Standard review: monitoring members' feedback
9 January 2020
RICS’ first review of a professional statement shows the importance members place on managing conflicts of interest – but divergence over how these conflicts are understood
The effective identification and management of conflicts of interest is essential to professionalism. The RICS Rules of Conduct state that members and firms must ‘act with integrity and avoid conflicts of interest and avoid any actions or situations that are inconsistent with its professional obligations’. The global RICS professional statement Conflicts of interest came into effect on 1 January 2018 and underpins the rules by setting mandatory requirements and providing supporting guidance in this challenging area.
A recent review of the professional statement, entitled Conflicts of interest: implementation and impact, presents the findings from 2 phases of research. Phase 1 surveyed all 10,051 RICS-regulated firms with email addresses, 40% of which responded. A large majority of respondents – 94% – were small firms with fewer than 10 staff, most of which are based in the UK. For phase 2 of the research, RICS interviewed contact officers or specialist staff representing 31 firms, this time focusing on a greater proportion of large firms and those operating internationally.
Following this work, the review:
- sets out how the professional statement has been received by the market;
- identifies how well conflicts of interest are understood, identified, managed, recorded and communicated;
- details the specific actions RICS will take or has already taken to mitigate any risks that have been identified.
The review was carried out with the aim of measuring levels of recognition and usage of the professional statement and identifying common themes, areas of weakness, risk and good practice. The findings are already being used to inform the future development of professional statements, policies and guidance.
The review is also accompanied by materials that are designed to strengthen implementation of the professional statement, although these documents do not constitute formal RICS guidance.
The following are some of the key points identified in the review.
- Almost all RICS members and firms consider managing conflicts of interest to be important, with a combined 93% believing this is either critically important or very important.
- The vast majority – 87% – of firms believe staff are quite familiar with the professional statement.
- The process for identifying, managing and informing clients about conflicts of interest varies significantly from firm to firm. Some have a less formal approach in place, which may lead to inadequate record-keeping or management of conflicts of interest.
- Identifying and managing conflicts of interest comprehensively can be complex and challenging for professional services firms and, as a result, they stressed the need for maximum clarity and more supporting material to be provided.
- When representatives were asked to explain what they understand a conflict of interest to be, both from their reading of the professional statement and their broader knowledge and experience, about half their responses demonstrated the lack of a clear and accurate comprehension of the term.
RICS continually monitors feedback from the profession on the useability and application of its standards. Considering the review findings, the organisation has already made a number of changes to its publication and consultation process. This includes a greater focus on plain English, enhanced design and accessible layout, as well as detailed user questionnaires to engage with the right stakeholders as early as possible.
In light of the review findings, RICS will assist members in the following ways.
- Support on standards: professional statements will be supported with guidance and good practice case studies where possible, to illustrate practically how they should be applied.
- Provide training: training will be delivered on all aspects of the professional statement through means such as online modules and webinars.
- Focus on smaller firms: additional assistance will be offered to smaller firms to ensure they meet the obligations of the professional statements.
- Raise awareness: new developments with professional statements will be highlighted to smaller firms, which may not have the resources available to monitor changes in the regulatory environment.
Sean Agass is a standards and guidance editor and Ellie Scott is a senior project manager at RICS