Any firm that offers surveying services to third parties (and where 50% or more of the principals are RICS Members) must, of course, register for RICS regulation. Once under the RICS umbrella both the firm and individual members must ensure they work within the RICS regulatory framework. Complaints against a firm or individual member can have serious regulatory implications. This article offers some practical guidance to help firms and individuals steer clear of breaching the regulations and/or to limit the consequences of any breach.
Regulation - a Recap
RICS requires its Members to adhere to its five Professional and Ethical Standards: taking responsibility, treating others with respect, always providing a high standard of service, acting with integrity and acting in a way that promotes trust in the profession. As to specific regulation, this is done through the RICS Rules of Conduct for Firms and Members (the Conduct Rules) which are summarised in the table below.
Click here to view the table.
The disciplinary process
The RICS Disciplinary, Registration and Appeal Panel Rules (the Disciplinary Rules) govern when and how disciplinary action can be taken against firms or individuals. Following receipt of a complaint, the RICS Head of Regulation will decide (having contacted the firm or individual if appropriate) whether or not RICS will take disciplinary proceedings. If a decision is made to proceed with the complaint, this can be resolved by (a) the making of a Consent Order with the written agreement of the firm/ individual or (b) referring the matter to a Disciplinary Panel.
The Disciplinary Rules set out at length the procedure to be adopted in the event that the complaint is referred to a Disciplinary Panel. Critically, Rule 43 provides that the burden will be on RICS to prove issues of fact to the Disciplinary Panel on the balance of probabilities (about which see further below). In the event of a finding being made, the Disciplinary Panel has the power to levy the following penalties (by reference to the sanctions policy issued by RICS):
- Cautions and/or reprimands
- Undertakings as to future conduct
- Fines ranging from GBP150 (fixed penalty) to an unlimited amount following a Disciplinary Panel finding, plus costs (which can include a hearing cost of GBP 2,650) – Conditions on continued registration/Membership
- Expulsion orders or orders requiring specified action
The appeal process
In the event of expulsion, the RICS Registration Panel can be asked to re-consider/review the decision if the Firm/ Member wishes to be re-admitted. In this situation, the burden is on the Firm/Member to satisfy the Registration Panel that it is appropriate for there to be a re-admission. A Firm/Member can appeal any decision of the Registration Panel or Disciplinary Panel, but must do so in writing within 28 days of the relevant decision. The appeal will be considered by the Appeal Panel, and once again the burden will be on the Firm/Member to prove that the order being appealed was wrong. The Appeal Panel has the power to vary previous findings or to refer the matter back for a new hearing.
It is often the case that disciplinary proceedings are commenced following a complaint by a client arising out of professional services. Frequently such complaints cannot be resolved through a Firm’s complaints handling procedure and, historically, they would escalate into formal claims for professional negligence. The same is certainly true now, however, we are seeing a growing number of complaints which are being referred to the Property Ombudsman (TPO) or the Ombudsman Service: Property (OSP). Both schemes broadly cover the same professions albeit TPO is more focused on estate agents and OSP on surveyors. It is important for a Firm to be alive to the fact that both schemes seek to resolve complaints quickly based on what is considered to be “fair and reasonable” up to a limit of GBP 25,000. Decisions are binding (and can only be challenged by way of judicial review). A failure to handle a complaint properly or to engage with the Ombudsman can have serious regulatory implications, as will be illustrated below.
What is covered by Professional Indemnity Insurance?
Firms are likely to be able to demonstrate that they meet the requirements of Firm’s Conduct Rule (FCR) 9 (see above) if they take out professional indemnity insurance in accordance with the latest version of the RICS Minimum Policy Wording (2011) (the Minimum Terms).
Fines and penalties cannot be insured and are excluded under the Minimum Terms, but they do provide cover in respect of adjudication, arbitration and ombudsmen awards made against the insured entity. Cover also includes 80% of any costs incurred if a Firm/Member are called to attend regulatory hearings, tribunals or other proceedings but only in the event that such proceedings arise out of a claim made or circumstance notified. Often this can be obvious. For instance, if a client alleges that a Firm has prepared a negligent survey and at the same time makes a complaint which is upheld pursuant to FCR 9, then it is likely that the Firm would be covered in respect of associated costs. However, the position may be less clear if, for example, disciplinary proceedings arise as a result of a failure to co-operate with the RICS at the same time that a client is pursuing a formal claim. In any event, it is important to ensure that both the Firm and Insurers attempt to reach an agreement early on in the process as to whether and to what extent costs will be covered.
Lessons to learn
Set out below are 2 examples of issues which we have seen in the matters we have been handling over the last 12 months and from reported decisions:
Click here to view the table.
Dealing with the Disciplinary Panel
If a Firm or a Member ends up in the unfortunate position of facing disciplinary action, they should co-operate fully and proactively with the regulator throughout the process. Although there is scope for the Disciplinary Panel to retain a degree of flexibility, the following points will assist any attempts to reach a satisfactory outcome or limit the extent/nature of any penalties:
- Consideration ought to be given by the Firm/Member and Insurers as to whether the complaint should be handled by external solicitors. Some Panels are not keen on legal representatives acting and it may be best to keep any lawyers behind the scenes.
- The Firm/Member should ensure that they understand the nature of the complaint and the process which will be adopted by the Disciplinary Panel.
- Consideration should also be given as to whether to agree to the making of a Consent Order particularly if there is concern in respect of an adverse finding. That said, we suggest that the Firm/Member consults with their Insurers before agreeing to this, particularly if a claim has been made/intimated.
- Correspondence with the Head of Regulation/Disciplinary Panel should be clearly worded and presented.
- Where the matter is listed for a hearing, documents upon which the Firm/Member relies should be filed on time in accordance with the relevant direction.
- Careful consideration ought to be given to, and a careful note made in respect of the deadline to submit, any appeal.
As with any regulatory regime, there is scope for things to go wrong. Often, the most serious of complaints cannot be resolved without the intervention of the regulator. It is, therefore, critical to ensure all reasonable steps are taken to engage properly in the process. The practical tips identified above may not lead to the complaint being dismissed entirely but should assist in mitigating the Firm/ Member’s exposure and its crossover, as appropriate, with its insurers.