ISA response to the Carsberg Review - Review of the regulatory role of the RICS
Question 1
Can a professional body discharge effectively the dual roles of regulator on the one hand and representative and member services body on the other? Should it do so? If not, what approaches might be preferable?
Yes, but the regulatory function should be separated from the 'member-services' function and should be clearly defined and separately funded.
It is essential that there should be lay-member participation on disciplinary boards and even-handed treatment of complainants and complainees.
Question 2:
What are the strengths and weaknesses of RICS' current regulatory framework?
Strengths: A mechanism is already in place to ensure: firstly, that complaints are handled and addressed; secondly, a dedicated procedure which requires members to offer the general public a complaints handling process which sets out actions which will be taken in the event of a complaint with strict timetables which will be followed.
Weaknesses: Disciplinary Boards are currently composed of volunteers for the role (the 'posse' approach), rather than members who are invited at random (the 'jury' approach). 'Fairness' may be compromised by the present system.
Regulation is centralised nationally, which is a legitimate approach for planning and rule making in the first instance, but not administration. Boards should be localised (or regionalised).
Regulations and Bye-laws are complicated and often difficult for the average member to understand or interpret. This is confirmed by the fact that Geoffrey Williams QC was commissioned by RICS to produce 'Professional Conduct for Chartered Surveyors' - to explain the rules to members.
There is a perception by small firms that regulation is directed by members from larger firms to the advantage of the larger firms at the expense of the smaller.
Question 3:
What needs changing to ensure adequate protection of the public/consumer interest?
Whilst the present regulatory framework protects the public/consumer interest, its centralisation causes it to be expensive and slow to respond.
Policing by the RICS directly might give a perception of bias which a distinct independent body would not.
Question 4:
Is the current approach to resources allocation satisfactory to permit best practice regulation?
No. Administration of regulations should be separately costed and shown as a discrete annual contribution paid with the membership subscription.
Question 5:
Should RICS regulate firms as well as members? And should all member directors be held equally responsible for all the activities of their firms? In what ways could RICS target accountability and would this still provide regulatory control?
Yes - but only if the 'firm' holds itself out as 'Chartered Surveyors'.
If not, RICS member-directors should be responsible individually for their own actions within the firm.
Members who practice with Public Authorities should be responsible for their personal activities within their employment.
Question 6:
What activities need to be regulated because of the risks they pose to the reputation of the profession or the consumer interest?
Holding of clients money and 'conduct'.
Question 7:
Are there other sectors of chartered surveying that RICS should consider regulating because of the risks involved?
None other than 'conduct befitting' issues.
Question 8:
Should RICS adopt a risk-based approach to regulation?
Yes.
Question 9:
Should different rules be developed for different types of activity or should one size fit all?
No. The alternative is to introduce renewable 'practice certificates', which in principle might appear to be a good idea, but in practice would be costly to administer with no tangible benefit to the consumer.
Question 10:
Should rules and regulations be full of detail or should a principles based approach be adopted?
A 'principles-based' approach is required, but to be workable, should be qualified by guidance on what is expected.
Question 11:
How should RICS enforce rules and core values in countries with very different legal and cultural systems?
U.K rules and regulations may be applicable in many instances, and many of the bye-laws have universal application but each country has particular characteristics which need to be taken into account . Application of bye-laws must accord with the legal system of the country in which the practitioner is based, unless there is corrupt government. See response to Q16.
Question 12:
Should RICS set up disciplinary committees in each of the world regions?
Yes - Local or even regional control should be the working principle of justice unless there are unique reasons why it should not apply.
Question 13:
Should RICS regulate professional competence? If so, how?
No - Members who are incompetent are controlled by the market (which will not employ incompetent individuals) or by the insurance industry (which will decline to offer PII to those with a poor claims history).
Question 14:
Should RICS investigate alleged professional incompetence and negligence?
No. There is already provision for incompetence and negligence to be addressed by the dedicated 'complaints handling procedure' which members are required to adopt. Alternatively, negligence or losses arising from incompetence are PII issues.
Question 15:
Should RICS introduce practising certificates to demonstrate members' competence in particular areas of chartered surveying?
No. In principle 'practising certificates' might seem a good idea. However, the cost involved would destroy the small general practice firm, with a history of practising competently in a wide variety of disciplines to the benefit of the large multi-disciplinary corporate firm with specialist departments. There is no evidence that practising certificates will benefit the consumer nor that if they were to be introduced, the RICS would be the best body to administer them. There is no evidence that large firms provide a better or more professional approach than small firms.
Question 16:
Should there be revalidation of that competence on a regular basis eg by examination, review, and/or interview? If so, how and how often?
No. For the same reasons as (13) above.
Question 17:
Should there be a larger number of lay members on the RICS Ethics, Conduct and Consumer Policy Committee and/or should both lay and RICS members be selected by the Independent Appointments Selection Board?
Yes. However composition of the Independent Appointments Selection Board needs to be considered carefully to ensure that it is truly independent and that appointments are made to avoid any element of personal interest or advantage.
Question 18:
Should RICS create a Regulatory Oversight Board that has significant policy making powers and budgetary control where regulatory policy is involved, in order to protect self regulation while increasing independence? What should be the composition of such a board?
Yes, but only if it is independent of Headquarters' staff and with a predominant composition of lay members.
Question 19:
Should there be a larger number of lay members on the disciplinary bodies? If so, what percentage of the membership should be lay members and is it appropriate for lay members to act as chairmen of these bodies?
i) Yes. ii) 50%. iii) Yes.
Question 20:
How can RICS ensure that RICS members on the disciplinary bodies are representative of those facing disciplinary action?
By ensuring that disciplinary boards are regionalised and that members from a wide range of disciplines are invited to serve (i.e. the 'jury' approach) rather than by soliciting volunteers (who may have special interests) to serve on the Board (i.e. the 'posse' approach).
Question 21:
Should chief executive's powers be extended to cover a wider range of breaches?
No. The Chief Executive is not an appropriate person to deal with disciplinary issues which concern members.
Question 22:
Should RICS introduce new processes to meet the five principles of good regulation? If so, what changes should be made?
Yes. Change the manner in which members of PCPs and Disciplinary Boards are selected; ensure that the RICS itself operates in an open and transparent manner in all its affairs; ensure judicial training for all persons involved in disciplinary processes; treat complainees with courtesy, and do not assume guilt until a case is proven, particularly when system- checks are carried out; ensure that guidance is dominant to enforcement as a policy within RICS.
Question 23:
Are there certain breaches of the rules that are so serious that they should always lead to suspension or exclusion from membership in order to protect the public? If so, what breaches?
Yes
Fraud
Dishonesty and deception
Question 24:
Should RICS take further steps to ensure consumers who have suffered financial loss at the hands of chartered surveyors can get redress?
Yes - but only in those circumstances where there is no other provision available.
One example would be a proven claim against a surveyor who has been practising without PII in breach of the regulations, and who has no personal assets to meet the claim.
Another would be an issue involving a Chartered Surveyor, arising during the period of membership, but where the member has resigned from RICS. RICS would currently decline any responsibility.
Question 25:
Should RICS investigate the possibility of establishing an overarching redress scheme for the property sector?
Yes. It would be quite feasible and potentially cost-effective to add a premium to all subscriptions to develop a fund to provide run-off cover for all members on retirement and to redress members of the public who would otherwise suffer at the hands of a Chartered Surveyor who has resigned from RICS and is no longer accountable within the scope of the Institution's Rules and Bye-laws.
For and on behalf of Independent Surveyors Association
David Hamilton FRICS
ISA Director of Professional Standards