RICS Core Material

Question 1

What are the levels of the RICS core materials?

Answer 1

1. International Standards - eg RICS Valuation Global Standards
2. Professional Statements - eg Conflicts of Interest, Global 2017/ Property Measurement 2018
3. Practice Statements - eg Surveyors Acting as an Expert Witness.
4. Guidance Notes - eg Comparable Evidence in Real Estate Valuation
5. Codes of Practice - eg Rating Code of Practice (Mandatory Professional Statement)

Question 2

Fee negotiations - what should you avoid?

Answer 2

Aggressive Fee undercutting
Avoid price fixing
Collusion

Question 3

What is the process when producing Terms of Engagement?

Answer 3

CIT
check Competence
check no conflicts of Interest
confirm Terms of engagement in writing before starting instruction

Question 4

Which Act allows a cooling off period of 14 days from the date of engagement?

Answer 4

The Consumers Rights Act 2015

Question 5

Why might you decline an instruction?

Answer 5

Not competent
Proposed client with not sign Terms of E or complete AML Checks
Conflict of Interest or Personal Conflict

Question 6

What would you normally include in a valuation terms of engagement?

Answer 6

If it was a red book valuation I would follow VPS 1.

Question 7

What would you normally include in a rating terms of engagement?

Answer 7

A letter to a potential client which includes
Our services
The term
The fee
Terms of appointment -
Mandatory declaration by Ratepayers - in Rating Code of Practice

Question 8

What is a conflict of interest? An example?

Answer 8

Where a member or firm’s independence and impartiality is threatened due to a conflict. eg

• Party conflict - acting in the interests of a client conflicts with a duty owed to another client
• Personal interest - financial or relation
• Commercial Relationship - different service offerings
• Acting on both sides of the transaction

Question 9

What does the Conflict of Interest 2017 state?

Answer 9

a member must not advise or represent a client which would involve a conflict or significant risk of a conflict, other than those who have provided informed consent.

Question 10

What is informed consent?

Answer 10

When a party or individual who is affected by a conflict acknowledges the existence but agrees to instruct a RICS regulated firm.

Question 11

Three types of conflicts of interest?

Answer 11

Party Conflict - same or related instruction for two parties.
Own Interest Conflict
Confidential Information Conflict

Question 12

What are the steps to handle a conflict?

Answer 12

1. Conflict Avoidance - Consider transparency or full impartiality. Decide to accept or not
2. Written Advice to both parties - Disclose the conflict to both parties, be clear as you can, acquire informed consent from both parties.
3. Conflict Management - Set up an information barrier with the provisions agreed by both parties.

Question 13

Investment agency conflicts - key points?

Answer 13

Can act for both sides of the transaction

must state if you are representing on a exclusive basis or not

Question 14

What’s incremental advice

Answer 14

When an agent is approached to offer advice to an alternative party. eg the seller to value the building if you are acting for the buyer. Need informed consent and information barrier.

Question 15

Example of when a conflict of interest has been managed at your firm?

Answer 15

CHECK? Within the last year we completed a red book valuation for an office property. We then received an instruction from a lender to complete a loan security valuation. We disclosed our previous involvement with the borrower to the lender and acquire informed consent in writing from the lender that they were happy for us to proceed.

Question 16

How would you deal with a compliant?

Answer 16

1. inform my line manager. Assess the seriousness of the compliant.
2. Follow my firms complaints handling procedure

Question 17

What is your firms complaints handling procedure?

Answer 17

1. Details of the complaint made in writing to Usha De Sousa - Legal Counsel
2. Within 7 days, AY will reply to confirm our understanding of the circumstances leading to the complaint.
3. Within 28 days the person dealing with the complaint with inform the relevant person of results of the investigation/any action has been taken.
4. Still dissatisfied - attempt to resolve through negotiations.
5. Still not resolved - referral to arbitration produce for surveying disputes or effective dispute resolution.

Question 18

What is negligence? How can it occur?

