvious warning signs, inadequate investigation or analysis, not applying relevant standards or regulations, or acting outside one's area of competence without appropriate consultation. Genuine Mistake A genuine mistake occurs when a professional acts reasonably and competently according to accepted standards, but an error still occurs due to factors like limitations in available information, reasonable interpretation of ambiguous data, or unforeseeable circumstances. The crucial element is that the professional's approach and methodology were sound and met professional standards at the time. The Reasonableness Test Courts apply an objective standard asking whether a reasonably competent professional in the same field would have acted similarly in the same circumstances with the same information available. This test considers the professional's level of expertise, the complexity of the situation, time constraints, and available resources. Practical Implications A surveyor who misses structural defects because they failed to inspect accessible areas would likely face breach of duty claims. However, if defects were genuinely concealed and the surveyor followed proper inspection protocols, this would more likely constitute a genuine mistake within acceptable professional practice. The distinction significantly impacts legal liability, professional insurance coverage, and regulatory consequences. Breaches may result in negligence claims, professional sanctions, and insurance exclusions, while genuine mistakes within competent practice typically receive different treatment under professional indemnity policies and regulatory frameworks. Documentation of proper methodology, adherence to professional standards, and reasonable decision-making processes becomes crucial in distinguishing between these scenarios.

Answer 2

* The only circumstance in which it is OK to make a facilitation payment is when you are under duress * ie there is a real and present risk or danger to "life, limb or liberty". * If you or your companions are under immediate physical threat * You should put safety first, make the payment and report the matter immediately, * Or as soon as is practicable to your manager or your Ethics/Compliance/Legal contact.

Answer 3

* I would be extremely uncomfortable accepting the prize in this scenario * The prize is of a significant value and could be interpreted as a bribe * Furthermore due to working on a project with the Main Contractor at the time of this scenario, accepting the prize would have been highly inappropriate and could be interpreted as having an affect on my business conduct during the project * I would respectfully decline the prize and suggest that this is made as a charitable donation to a charity of the Main Contractor’s choice * I am aware that bribes are commonly distributed as random prizes and due to the seriousness of this incident I would report this to my line manager

Answer 4

* In the first instance I would declare this hospitality on my companies gifts and hospitality register * Assuming the invite was approved and I was authorised to attend. * I would need to decline the invite due to the Project Team dropping out * Since they won't be present, this will not be a genuine business event. * Consequently I would decline this hospitality at the Project Team's expense.

Answer 5

* Unfair competition * Not treating others with respect * Not acting with integrity * Unsustainable to undertake business in this manner * Avoid Dutch auctions as devaluing the profession * You would need to reduce scope to achieve same margin, would this provide high standard of service * This could be interpreted as a bribe

Answer 6

* This lunch had a legitimate business purpose, so it's fine to accept the hospitality * But the client should have considered how a £200 bill for a lunch could be perceived and have chosen a more modest restaurant * Given the size of the bill, it must be declared on the Hospitality Register and I would make my line manager aware immediately afterwards * I would offer to reciprocate but ensure this is carried out in a more modest manner as the lavishness of the restaurant could be interpreted as inappropriate and disproportionate

Answer 7

* Court case in 2001 * Babb had carried out a valuation as an employee of a company for a house purchased by Merrett * Valuation later found to be negligent * The original company no longer existed * Court ruled Merrett could pursue the individual – Babb – for the losses * Big shock in the industry

Answer 8

* Considered if a professional employer was vulnerable to claims brought directly against them for advice given on behalf of their employers * Highlights importance of run off cover * Professional individuals and firms must ensure that run off cover is in place after they leave their firm’s employment or a firm ceases trading * Individuals should ensure that their ex company keeps up this cover on their behalf

Answer 9

* Must be made on an ‘each and every’ claim basis * Gives min wording * Sets out minimum levels of indemnity * Sets out maximum levels of uninsured excess * Run off cover must be in place for at least 6 years * Should include cover for past and present employees, directors and partners

Answer 10

The professional / firm is liable for the difference – in assets etc

Answer 11

* Keep full and detailed records of meetings, conversations etc * Record recommendations and advice given * Use proper letters of engagement, scope of services and terms of engagement * Don’t advise on a specialism outside your field of experience * Use RICS guidelines * Avoid poor management and excessive workloads

