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Hot Topic Highlight – RICS Consultation on Ethics and Rules of Conduct

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What is this article about?

In this week’s blog, we take a look at the current RICS consultation on the new Statement of ethical principles and rules of conduct (1st Edition).

You can read the full details of the consultation here, which will close on 7 December 2020 at 23:59. All RICS APC candidates should read the proposals and considering providing feedback, as the new rules and guidance will directly affect them in the future.

Why are the RICS proposing change?

The current RICS ethical guidance is primarily set out in the RICS Professional & Ethical Standards and the Rules of Conduct for Firms and for Members, alongside various other supporting guidance.

The aim of the existing standards is to promote trust in the profession and to maintain the highest standards of ethical behaviour and professionalism.

You can read more about the current requirements either on the RICS website or searching through our blog archive – all you need to do is search for ‘ethics’, for example, using the search box here.

The Rules of Conduct were first published in 2007, with only minor amendments being made since. The Professional & Ethical Standards were published shortly after in 2009, reflecting the general principles of the International Ethics Standards (IES).

Within the Future of the Profession consultation response report published by RICS in January 2019, it was identified that since 2007-2009 the market and profession have changed substantially with a number of new challenges, risks and opportunities coming to light.

A RICS working group was subsequently set up to review the current regulation model and standards, leading to the principles and approach framework in Figure 1 being established (RICS, 2020). This forms the basis for the proposed Statement of ethical principles and rules of conduct (1st Edition).

Figure 1 – RICS Regulation Framework (RICS, 2020)

What changes are proposed by RICS?

The key changes to RICS’ approach relate to an increased focus on conduct, competence, diversity, inclusion, support, professional excellent and a risk-based approach, as outlined in Figure 1 above.

RICS have also set out three overarching objectives for the new Standard; clarity, effectiveness and brevity. This should help to ensure that all RICS regulated Firms and Members can understand and apply the new Standard with ease and consistency.

The new Standard aims to replace and combine the existing RICS Professional & Ethical Standards and the Rules of Conduct for Firms and for Members, together with detailed guidance on specific issues and example behaviours (particularly for RICS regulated Firms) to aid compliance. The Standard will continue to reflect the requirements of IES.

RICS confirm that ‘members must use their professional judgement in applying these principles to the situations they face in practice and firms must support individuals working for them to do so. The rules are primarily about professional conduct, but personal conduct may be relevant to the rules where it may damage public confidence in the profession’.

Five new rules applying to both Firms and Members, based on the existing ethical standards, are proposed:

  • Rule 1 - Members and firms must be honest, act with integrity and comply with their professional obligations, including obligations to RICS, e.g. checking for conflicts of interest and being transparent with clients in relation to fees

  • Rule 2 - Members and firms must maintain their professional competence and ensure that services are provided by competent individuals, e.g. undertaking work with due knowledge, skills and competence and ensuring adequate CPD is undertaken

  • Rule 3 – Members and firms must provide good quality and diligent service, e.g. understanding the client’s needs and objectives before accepting work and formalising instructions through written terms of engagement

  • Rule 4 – Members and firms must treat others with respect, e.g. treating others with respect and encouraging diversity and inclusion

  • Rule 5 - Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession, e.g. managing professional finances responsibly and preventing harm to the safety of employees, client and the public

The key changes from the existing standards are:

  • Separation of the principle of maintaining continuing competence from the principle of providing a good service to clients

  • Combining the principles of taking responsibility and maintaining public confidence in the profession

Appendix A to the Standard sets out professional obligations of RICS regulate Firms and Members to RICS. These are supported by the mandatory requirements in various RICS Professional Statements, e.g. relating to conflicts of interest.

The following professional obligations relate to RICS Members:

  • ‘Members must comply with the CPD requirements set by RICS

  • Members must cooperate with RICS

  • Members must promptly provide all information reasonably requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf’

The following professional obligations relate to RICS regulated Firms:

  • ‘Firms must publish a complaints handling procedure, which includes an alternative dispute resolution provider approved by RICS, and maintain a complaints log

  • Firms must ensure that all previous and current professional work is covered by adequate and appropriate professional indemnity cover that meets the standards approved by RICS

  • Firms with a sole principal must make appropriate arrangements for their professional work to continue in the event of their incapacity, death, absence from or inability to work

  • Firms must cooperate with RICS

  • Firms must promptly provide all information reasonably requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf.

  • Firms must display on their business literature, in accordance with RICS’ published policy on designations, a designation to denote that they are regulated by RICS.

  • Firms must report to RICS any matter that they are required to report under the Rules for Registration of Firms

When will the new Standard apply from?

It is proposed by RICS that if approved, the new Standard will apply from June 2021.

What do RICS APC candidates need to know?

RICS APC candidates need to be aware of the proposed consultation and changes for the Spring 2021 interviews. They will also need to ensure they are aware of the existing standards and how these relate to the proposed changes.

An incorrect answer on an ethics question could constitute an automatic fail, so it is vital that RICS APC candidates are fully aware of relevant issues and proposed changes.

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