As the world becomes more open and interconnected, people expect greater transparency in commercial transactions. A succession of scandals involving accountants, banks, politicians journalists, and even sportsmen, as well as major corporate tax avoidance controversies, have undermined people’s trust in professional people in all disciplines and markets. A range of sources, including marketing communications firm Edelman’s annual survey, the 2017 Edelman Trust Barometer, confirm that mistrust of business, media and other institutions is a world-wide phenomenon. The property sector has not been immune.
However, RICS CEO Sean Tompkins counters: “Ethics has been at the top of the RICS agenda since the organisation was established in 1868. It remains at the heart of everything we do today. Absolute commitment to ethical standards is the basis of the professionalism that distinguishes a RICS qualified person from others.”
Mr Tompkins explains that RICS has a clear and streamlined set of professional and ethical standards to guide individual members and RICS-regulated firms and to ensure that anyone dealing with RICS members can do so with complete confidence.
“Our regulatory framework is the best guarantee that all our members follow the same consistent ethical values in their daily practices,” Mr Tompkins says. RICS has anticipated the risks and challenges posed by changing market conditions, he notes. “As a global 21st century professional body, we want to go a step further and adapt so that our standards remain fit for purpose, while increasing transparency and levels of trust in the RICS qualification.”
RICS is using an open, collaborative approach, working with other institutions, associations and standard-setting bodies to harmonise its standards. “Over the last few years we’ve been working with over 100 not-for-profit organisations in the land, property, construction, infrastructure and related professions around the globe as part of the International Ethics Standard (IES) Coalition [https://ies-coalition.org/], to establish consensus on what ethics should mean for the property sector,” says Mr Tompkins. “As a result, we’ve compiled the first universal set of high-level ethical principles for land, real estate, construction, infrastructure and related professions.’
However, before incorporating the new international standards into its own codes, RICS is undertaking extensive market research among professionals around the world to clarify how its members should conduct themselves in certain situations. Mr Tompkins says: “We want to be able to explain to external stakeholders and consumers what they can expect from RICS professionals. This research will help us understand how ethics and professionalism are understood in each different market. Different cultures, traditions and legislation play an important role in our interpretation and implementation of ethical standards.”
Conflicts of interest are a particular concern and can cast doubt on an individual’s integrity; it can also have a damaging effect on the firm and profession as a whole. Conflicts of interest arise when there’s a potential clash between self-interest and professional or public interest which might undermine an individual’s or corporate impartiality. A conflict of interest may occur where a surveyor or their firm acts for clients with competing interests at the same time such as advising both the seller and buyer of a commercial property simultaneously; or has other obligations that detract from their relationship with the client, such as acting as expert witness while having an interest in the outcome of proceedings; or has conflicting duties to different clients, for example, acting for two or more parties competing for an opportunity.
Even well-known politicians have recently experienced difficulties dealing with such conflicts so the property business is not exceptional in this regard. Real estate professionals and their firms are frequently confronted with challenging situations where the interests of clients might conflict or be perceived to conflict with the interests of other clients. Some areas of risk are regulated by national law designed to protect the public interest but there is not always clarity and practices differ from one country to another.
In the UK market, for example, dual agency is a particular concern to the commercial property investment market. Multiple introductions, whereby a single firm represents several buyers for the same investment opportunity, incremental advice where an agent is approached to provide advice related to a purchase or disposal that is incremental to an existing instruction to advise the buyer or seller are also sources of concern.
Conflicts may not be inevitable in these situations and there may be no wrong done. However, if potential conflicts of interest are not identified and managed appropriately, perceptions can damage consumer confidence and threaten the integrity of the profession and those acting within it. Emphasis must be placed on how conflicts are managed on a case-by-case basis, particularly when dealing with vulnerable consumers.
Views have been sought from industry and key stakeholders to identify areas of particular risk, and the ways that professional bodies can better mitigate against risks of conflict of interest. To this end, RICS has developed additional rules along with guidance on how to identify and manage conflicts of interest. The organisation presented these mandatory requirements at MIPIM 2017 in a global professional statement applicable to all chartered surveying disciplines.
“The statement provides clarity for RICS members/firms and give end-users greater confidence by creating consistency of interpretation of the existing rules of conduct,’ says Mr Tompkins. “It sets out the high-level principles for the appropriate identification and management of conflicts across all areas of RICS practice and geographies. Professionals will still need to exercise judgment, and take into account the knowledge and experience of the consumer. If safeguards cannot reduce the threat posed by the conflict to an acceptable level, the professional should remove themselves from the relationship,” he adds.
RICS is focusing on the future role of professionalism in a rapidly changing property industry, focusing on client requirements; the growing value of strategic facilities management services to corporate real estate; and the impact of new technology and data on property investment and use. RICS will also publish new industry standards on conflicts of interest and launch a major piece of occupier-focused research relating to facilities management. Mr Tompkins says: “At a time when the industry is responding to new political, trade and societal dynamics, we want to engage all parts of the property world to take stock and to lead meaningful and positive changes across the profession.”