guidance on the new rules for the registration of …...guidance on the new rules for the...

Regulation

Guidance on the new Rules for the registration of firms and Rules for the use of the RICS logo and designations by firmsWith effect from 1 April 2020

rics.org/regulation

Contents

1 Introduction �� 1

1.1 Purpose of this guidance �� 1

1.2 Background to the new rules �� 1

1.3 Key actions required by firms �� 1

2 Changes to the rules for the registration of firms �� 2

2.1 New rules in force 1 April 2020 �� 2

2.2 Firms required to register for RICS regulation �� 2

2.3 New requirement that 25 per cent of principals are RICS-qualified members �� 2

2.4 Firms unable to meet the 25 per cent requirement �� 3

2.5 Registration of a division, department or practice area for regulation by RICS �� 3

2.6 The responsible principal role �� 4

3 New rules for the use of the RICS logo and designation by firms �� 7

3.1 New rules in force 1 April 2020 �� 7

3.2 Permitted use of the RICS logo and firm designation �� 7

3.3 Text for inclusion in terms of engagement �� 7

3.4 Use of the ‘chartered surveyor(s)’ designation �� 8

rics.org/regulation

iEffective from 1 April 2020

Guidance on the new Rules for the registration of firms and Rules for the use of the RICS logo and designations by firms

ii Effective from 1 April 2020

1 Introduction

1.1 Purpose of this guidanceThis guidance aims to help RICS members, RICS regulated firms and firms considering RICS regulation to understand and interpret the new Rule for the registration of firms (version 6) and Rules for the use of RICS logo and designation by firms (version 4).

1.2 Background to the new rules The RICS model for firm regulation was first introduced in 2007. Over ten years on, RICS needs to ensure that it remains fit for purpose in current times.

RICS regulates firms because it has a key role in implementing the professional standards vital to the welfare of society, the built environment and the economy. There is also a need to address the public expectation that transparent and proper corporate governance practices means holding business leaders accountable for their firm’s conduct, performance and service.

In 2017 RICS reviewed its model for firm regulation and assessed whether it could be improved. Following the review, several proposals were developed to improve the model. RICS members and regulated firms were consulted on these proposals between February and April 2018.

In November 2018 the Regulatory Board approved a package of policy changes to the rules, and RICS released exposure drafts of the new rules for comment by the profession. The new rules have now been approved by the Regulatory Board and will come into force on 1 April 2020.

1.3 Key actions required by firms• Regulated firms should review the number of principals within their firm who are

RICS-qualified members and should contact RICS if this is less than 25 per cent of the total.

• At a date to be confirmed by RICS, regulated firms will need to designate an individual within the firm to be the responsible principal. RICS will notify regulated firms in due course when this information needs to be submitted online.

• Before 1 April 2020, firms not regulated by RICS must remove the RICS logo from all branding or must register for regulation with RICS.

rics.org/regulation

1Effective from 1 April 2020

https://rics.org/globalassets/rics-website/media/upholding-professional-standards/regulation/rules-for-the-registration-of-firms-rics.pdf

https://rics.org/globalassets/rics-website/media/upholding-professional-standards/regulation/rules-for-the-registration-of-firms-rics.pdf

https://rics.org/globalassets/rics-website/media/upholding-professional-standards/regulation/rules-for-the-use-of-the-rics-logo-and-designations-by-firms-1-april-2020.pdf

2 Changes to the rules for the registration of firms

The new rules include the following key changes:

• at least 25 per cent of a regulated firm’s principals must be RICS-qualified members

• regulated firms must designate a responsible principal who will provide oversight and accountability for ensuring the firm meets its responsibilities as a regulated firm and

• a firm can, under certain circumstances, register a division, department or practice area for regulation by RICS.

2.1 New rules in force 1 April 2020The rules come into force on 1 April 2020. RICS is providing a 12-month transition period to ensure that there is enough time for regulated firms to understand and adopt the new requirements.

Regulated firms must comply with the new rules by 1 April 2020 to avoid any disciplinary action by RICS.

Before 1 April 2020, regulated firms must continue to comply with the Rules for the registration of firms (version 5).

2.2 Firms required to register for RICS regulationThe rules determining when firms are required to register for regulation in section 3.1 have changed:

‘A Firm is required to register for regulation by RICS if:

a. the Firm provides surveying services to the public;

b. the Firm is operating in Regulated Area A;

c. at least 50% of the Firm’s Principals are RICS Members.’

The new wording better captures the types of firms to be mandated for registration with RICS.

RICS considers that any firm supplying or undertaking surveying services in Regulated Area A (currently comprising only the United Kingdom) would be ‘operating in’ that area.

The change does not impact existing regulated firms.

2.3 New requirement that 25 per cent of principals are RICS-qualified members The rules require that at least 25 per cent of a regulated firm’s principals must be RICS-qualified members. A qualified RICS member means a chartered or non-chartered member of RICS (i.e. Assoc RICS, MRICS or FRICS). This does not include attached membership classes of RICS, such as student members.

