Negligence, Complaints Handling, Dispute Resolution and PII

What is negligence?

Failure to carry out work to the required standard of reasonable care and skill resulting in breach of contract and potential loss or damages

What is professional negligence?

When a surveyor fails to perform duties with reasonable care and skill or breaches duty of care

How might negligence arise?

Failure to comply with contract or failure to manage client expectations

How can negligence be avoided?

Clearly understand client objectives and confirm written terms of engagement

What competency requirement helps avoid negligence?

Ensure you are competent to undertake the work

What professional guidance should work follow to avoid negligence?

Carry out work in accordance with professional standards and practice information

What documentation practice helps avoid negligence?

Keep detailed notes and records and take photographs

What knowledge requirement helps prevent negligence?

Keep up to date with market knowledge

What contractual method can limit negligence exposure?

Apply a liability cap

What RICS guidance recommends limiting liability caps?

RICS Guidance Note on Risk Liability and Insurance 2021

What is the limitation period for negligence claims in contract?

Six years from the date of the negligent act

What is the limitation period for negligence claims in tort?

Six years from the date the loss is suffered

What legislation extends the limitation period if material facts are unknown?

Section 14A of the Limitation Act

What extension can Section 14A provide?

Three additional years if the claimant was unaware of material facts

What is the long stop limitation period for negligence?

15 years from the negligent act

What must firms do when a complaint is received?

Notify Professional Indemnity Insurers as soon as possible

What must Terms of Engagement state regarding complaints?

They must confirm the firm operates a Complaints Handling Procedure

When must details of the Complaints Handling Procedure be provided?

At the same time as the Terms of Business

What independent mechanism must be included in the CHP?

A RICS approved Alternative Dispute Resolution mechanism

What records must firms maintain regarding complaints?

A complaints log showing details progress and outcomes

What is the first stage of complaints handling?

Internal complaint resolution

What must be provided to the client at the start of instruction regarding complaints?

A copy of the Complaints Handling Procedure

Who is responsible for handling complaints internally?

The appointed Complaints Handling Officer

How must a complaint initially be submitted?

In writing

Within how many days should a complaint be acknowledged or registered?

Within 7 days

Within how many days should the complaint be investigated?

Within 28 days

What characteristics should internal complaint handling demonstrate?

Quick clear and transparent process

What happens if the complaint is not resolved internally?

It progresses to an independent redress scheme

What must the complainant be told regarding redress schemes?

The name of the independent redress scheme

Give an example of an independent redress scheme.

RICS Dispute Resolution Service

When will RICS intervene in complaints?

If a member fails to respond to a complaint or fails to provide an ADR mechanism

What additional CHP requirement applies to sole practitioners?

They must appoint another firm as Complaints Handling Officer

What is dispute resolution?

A procedure used to resolve conflict between parties

What is Alternative Dispute Resolution?

Dispute resolution methods outside of court litigation

What is the purpose of ADR?

To resolve disputes without going to court

Name three forms of ADR.

Mediation Independent Expert Arbitration

What is negotiation in dispute resolution?

Direct problem solving between the parties involved

What is mediation?

A neutral mediator facilitating discussions to help parties reach agreement

Is mediation binding?

No the decision is not binding

What does without prejudice mean in mediation?

Statements cannot be used later in court proceedings

What is an Independent Expert?

A specialist appointed by both parties to determine the dispute

Can an Independent Expert use their own knowledge or evidence?

Yes they can use their own opinion or evidence

Are parties bound by an Independent Expert decision?

Yes

Can an Independent Expert be sued for negligence?

Yes

What is arbitration?

A formal dispute resolution process governed by the Arbitration Act 1996

Who acts as decision maker in arbitration?

An arbitrator with specialist knowledge

Can arbitrators hold hearings?

Yes or consider written representations

Can an arbitrator introduce their own evidence?

No they can only rely on submitted evidence

Can arbitrators be sued for negligence?

No

How can arbitration decisions be challenged?

Appeal to the Court of Appeal on a point of law

What are advantages of arbitration?

Fast cost effective and confidential

What is PACT?

Professional Arbitration on Court Terms

What disputes commonly use PACT?

Lease renewal disputes

Which legislation relates to PACT disputes?

Landlord and Tenant Act 1954

What is the purpose of PACT?

Alternative to County Court proceedings for lease renewal disputes

Who introduced PACT?

Joint initiative between RICS and the Law Society

Can a dispute resolver act as Independent Expert or Arbitrator under PACT?

Yes

What is the main benefit of PACT?

Fast confidential and cost effective dispute resolution

What is the difference between an Independent Expert and Arbitrator regarding legislation?

Independent Expert not governed by legislation while arbitrator is governed by Arbitration Act 1996

Who can use their own knowledge in decision making?

Independent Expert

Who can only rely on submitted evidence?

Arbitrator

How are costs determined for Independent Expert?

Usually guided by lease provisions

Who has discretion on costs?

Arbitrator

Do Independent Experts have discovery powers?

No

Do Arbitrators have discovery powers?

Yes

Can an Independent Expert be sued?

Yes for negligence

Can an Arbitrator be sued?

No except appeal on point of law

What RICS guidance relates to dispute resolution roles?

RICS Practice Statement and Guidance for Surveyors Acting as Expert Witness 2024

What RICS guidance relates to arbitrators?

RICS Guidance for Surveyors Acting as Arbitrators 2013

What RICS guidance relates to advocates?

RICS Guidance for Surveyors Acting as Advocates 2017

What RICS guidance relates to independent experts?

RICS Guidance for Surveyors Acting as Independent Experts 2014

What is the purpose of Professional Indemnity Insurance?

To protect clients surveyors and third parties against negligence claims

Why is PII mandatory?

To cover financial losses arising from professional negligence

Who must underwrite PII policies?

An RICS approved insurer

When must insurers be informed about claims?

When a potential claim arises

What RICS document sets out PII requirements?

RICS Professional Indemnity Insurance Requirements 2024

What annual submission must be sent to RICS?

PII certificate as part of the annual return

What support service does RICS offer regarding claims?

RICS Member Support Service

What factors affect PII cover levels?

Firm turnover and risk profile

How should new businesses determine PII cover?

Estimate initial risk and adjust later

How does PII operate?

On a claims made basis

Is PII required for pro bono work?

Yes

What is the minimum PII cover for firms with turnover under £100k?

£250000 per claim

What is the minimum PII cover for firms with turnover £100k to £200k?

£500000 per claim

What is the minimum PII cover for firms with turnover over £200k?

£1 million per claim

What is the maximum insured excess for firms with turnover up to £10 million?

Greater of 2.5 percent of the sum insured or £10000

Is there a maximum excess limit for firms with turnover above £10 million?

No fixed limit

What is the run off cover requirement for consumer claims?

Minimum £1 million aggregate cover for six years

What is the run off cover requirement for commercial claims?

Adequate cover for minimum six years

What is the purpose of client money protection scheme?

Insurance protection if a regulated firm cannot repay client money

Who operates the client money protection scheme?

RICS

What two areas does the client money protection scheme cover?

Surveying services and residential agency