Where appropriate, RICS proposes not to take further action where the Relevant Person, including a Firm, has agreed to the terms of the Consent Order in order to address the admitted areas of non-compliance.

Reference No: 071101

Circumstances of Consent Order An RICS Accountant visited firm X based at two locations in the East Midlands to conduct a Regulatory Review Visit in June 2007. The Accountant uncovered several concerns which identified the firm were not holding Clients Money securely. The most unsettling issue was that reconciliations had not been completed on a monthly basis which had resulted in the client account becoming overdrawn for a period of days. Indeed, the Accountant was surprised to discover the firm had completed little book-keeping during an 18 month period. Regular reconciliations are advised as they give reassurance to all concerned that Clients Money is safe. The Accountant also established that the firm had not received confirmation from the bank that they recognised the funds as Clients Money. This troubled the Accountant because if the firm went into administration, there would be no guarantee that the Clients Money would not become part of the firm’s funds, potentially putting clients funds at risk. Taking all factors into consideration, RICS determined that the risk was less serious and the firm agreed to dealing with the matter by way of Consent Order.

Terms agreed by Relevant Person Firm X agreed to perform reconciliations on at least a monthly basis and produce evidence of these to RICS on two consecutive months. Additionally, the firm agreed to send RICS evidence in the form of a letter from the bank confirming that RICS’ client account conditions applied to all client accounts. The firm also agreed to pay a fine in the sum of £750 and RICS’ costs in the sum of £145.

Reference No: 080122

Circumstances of Consent Order Member Y ran his own practice in an popular East Midlands city. He suffered a string of personal mis-haps that rendered him unable to work due to mental health issues for a significant period of time. This continued until Mr Y had no other option but to close the business. Due to a lack of financial provision, he did not have the funds available to put Professional Indemnity Insurance Run-Off cover into place. Run-off cover is necessary to ensure that all previous work done is covered should a member of the public wish to make a claim. As Mr Y had conducted very few instructions, RICS took a pragmatic and sympathetic view and determined that the appropriate penalty in this case was to issue Mr Y with a Consent Order.

Terms agreed by Relevant Person Mr Y agreed to attend a training course, seminar or presentation relating to RICS Regulation and provide written evidence of this to RICS. In view of Mr Y’s circumstances, RICS did not charge costs but did issue a fine in the sum of £500 which Mr Y agreed to pay.

Reference No: 071130

Circumstances of Consent Order Member Z was a director of a firm based in southern Scotland. The firm consisted of three directors, two of whom were RICS Members. One of the directors resigned without giving notice and his resignation was followed by that of a key employee. This left the firm in the position of losing half of its business overnight without a corresponding reduction in overheads. As a consequence, the RICS member director was left in the unenviable position of having to appoint a liquidator to place the firm into administration as the firm had liabilities approaching £1.2m. Mr Z attempted to mitigate his position by working unpaid for as much time as he could allow as well as working with the liquidator to ensure that where possible, creditors did not lose all their funds. In addition, the firm did not hold Clients Money and Mr Z had been able to obtain Professional Indemnity Insurance Run-Off cover for the firm in liquidation. RICS determined that the proportionate response in this case was to issue a Consent Order.

Terms agreed by Relevant Person Mr Z agreed to attend a workshop on Business Planning and Finance and complete details of these courses in his lifelong learning record online. In addition, he agreed to pay a fine in the sum of £250 and RICS’ costs in the sum of £199.50.

Reference No: 080220

Circumstances of Consent Order Mr A, an RICS member, was the sole director of a London firm that offered building and surveying services.  In 2006, the company ran into financial difficulties when two significant clients went bankrupt owing Mr A considerable sums of money. He sought legal advice to establish whether it was possible to recover any of the debt but this in itself, was fraught with difficulties because Mr A could not afford to see through any legal action because of his own cash flow position. He, therefore, opted to let the company go into administration. Neither he nor the firm held Clients Money. Furthermore, he had only completed one surveying project in the last five years as the rest of his work had consisted of non-surveying instructions. As a consequence, the risk was low and RICS decided to negotiate a Consent Order with Mr A as a proportionate and appropriate way of resolving the matter.

Terms agreed by Relevant Person Mr A agreed to provide written confirmation to RICS that Professional Indemnity Insurance Run-Off cover was in place for the company in liquidation. He also agreed to attend training or a workshop on business finance, avoiding insolvency, or debt recovery and complete his lifelong learning log online. Mr A also agreed to pay a fine in the sum of £250 and RICS’ costs in the sum of £161.

