Sir Bryan Carsberg submitted the findings of his review of the regulation of RICS members to the Governing Council in April. Here he summarises his recommendations.

When I was asked to review the regulatory activities of RICS, I began by thinking about the principles that should guide my review. First, I concluded that the regulation of chartered surveyors should continue to be carried out by themselves. Self-regulation by professional bodies works because members of a profession have the expertise to undertake regulation and the interest in doing so. One of the advantages of membership of a professional body is in the shared reputation for high-quality work and for carrying out that work with integrity and according to good rules of conduct. Regulation is needed to maintain that reputation, and consequently all members of a professional body have an interest in the effective regulation of their fellow members.

Self-regulation does not mean that all of the regulatory activities have to be carried out by the members of the professional body themselves. It covers systems that involve asking non-members to help in various ways, including putting regulation in the hands of a body that has a majority of non-members. The essence of a system of self-regulation is that it is established by members and can be changed by members if they find that it is not working satisfactorily.

A second important principle that has informed my approach is that regulation must pass a cost-benefit test. Regulation can be costly: it involves an explicit cost for the professional body, imposes costs on the firms in which members work and may deter certain kinds of activity, such as entrepreneurial activity, that is important to the nation’s economy. Regulation is not desired regardless of cost. It is important to weigh the costs of each option to assess whether they are justified by the benefits.

The assessment usually cannot be supported by any very exact arithmetic; and the benefits of given levels of regulation are likely to change over time, with changing public expectations.

Nevertheless it seems important to challenge proposals for regulation in terms of cost effectiveness. I have done this and I hope that it will have contributed to making my conclusions acceptable. RICS made clear in its initial instructions to me that it wished its regulatory activities to be in accordance with best modern practice. I gladly adopted this guidance, seeing it as setting the cost-benefit context.

Governance

Decisions concerning the governance structure of regulation are paramount. If a good structure is in place, the bodies involved can legitimately modify the details of the application of regulation in the light of experience and changing external pressures. I therefore began the main part of my review by considering governance. I considered first whether there was a need for an external oversight body. Some professions enjoy a privileged position with regard to reserved business – business that is limited by statute to people with certain qualifications. A profession having such business may expect to have to provide an extra degree of public assurance through external oversight. However, as no classes of business are reserved to chartered surveyors, and there are no other reasons for external oversight, such as the wish to coordinate the regulation of two or more professional bodies, I concluded that external oversight was not needed for RICS.

However, when I came to consider the internal structure of RICS regulation, I did see the need for some change. Professional bodies represent their members and promote their interests, as well as carrying out regulation. These activities clearly involve potential conflicts if they are not well separated. The public is likely to believe, rightly or wrongly, that a professional body will be unduly lenient in regulation if the same people are both regulating and promoting the interests of members. At present, RICS does not have effective separation, for example because regulatory policy is subject to the approval of Governing Council.

I believe that a new Regulatory Board should be established to set regulatory policy and the principles governing its application, and that the board should operate under delegated authority from Council, so that it does not have to refer its decisions to Council for approval.

Individual disciplinary decisions should be made by a different body, in accordance with the principle that the people who make the rules should not be the people who apply them. Therefore I have recommended the establishment of a Conduct Board, with responsibility for disciplinary decisions, also operating independently of Governing Council.

The balance between members and non-members on the Regulatory Board and Conduct Board is also relevant to the independence of regulation. RICS already has non-members on its boards and committees, selected by an independent appointments board, and, indeed, this is a strength of present procedures. I initially thought that I might recommend increasing the numbers of non-members involved in regulation, but keeping them at under 50 per cent of the membership of each body. However, consultation with external bodies convinced me that a stronger role for non-members is necessary if the new regime is to have wholehearted external approval. Failure to take this step would be to miss the opportunity to bring RICS’s regulation up to best modern standards. I have therefore recommended that each board should have equal numbers of members and non-members, with an independent chair.

Other recommendations

I have covered many other areas in my final report to Council. Here, I can do no more than summarise some of the main recommendations, so I encourage people with an interest to read the whole report for additional information. At just over 30 pages, it is not (I hope) burdensome to read.

My recommendations include:

• Firms should be the focus of regulation as far as practicable, particularly for areas such as members’ accounts rules and professional indemnity insurance, where the firm is the natural unit
• RICS should continue to monitor members’ continuing professional development (CPD)
• Practising certificates should not be introduced now, but this decision should be reconsidered when more experience has been gained in regulating firms
• RICS should consider introducing more specialist qualifications and make undertaking appropriate CPD a condition for maintaining such qualifications
• Disciplinary procedures should be more flexible and less burdensome in dealing with minor offences, where those offences are unintentional and have not resulted in significant detriment to consumers. In such cases, the objective should be to help the member achieve satisfactory compliance rather than to punish
• Consideration should be given to having additional professional standards (practice statements) and a more transparent procedure for establishing those standards
• RICS’s regulatory literature should be reviewed to make it as clear as possible, and additional steps should be taken to help members understand their responsibilities
• The pilot ombudsman scheme in Scotland seems to have been successful in defusing conflict and promoting settlements with which the parties can be content. The scheme should be extended to the rest of the UK.

RICS is a distinguished professional body and its members enjoy high public esteem. I hope that my review may make a small contribution to the maintenance and enhancement of this position.

The full report of Sir Bryan Carsberg’s review of the regulation of RICS members can be downloaded as a pdf from the right hand menu.

This article appeared in RICS Business May 2005.