ETHICS – FIRMS and TERMS OF ENGAGEMENT / CONFLICTS

What must you do when starting a new RICS regulated firm?

Inform RICS of the new practice by completing a firm details form

What must a new firm do regarding RICS regulation?

Register with RICS for regulation of the firm

What insurance must be arranged when starting a firm?

Professional Indemnity Insurance and send the details to RICS

What procedures must be set up regarding client money when starting a firm?

Procedures for handling clients money must be established

What branding requirement must an RICS regulated firm follow?

Display the RICS logo

What complaints procedure must a firm have?

A complaints handling procedure and a complaints log

Who must be appointed for complaints handling?

A complaints handling officer or external surveyor if sole practitioner

What contingency planning is required for a sole practitioner?

A contingency plan must be in place

What information must be provided to RICS for firm registration?

Type of business and staffing details

What personnel must be identified to RICS when registering a firm?

Name of the Responsible Principal

What regulated activities must be declared to RICS when registering a firm?

Statutory regulated activities such as financial services

What business information must be declared to RICS when registering?

Nature of business and clients

What complaints information must be submitted to RICS for registration?

Complaints handling procedure details and records

What insurance information must be provided during registration?

Professional indemnity insurance details

What financial handling information must be provided to RICS?

Whether the firm holds client money

What is a Responsible Principal?

A nominated person ensuring all reasonable steps are taken to comply with RICS regulation

What must be done if closing an RICS regulated firm?

Inform RICS of retirement or closure

What must happen to clients when a firm closes?

Clients must be informed and handover arrangements made

What must happen to client money when closing a firm?

Return any client money to their accounts

What insurance requirement exists after closing a firm?

Professional indemnity run-off cover for a minimum of 6 years

How long must client files be retained after closing a firm?

Minimum 6 years

What must be done regarding company registration when starting a practice?

Disclose business name and register through the government website

What must be done with HMRC when starting a business?

Register for VAT and tax

What is the VAT registration threshold turnover?

£85

What compliance officer must be appointed when starting a practice?

Money Laundering Reporting Officer

What registration is required regarding personal data?

Register for data protection

What other regulatory compliance may be required when starting a practice?

Financial services compliance

What insurance is required for employees?

Employer’s liability insurance

What insurance covers third party claims?

Public liability insurance

When must a firm be regulated by RICS according to Rules for the Regulation of Firms 2022?

If 50 percent of principals are RICS members and the firm provides surveying services

When can a firm apply for RICS regulation voluntarily?

If 25 percent of principals are RICS members

What is an example of recognising professional limitation?

Seeking guidance from a senior RICS qualified colleague

Why might you carry out inspections with a colleague?

To ensure nothing is missed

What are the three levels of RICS disciplinary action?

Head of Regulation action

Who is the Head of Regulation mentioned in the notes?

Nigel Clarke

What is the first stage of RICS disciplinary procedures?

Formal investigation by the Head of Regulation

What actions can the Head of Regulation take initially?

Serve a fixed penalty notice

What other action can the Head of Regulation take?

Issue a regulatory compliance order

What tribunal option can the Head of Regulation choose?

Refer the matter to a single member of the regulatory tribunal

What escalation option can the Head of Regulation use?

Refer the matter directly to a disciplinary panel

What is a fixed penalty notice?

A fine or caution

When is a fixed penalty notice typically used?

When rules regarding supply of information are breached

What is a Regulatory Compliance Order?

A written document requiring actions within a specified period and agreement to pay a fine

What breaches usually trigger a Regulatory Compliance Order?

Low level breaches easily corrected

What can happen if CPD requirements are not met?

Sanctions such as fixed penalty notice or disciplinary panel action leading to expulsion

When is a disciplinary panel used?

For more serious breaches of conduct

Who can initiate a disciplinary hearing?

Head of Regulation

Who may sit on a disciplinary panel?

Members not within RICS

What penalties can the Regulatory Tribunal Disciplinary Panel impose?

Regulatory compliance order

What financial penalty powers does the tribunal have?

Unlimited fines per breach

What membership penalty can the tribunal impose?

Expulsion from membership or removal of a firm

What does the appeal panel consider?

Appeals from members or firms relating to disciplinary outcomes

What power does the appeal panel have?

It can change the penalty proposed

What is a Terms of Engagement?

A written record of the agreement between the client and the firm

Why are Terms of Engagement used?

To avoid doubt and confusion and outline the scope of work

What legislation provides a cooling off period for consumer contracts?

Consumer Rights Act 2015

What cooling off period is provided under the Consumer Rights Act 2015?

14 days

What information must be included in Terms of Engagement?

Details of both parties

What property information should be included in Terms of Engagement?

Property address

What ethical matter must be included in Terms of Engagement?

Conflicts of interest

What scope information must be included in Terms of Engagement?

Scope of works and limitations

What financial information must be included in Terms of Engagement?

Fee basis

What complaint procedure must be included in Terms of Engagement?

Complaints handling procedure

What insurance information must be included in Terms of Engagement?

PII cover

Why might you decline an instruction?

Not competent to undertake the work

Why might AML requirements cause you to decline an instruction?

Client refuses AML checks

Why might Terms of Engagement refusal cause instruction decline?

Client refuses to sign Terms of Engagement

Why might a conflict cause instruction refusal?

Conflict of interest or personal interest exists

Why might insurance cover prevent taking an instruction?

Professional indemnity cover cannot be agreed

Why might pro bono advice create risk?

PII may not cover the work

Why must sanctions checks be carried out?

Client may be on the UK Government sanctions list

What is included in a fee proposal?

Scope of services

What charging information must be included in a fee proposal?

Fees and charging basis

What types of fee structures may be used?

Fixed fee hourly fee or percentage fee

What tax must be clearly stated in a fee proposal?

VAT

What time information should be included in a fee proposal?

Timescales

What contractual information must be included in a fee proposal?

Terms and conditions

What unethical pricing practices must be avoided?

Price fixing

What unethical competitive behaviour must be avoided?

Collusion with competitors

What market practice must be avoided when pricing services?

Aggressive fee cutting

How should fees generally be determined?

Market based and agreed with clients

What is a conflict of interest?

When independence or impartiality is threatened due to competing duties

How can personal interest create a conflict?

It can influence actions or decisions when acting for a client

What are examples of conflict situations?

Financial interest personal interest commercial relationships acting for both sides

What are the three types of conflict of interest?

Party conflict Own interest conflict Confidential information conflict

What is a party conflict?

When duty to act for one client conflicts with duty to another client

What is an own interest conflict?

When a personal or connected financial interest affects judgement

What legislation relates to connected person disclosure in estate agency?

Section 21 Estate Agents Act 1979

What is a confidential information conflict?

When information for one client must remain confidential but affects another client

What RICS professional statement governs conflicts?

RICS Global Professional Standard Conflicts of Interest 2017

When did the RICS Conflicts of Interest Professional Statement come into effect?

January 2018

What must firms do before accepting an instruction with a conflict?

Identify the conflict

What must be obtained before advising where conflict exists?

Informed consent from affected parties

What record keeping requirement exists for conflicts?

Firms must keep records demonstrating compliance

What is conflict avoidance?

Declining an instruction because the conflict cannot be managed

What is conflict management?

Accepting an instruction but managing the conflict with controls and consent

How do you conduct a conflict check?

Check client details and property address

What internal method can help conflict checks?

Ask colleagues about potential conflicts

What system example was used in the notes?

Salesforce database

What information is entered into a conflict database?

Parties involved and property addresses