Reference No: 080219

Circumstances of Consent Order An RICS Member, Mr B, ran his own practice in the Home Counties. Unexpectedly, HM Revenue and Customs sent him a sizable invoice for Income Tax extending back three to four years. HMRC chased for the outstanding funds unsuccessfully and so petitioned for the Member’s bankruptcy. The petition was successful and the Member was made bankrupt in December 2006. He had been unable to satisfy the debt as he started to wind down his business as he was nearing retirement age. This had led to a drop in his fee income which in turn meant that he was unable to pay the tax demand, as he had not made provision for unexpected bills. When he tried to increase his business, he was thwarted by the economic conditions. Mr B contacted RICS and told us of his situation. He was able to reassure RICS that he had Professional Indemnity Insurance (PII) in place to protect the public and did not hold Clients Money. As a consequence, RICS felt the risk to the public was low and decided that a Consent Order was a proportionate outcome for this case. The Member was happy to agree to this outcome.

Terms agreed by Relevant Person During discussions with Mr B he had indicated that he wished to close his business by retiring and resigning his Membership of RICS. This was taken into consideration when proposing the terms of the Consent Order. Mr B’s financial circumstances were a factor in RICS not fining him for breaching RICS’ Rules but did ask him to pay costs in the sum of £150.

Reference No: 080311

Circumstances of Consent Order Mr C ran his own business in a popular Midlands town. In early 2007, he was dealt two blows in quick succession. The first was losing his main client’s business and then shortly afterwards he was diagnosed with a life threatening illness which left him unable to work. With little work coming in, he struggled to make ends meet for a short period of time. He made the decision that he had no other option than to petition for his own bankruptcy in July 2007. To add to his woes, this coincided with the anniversary of the renewal of his Professional Indemnity Insurance (PII). He could not afford to ensure that all previous and current professional work was covered by adequate and appropriate PII. Mr C was fortunate, however, in that the total sum of work not covered was limited to four homebuyer surveys. A further factor in the Member’s favour was that the firm did not hold Clients Money. RICS were sympathetic to the Mr C’s difficult circumstances and decided that the proportionate action in this case was to issue a Consent Order.

Terms agreed by Relevant Person The terms of the Consent Order were agreed so that Mr C had to attend training workshops on Financial Planning, or Managing the Money & Managing the Risk and complete details of these courses in his Lifelong Learning record online, or provide evidence of attendance to RICS. Mr C also agreed to a term to obtain PII and provide evidence to RICS that it was adequate and appropriate and met the standards approved by the Regulatory Board and to pay RICS’ costs in the sum of  £287.50.

Reference No: 080320

Circumstances of Consent Order RICS received a serious complaint from a prospective purchaser who had lost the property he wanted to purchase due to the Mr D’s firm’s failure to tell them of the existence of another offer. The prospective purchaser had tried to use the Complaints Handling Procedure (CHP) but had been foiled due to a member of staff in Mr D’s firm not knowing about the CHP and when it should be used. RICS investigated the complaint and were able to establish that Mr D had not operated his CHP, when the complainant was entitled to do so. During RICS’ investigation Mr D was very helpful and cooperative. This was the first occasion RICS had received a complaint about him who worked as a principal of a firm of estate agents in the Home Counties. RICS considered this was an isolated occurrence and used a proportionate approach to decide the appropriate course of action was to issue a Consent Order which Mr D was happy to agree.

Terms agreed by Relevant Person Mr D agreed to provide RICS with information that had been sent to staff within the firm to ensure that a copy of the CHP would be given to dissatisfied clients in the event of a future complaint. He also had to send RICS a copy of the firm’s updated CHP to reflect the new Rule and also agreed to pay a fine of £100 and RICS’ costs of £486.

Reference No: 080218

Circumstances of Consent Order An RICS Accountant undertook a Regulatory Review Visit to a two partner firm based in East Anglia in January 2008. The reason for the visit was that the firm had struggled to comply with the old Members Accounts Regulations and had a history of poor compliance. The visit highlighted grave concerns with how Firm E looked after Clients Money. The more serious points were that the firm did not realise that they had to complete reconciliations on the client ledger. It also came to light that the partners did not review or sign off the reconciliations on a monthly basis which RICS believes demonstrates best practice. In addition, the Accountant was shocked to discover that the RICS Partner had pre-signed blank cheques. These points are important as they go to demonstrate the strength of the controls in place to protect Clients Money. In this particular case, the firm had relied on the services of their Accountant who had previously supplied returns to RICS. From the information RICS had, it appeared that the Accountant instructed by firm E had let the firm down, as he had not undertaken the necessary checks to assist the firm. Firm E did cooperate with the RICS accountant and had taken immediate action.

Terms agreed by Relevant Person Firm E had already provided confirmation that the practice of pre-signing cheques had stopped. In addition, they agreed to complete monthly reconciliations that met RICS requirements. Furthermore, the firm agreed to contribute £1000 towards the cost of a follow up Regulatory Review Visit that would occur in August 2008 to ensure that RICS could satisfy themselves that the issues of non-compliance had been resolved.