RICS Alert - Conflicts of Interest
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Our RICS Alert blog series will provide you with the latest updates on professional standards and guidance.
This blog article will focus on what the new RICS professional statement; Conflicts of interest - UK commercial property market investment agency 1st Edition May 2017, means to you.
Why is this relevant?
We want to maintain our integrity as property professionals, as well as maintaining consumer confidence in what we do. Conflicts of interest are a threat to the industry and the new RICS guidance aims to protect us (as surveyors), clients and the general public.
Moreover, RICS Members have an obligation to undertake at least 20 hours of CPD each year, which includes a 3 yearly review of current professional and ethical standards. Having a clear understanding of the new guidance forms an important part of this.
In this blog, we will consider the following:
- What is a conflict of interest?
- Does this apply to me?
- What does the guidance cover?
- When does it come into force?
- What else should I know?
Relevant RICS APC competencies:
- Conduct rules, ethics and professional practice (mandatory to Level 3)
- Conflict avoidance, management and dispute resolution procedures (mandatory to Level 2)
- Agency and investment-related competences, e.g. Purchase and sale
What is a conflict of interest?
Within the new guidance, the RICS defines a conflict of interest as ‘where an agent acts for clients who have competing interests, or where an agent’s personal interest conflicts with that/those of their client’.
The former could arise if you were to act for two competing buyers for the same property. The latter could arise when you are selling a property owned by a close family member.
Does this apply to me?
In short, yes - if you are acting on an agency or investment instruction, e.g. purchase or sale of an investment opportunity.
Members of the RICS must comply with the mandatory requirements of professional statements. Other examples include the Red Book and Rules of Conduct.
If you were to face a professional negligence claim, failure to comply with mandatory requirements could lead to a successful claim against you. Compliance provides you with, at least, a partial defence.
What does the guidance cover?
Dual agency, also known as double dipping, is defined by the RICS as ‘where an agent has a contractual agency relationship with both the seller and the buyer at the same time’. It must not be undertaken under any circumstances.
The guidance also covers multiple introductions and the provision of incremental advice.
When does it come into force?
From 1 January 2018 for instructions undertaken in the UK. Various major players are complying prior to the deadline, e.g. SEGRO, JLL, CBRE and Land Securities.
What else should I know?
The full professional statement can be found here.
Other relevant guidance includes:
- Rules of Conduct for Members
- Rules of Conduct for Firms
- Professional and ethical standards
- RICS professional statement - Real estate agency and brokerage 3rd Edition August 2016 (see Section 1.3)
Want to know more?
Stay tuned for our next blog post to help build a better you
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