RICS regulation: fostering confidence

11 September 2018

RICS regulation fosters public confidence in the profession, writes Ian Hulme

Nearly 80% of RICS’ regulatory resources go into assurance, and this activity is by far our most useful tool for making certain that professionals and regulated firms meet the public’s expectations on service standards, client protection, conduct and competence.

Defining assurance

Assurance means engaging with professionals and regulated firms to help them implement the profession’s standards and embed best practice in daily business. We do so in three stages:

• by identifying where there is a risk that RICS standards are not being upheld;
• by reviewing the activities, documents, systems and processes of a professional or a firm; and
• by providing guidance and advice on how to implement professional standards, or, if we find the professional or firm is already doing as required, giving general advice on how to make improvements.

Identifying risk

The first step in supporting our professionals is identifying those who are at risk of falling out of compliance with our standards. We do this by collecting and analysing data on the profession’s activities and risk-scoring it, based on material factors such as a firm’s size, revenue, number of valuations, disciplinary record and staff experience.

We collect such data in a number of ways. All professionals and firms are required to submit annual information on their activities. We also receive any complaints from the public, and exchange information with other regulators such as the Financial Conduct Authority. This is supplemented by gathering intelligence from the marketplace, for example, by monitoring news coverage.

In our monitoring activity, we focus on issues that the profession must get right so as to instil public confidence, including:

• ensuring the security of client money;
• guarding against money laundering;
• working to a globally consistent valuation standard;
• valuer registration; and
• managing conflicts of interest.

The way we direct our assurance activities and carry out our work are informed by assessment of risks, leading to more proportionate and targeted regulation. As part of our risk-based approach to regulation, we will target our resources at issues that pose the greatest harm or detriment to the public interest and the profession’s reputation.

Conducting reviews

Where we have identified a high risk that certain professionals and firms might not be handling issues correctly, in line with the profession’s standards, they may be selected for a regulatory review. This review is based on key documents such as terms of engagement, reports and other standard documentation.

If we have identified a particularly high risk that a firm or professional is failing to comply with the profession’s standards, they can expect a regulatory review visit.

These reviews are carried out by RICS specialists, and can take the form of a visit to the firm’s office or offices, or a request to examine files and key documents remotely through a secure digital connection. Between August 2016 and July 2017, we conducted 586 regulatory review visits (see Figure 1).

Figure 1: Types of RICS regulatory review visit, 2016-17

We realise that we handle sensitive business data during these reviews. RICS fully adheres to EU legislation on data protection, and has in place policies and processes to meet its requirements. All RICS staff must also undergo mandatory annual data protection training, and we have robust data protection and information security clauses in place for all contracts with third-party data processors. We want to ensure that firms and professionals can keep guaranteeing their clients’ confidentiality.

Giving guidance and advice

Professionals and firms that undergo a review are rated (see Figure 2). The firms and individuals who fall short of an outstanding rating receive tailored guidance and advice on how to improve their work to meet the profession’s standards. Of the professionals and firms that receive a regulatory visit, 95% agree that it was a benefit to their business.

Figure 2: RICS regulatory review visit, ratings 2016-17

We can only effectively provide assurance if the vast majority of the profession is committed to working to our standards: it is a collaborative effort. RICS considers its assurance regime a success and, as Figures 1 and 2 show, we have the numbers to demonstrate this.

We believe that clients can take confidence from the fact our profession submits to independent reviews and values the outcomes of these. Accountability and transparency are the cornerstones of a trusted profession.

Ian Hulme is Head of Registration and Compliance at RICS

Further information

• This feature was taken from the RICS Building Control Journal (September/October 2018)