Answer 12

* Although this client manager is asking for a steep discount, it's more a matter of him trying to renegotiate contract terms with us. So this can't be classed as a bribe. * I would advise that we would consider offering the saving but the level of service and resource would need to be reviewed inline with the reduction. * Were the original fees considered as good value and a fair and reasonable sum / is this devaluing the profession * It may not be sustainable and in the clients interests if I cannot provide a high standard of service * A fee profile and resource schedule would need to be prepared to determine if the saving and adequate level of service can be offered * May need to decline if unable to offer required service

Answer 13

* Limit of liability is used to place a cap on the level of exposure a business signs up to * In the aggregate means as a maximum after many different claims * If cover is for each and every claim, it is that level for each claim * Anything not covered by PI insurance can be gone after so assets could be at risk * As such, companies may try and place a limit of exposure

Answer 14

* I could not offer advice on my own without PI insurance. * If I did have my own PI insurance I would ensure that the information given was subject to the thorough checking process given to all information prior to issue regardless of who it was to. * Inform them they can contact you during working hours to discuss T&Cs of appointment. * If you are not comfortable acting for them, advise them to use the RICS “find a surveyor scheme” * Adhere to rules of conduct

Answer 15

* The client may not be soliciting a bribe here * Nevertheless, as a tender is in progress, any sponsorship made could be perceived as an undue Influence and a bribe * In the first instance you would explain this to the client and decline to make a donation * To ensure transparency, you would also report the request to your line manager. * Depending on advise from Senior Management it may be appropriate to escalate this to our firms whistleblowing policy

Answer 16

* Going to what sounds like a lavish lunch paid for by a bidder in the middle of a tender process is against Company policy and could be an offence under the UK Bribery Act. * If this were the first time, it would be OK just to decline and explain that such an invitation is inappropriate. * However, this supplier is persistent, and there is a red flag in that he wants to discuss things that he cannot put in writing, so we should report this infringement. * Unfair competition * Not acting with integrity or respectful to fellow contractors

Answer 17

* This was a thorough internal and external review of the regulation of RICS * A response to members’ general dissatisfaction with aspects of RICS regulation

Answer 18

Proportionality - meaning RICS should only intervene when necessary and any remedies imposed should be proportionate. For example late payment of RICS fees by a member may be dealt with by a verbal warning whereas continued failure to pay fees would result in expulsion. Accountability - regulators must be able to justify their actions under public scrutiny to promote complete fairness – Clearly explain why decisions have been taken Consistency – complete fair and level playing field treat everybody the same Targeting – Focussed on the problem and minimise side effects from a scattergun approach, also be unambiguous on any regulations that are introduced Transparent – keep regulations simply and user friendly, to be effectively communicated- assist back in line with regulation rather than a heavy handed approach

Answer 19

* I do not lower my level of services. * I investigate why all the fees have been spent. * If it is an error in our fee calculation, I put in place measures to ensure that it does not happen again. * If it is because we have provided additional services I give all the details to my director to prepare a claim for additional fees. * I ensure that I keep track of fee spending and of all works not included in our scope of services.

Answer 20

* CPD * Handling clients’ money * PI insurance requirements * Complaints handling procedures * Maintaining professional and ethical standards * Procurement & Tendering * Cashflow Forecasting

Answer 21

* To provide a framework that we can all work to and so the client knows he is getting a set level of service. * As well as being an important tool for the Institution, the Rules of Conduct are also a useful professional guide for individual Institution members.

Answer 22

* Set up a separate client account this is properly named and clearly identifiable. * Provide the client with a statement of account. * Inform and agree drawdowns. * Prior to drawing monies send a statement of how much is to be withdrawn and what services and associated fees are made up of, send updated statements of account * Once complete, show a final statement, ensure everything is complete and transparent.

Answer 23

* It is called annual return and done on-line. Failure to do so leads to a fixed penalty. * Type of business and staffing * Nature of clients * Training provision * Complaints handling procedures details and records * PI insurance details * Whether the firm holds clients’ money

Ethics Level 3 Flashcards

(47 cards)