Answer 18

It when a usual duty of care to clients and third parties is breached and there is a loss. A claim for damages can arise.

Question 19

Under the Limitation Act 1980 - what are some of the current limitation periods for negligence?

Answer 19

Contract law - 6 years from the date of negligence
Tort law - 6 years from the date the claimant suffered the loss.
Where the loss was not apparent at the time of the tort there is a period of 3 years from the date on which loss could reasonably have been discovered to 15 years long stop from the negligent act.

Question 20

What’s the difference between Contact and Tort?

Answer 20

Contract is right and obligations created by an act of agreement through a contract.
Tort - right and obligations created through common law, eg negligence

Question 21

How can negligence be avoided or reduced?

Answer 21

Clearly understand the clients objectives
Ensuring your competence
Undertake work in accordance with RICS standards and guidance notes.

Question 22

What is Professional Indemnity Insurance?

Answer 22

Insurance to protect clients, surveyors and thirds parties against negligence claims when there is a duty of care breach and a claim for damages arises.
PII is done on a claims made basis

Question 23

Which insurance company would you choose?

Answer 23

RICS have outlined an assigned risk pool of insurers

Question 24

What are the current minimum PII requirements of a firm?

Answer 24

Based on a firms turnover in the preceding year and its minimum level of indemnity required for each and every claim
>£100k = £250k
£100k to £200k = £500k
£200k = £1 mill
A new business must estimate their turnover

Question 25

What is the maximum level of uninsured excess required by the RICS?

Answer 25

Liability up to £500k = Greater of 2.5% of the sum insured or £10k Liability of over £500k = 2.5% of the sum insured

Question 26

A claim on a valuation, how long can someone claim till?

Answer 26

Three years beginning on the date on which the claimant learned about their entitlement to bring the claim. There is a long stop period of 15 years from the date of valuation of the report.

Question 27

What if a firm ceases to exist?

Answer 27

RICS requires firms to buy "Run off" PII to cover this.

Question 28

What is a liability cap for valuation reports? | Whats yours?

Answer 28

its a limit agreed in the contractual agreement that a client can only claim damages up to a certain amount. Standard is up to £5million. Can be more

Question 29

Why is handling clients money important?

Answer 29

Well the importance is underpinned through the Rules of Conduct for firms which requires a firm to preserve the security of clients money in the course of practice or business. Important as client money needs to be safe Only used for appropriate purposes

Question 30

What are the six main areas of good practice as set out by the RICS in their professional statement regarding client money?

Answer 30

1. Holding Money - Correctly 2. Providing information to clients - correct fee basis/invoice amount 3. Receipts of client money - paid into the correct account 4. Payments from client accounts - ensure payment is returned swiftly 5. Accounting records and controls - keep records 6. Compliance - comply with AML, rules and regs

Question 31

If you were to set up your own firm what would you need to do?

Answer 31

Need two main areas RICS and Statutory Compliance RICS Inform the RICS Register with RICS for regulation by the Regulatory Board Set up PII and send details to RICS Setup a complaints handling procedure/complaints log Appoint complaints handling officer Register for RICS Valuer Registration Scheme Logo kit from RICS Ensure CPD log Succession Planning ``` Statutory Disclose business name Bribery Act 2010 compliance Health and Safety Compliance Appoints a AML reporting officer Register for data protection Inform HMRC Discrimination Compliance under equality act Employment Law Compliance - National Minimum Wage ```

Question 32

What should you do when closing a practice?

Answer 32

Inform the RICS Inform Clients at the earliest opportunity Return Monies Ensure you have "run-off" PII Retain a copy of client files for a minimum of 6 years

Question 33

What is your firms AY Conflict of Interest Policy?

Answer 33

To take all reasonable steps to identify and prevent conflicts. How to set up an information barrier Best practices to acquire informed consent Record Keeping Monitoring

Question 34

How would you conduct a conflict of interest check?

Answer 34

Run a report off the CRM database | Check for types of conflict - Party Conflict, Commercial Relationships.