Regulatory proceedings: no longer least said, soonest mended
Whether you are a professional individual or a firm, Regulated Members of the Royal Institution of Chartered Surveyors (RICS) are expected to comply with ethical, conduct and competence-related professional standards. When things go wrong and a Regulated Member has seemingly breached these standards, RICS may investigate and take disciplinary action.
So how should you respond if you find a letter from the RICS Head of Regulation on your doorstep? In this article we build on our previous answers to commonly asked questions by members and firms facing a RICS investigation. We explore in further detail what you can expect at each stage of the RICS investigation, and discuss RICS’ investigatory powers. We also offer some practical tips to help you better navigate the different stages of the investigation process.
RICS may investigate any Member it regulates, whether this is a RICS-registered professional, or a regulated firm. Generally, following receipt of information or an allegation, the Head of Regulation will decide whether an investigation should commence. A matter will only be referred for disciplinary proceedings if there is a case to answer, and then only when disciplinary action is considered necessary.
Receipt of information or an allegation
The first step generally involves an allegation or complaint being made to RICS. While it typically investigates complaints about a Regulated Members’ professional work, RICS is also able to look into a Member’s actions in their personal life if they could bring the profession into disrepute. Investigations are not always triggered by a complaint being made however, and can equally begin with RICS identifying relevant information in the press or on social media channels.
At this initial stage, RICS may refer serious, concerning or urgent cases to the Disciplinary Panel to impose interim measures. This is a serious step to take. If interim measures are imposed, the Regulated Member’s registration will be temporarily suspended or restricted pending the outcome of the investigation, usually with immediate effect. In order to impose interim measures, the Disciplinary Panel will need to be satisfied that the Regulated Member is liable to disciplinary action and that an interim measure is necessary to protect the public, is otherwise in the public interest and/or is in the interests of the Regulated Member. While interim measure applications are generally determined in private, Regulated Members will be given notice and are permitted to make representations. Regulated Members should give careful thought to how their representations are framed at this early stage. Anything said may not just affect the Member’s ability to practise in the interim, but may also potentially inform the investigation and later disciplinary case against him/her.
Decision to begin an investigation
An investigation commences when the RICS Head of Regulation considers there is a case to answer in the allegation or information received. The Head of Regulation will assess whether the breach could amount to misconduct or serious professional incompetence, as well as whether it is in the public interest to investigate.
If there is a case to answer, the Head of Regulation will inform the Regulated Member of the allegation, provide copies of relevant documentation, and invite a written response within 28 days. The written response presents a critical opportunity for the Regulated Member to put forward an account or defence in response to the allegations. Failing to engage properly at this initial stage could very well mean the difference between an early resolution of matters and an otherwise-avoidable disciplinary hearing.
Realistic prospect test
After undertaking further inquiries and considering the Regulated Member’s written representations (if any), the Head of Regulation will then assess whether the “realistic prospect” test has been met. This involves deciding whether there is a realistic prospect that a Disciplinary Panel, on the balance of probabilities, will find the facts of the allegation proven, and that they amount to misconduct/serious professional incompetence. Matters such as the seriousness of the breach, as well as the strength of the evidence, will be considered.
If the realistic prospect test is not met, the case will be closed without disciplinary action. The Regulated Member will be notified of the decision, though RICS may still provide some guidance about the Member’s future practice. The realistic prospect test is unlikely to be met where there is only an isolated incident of poor service, a single mistake or omission, or bankruptcy/liquidation without evidence of misconduct.
However, if there is a realistic prospect of establishing liability for disciplinary action, the Head of Regulation will then decide whether or not disciplinary action is necessary. Under the RICS Regulatory Tribunal Rules, the Head of Regulation is required to consider both the seriousness of the allegation and the wider public interest when making this decision.
RICS may decide not to take disciplinary action, even where the realistic prospect test has been met. For example, if the breach was not very serious, the Regulated Member has already accepted full responsibility, and all reasonable steps have been taken to rectify the situation and prevent a similar occurrence in future, RICS may decide not to refer the case for disciplinary proceedings. Equally, in a case where the misconduct was historical in nature and of lesser seriousness, with there being no similar concerns since, RICS may decide to close the case.
Where the Head of Regulation considers that the realistic prospect test has been met of establishing liability for disciplinary action, and it is necessary to proceed to a disciplinary hearing, the Head of Regulation will do one of the following:
Generally, fixed penalties are only for specific lower-end cases involving breaches of RICS’ information-gathering rules, failing to comply with CPD requirements, or failing to pay the requisite registration fees. Similarly, Regulatory Compliance Orders are made in cases where the breach is on the less serious end of the spectrum, a public disciplinary hearing is not necessary, and the Regulated Member admits the breach and is willing to work with RICS to rectify the matter. Regulatory Compliance Orders are essentially specific terms that a Regulated Member needs to comply with over a defined period of time, usually tailored to ensure that professional standards and expectations are met in future. This may include requirements to undergo training, implement new standard operating procedures, or undertake health and safety assessments.
On the other hand, referrals to a Single Member of the Tribunal or a Disciplinary Panel are reserved for more serious cases. Referral to a Single Member of the Tribunal is reserved for circumstances where: :
A referral to the three-person Disciplinary Panel is reserved for the most serious cases. Examples include allegations involving elements of dishonesty, clients being charged for unnecessary or poor quality work designed to increase profit, or where the Regulated Members’ actions have seriously affected a large number of people.
Under the Monitoring and Investigation Rules 2007 (“the Rules”), RICS has powers which it can use in its monitoring and investigation of compliance with its Rules of Conduct. These include:
Under Rule 9 of the Rules of Conduct for Members 2007, Members are required to “cooperate fully” with RICS staff. Accordingly, any failure to cooperate or comply with investigation requests may result in an additional referral to the Head of Regulation, who will consider whether the non-compliance raises a question of liability for disciplinary action. Cooperation is therefore almost always in the Member’s best interests – not least because a willingness to assist the investigation can be raised as a mitigating factor when the Disciplinary Panel considers the eventual sanction.
This is not to say, however, that little thought should be given to the scope of RICS investigation requests. The nature, extent and form of information or documentation shared with RICS should always be carefully considered. Documentary requests by RICS may relate to information that should be withheld for reasons of client confidentiality. Written submissions in response to the allegations at the pre-investigation stage may be shared with the person who raised the complaint. In some instances, undertakings may need to be sought from RICS as to whether certain documents or responses should be withheld from the complainant. Accordingly, Members under investigation should continually keep under review the manner in which they are responding to RICS investigation requests.
I am a Regulated Member currently being investigated by RICS. How should I respond?
RICS investigates a large number of complaints each year, many of which do not result in a referral to disciplinary proceedings. Keep calm and do not assume the worst. Consider your next steps carefully. It may be wise to take legal advice at this early stage, as your actions from the outset can affect the ultimate outcome. This might be particularly important where there is an indication RICS will apply for an interim order, which could affect your ability to continue practising during the investigation. How you engage initially with the regulator will likely set the tone for how the matter eventually progresses.
If the complaint relates to client work, ensure that you have access to all of the relevant files and that they are in a workable order. This will allow you to consider the terms of the complaint in a logical manner.
You should make sure the note is stored on a personal drive (i.e. not your work computer). You should also intend that the note is prepared for the purpose of seeking legal advice, as this would mean it could attract legal professional privilege (LPP). It should therefore be marked as LPP, as then you cannot be required to disclose it for any other purpose. This note will provide a very useful insight to your lawyer.
You may have a duty, under your contract of employment, to tell your employer, or a responsibility to inform fellow partners if you are in a partnership. If you are regulated by another regulator, you may also be required to make a disclosure to them about the complaint.
Where RICS is simply making preliminary inquiries in respect of the allegations, it may be better to postpone a full response until a later date. You may be in a better position to understand the case against you when further information has been provided by the regulator.
As mentioned above, where there is a case to answer, RICS will inform you of the allegation and invite a written response within 28 days. Consider carefully how you will put forward your account or version of events, as this will likely have repercussions later on in the investigation and disciplinary process.
Regulated Members are required to “cooperate fully” with RICS staff (Rule 9, Rules of Conduct for Members 2007). Failing to do so could lead to a separate finding of misconduct against you. Be compliant with the regulator and demonstrate that you are willing to cooperate in the process.
If you are asked to provide your file consider to what extent it can be provided. It may contain confidential material which would make you think twice about handing it over – take advice on this if you are unsure. Confidential aspects may require redaction or removal, with an appropriate explanation being provided. However, the first principle must be that you are as cooperative as possible with RICS. Contemplate that first when determining whether information should be provided.
This will rarely help. When the regulator has become aware of the complaint, it may still proceed with the investigation, even if the complainant seeks to withdraw the complaint. Contacting the complainant could be seen as trying to undermine the process. Be mindful also that your responses to the allegations submitted to RICS may be shared with the complainant for their comments.
Even if you do end up appearing before a disciplinary tribunal, this does not necessarily mean the end of your career. RICS has a number of sanctions at its disposal, ranging from fixed penalties to expulsion. Seeking early advice will give you the best chance of a favourable outcome.
Julie Matheson is a Partner in the Regulatory team, specialising in advising firms and individuals practising in the professional services and built environment markets. She has particular expertise in advising on compliance with RICS regulatory obligations and in RICS disciplinary matters.
Lucy Williams is Legal Counsel in the Regulatory Department with a particular specialism in legal, healthcare and financial regulation. In her defence practice Lucy represents regulated professionals and organisations facing professional disciplinary proceedings.
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