In section 1.4 the rules define a principal as:

a. ‘a sole practitioner;

b. a director of a company [as legally or statutorily recorded];

c. a member of a limited liability partnership or other body corporate managed by its members;

d. a member of the management, supervisory or administrative board in any other body corporate;


2 Effective from 1 April 2020

https://www.rics.org/globalassets/rics-website/media/upholding-professional-standards/regulation/media/rules-for-registration-firms-rics.pdf

https://www.rics.org/globalassets/rics-website/media/upholding-professional-standards/regulation/media/rules-for-registration-firms-rics.pdf

e. a person holding any position that is equivalent to any of the above positions in the part of the world in which the Firm is established;

f. a person performing the functions of any of the above roles;

g. an officer or employee of the Firm who provides surveying services to the public through and in the name of the Firm. Provision of such services is not routinely subject to direct supervision by any other person, normally denoted by a person whose job title includes the word “Partner” or “Director”.’

Firms must advise RICS of all principals within a firm (both RICS-qualified members and other principals) through their normal RICS annual return or registration process. RICS uses this information to ensure that firms meet the requirement that 25 per cent of their principals are RICS-qualified members.

RICS recognises that job titles and job responsibilities will differ significantly across firms. Therefore, in assessing whether an individual falls within the definition of a principal under point g (above), RICS encourages firms to focus on:

• the seniority of individuals

• role responsibilities and

• the extent to which their work is supervised.

If an officer or employee meets the following conditions, RICS considers that person to be a principal within the firm:

a. the individual provides surveying services to the public through and in the name of the firm and

b. the provision of such services is not routinely subject to direct supervision by any other person.

Firms should contact RICS if they are unsure of an employee’s status as a principal.

2.4 Firms unable to meet the 25 per cent requirement If a firm is unable to meet the new requirement to have at least 25 per cent of its principals as RICS-qualified members, the firm may still be eligible to register for regulation by RICS at the discretion of the RICS Head of Regulation, via section 4.2 (a) and (b) of the rules. To register for regulation in this way a firm would need to either:

• demonstrate that the firm is implementing an appropriate plan to secure compliance with the eligibility criteria within a reasonable period or

• be appropriately supported and supervised by another RICS-registered firm or firms.

The decision about whether a firm can register for regulation in this way will be made by the RICS Head of Regulation. Contact RICS at [email protected] prior to applying for regulation through this section of the rules.

If a regulated firm is unable to meet the new requirement that 25 per cent of its principals be RICS-qualified members and cannot register via section 4.2 (a) or (b) of the rules, the firm cannot be registered or remain registered for regulation by RICS. In this case, RICS will contact the firm to initiate its de-registration. Regulated firms are encouraged to contact RICS if they believe they will be non-compliant with the rules.

2.5 Registration of a division, department or practice area for regulation by RICSIn certain circumstances it may be appropriate for a division, department or practice area within a firm to register for regulation by RICS in its own capacity, in place of registering the firm itself. RICS considers this provision to be suitable for a division, department or practice area in a large multi-disciplinary firm.

For a division, department or practice area of a firm to register for regulation by RICS, the following conditions must be met:

rics.org/regulation


mailto:regulation@@rics.org

• the firm must provide surveying services to the public

• the provision of surveying services by the firm must be the responsibility of a division, department or practice area of the firm

• the division, department or practice area of the firm must have a degree of management autonomy and can meet the obligations of registration

• the firm must provide consent that the division, department or practice area can register for regulation by RICS in its own capacity and in place of registering the firm itself and

• the division, department or practice area of the firm can meet all other requirements for being regulated by RICS.

If a firm seeks to register a division, department or practice area for regulation by RICS, it must do so through a manual registration with RICS. Contact RICS at [email protected] for information on this process.

2.6 The responsible principal roleRegulated firms must nominate an individual to be the responsible principal within the firm. The responsible principal will provide oversight and accountability for ensuring a regulated firm meets its responsibilities.

2.6.1 Expectations of the responsible principalThe responsible principal will have primary responsibility for ensuring that, within a regulated firm, RICS’ professional, technical and ethical standards are applied, upheld and supported by appropriate governance and assurance frameworks.

RICS expects the responsible principal to be the key senior relationship holder between the regulated firm and RICS in respect of compliance matters. In addition to the specific responsibilities set out below, the responsible principal can also:

• support a good corporate culture

• encourage strong professional values and

• ensure positive company cooperation with RICS’ regulatory processes (such as monitoring, investigations and disciplinary procedures).

RICS will normally expect the responsible principal to be a senior RICS member and someone:

• in a position of leadership, who holds responsibility for compliance and can influence the strategic objectives of, and significant decisions made by, the firm

• who can provide oversight and accountability for ensuring the firm meets its responsibilities as a regulated firm

• who has experience in, and understanding of, regulatory compliance activities to carry out the duties of a responsible principal

• who understands RICS standards and other requirements of RICS registration by the regulated firm and

• who acts as the main point of engagement with RICS in relation to a firm’s RICS compliance.

RICS encourages regulated firms to nominate an RICS member principal for the role of responsible principal. However, it may not be practical for regulated firms to nominate an RICS member in every circumstance; for example, a regulated firm may choose to nominate a senior lawyer or accountant, as these professions typically take on, and have experience in, compliance activities.

If a non-RICS member is nominated for the responsible principal role, RICS may request information from the firm as to why it is appropriate to appoint this individual, and how the individual can successfully carry out the duties of the responsible principal.



mailto:regulation@@rics.org

2.6.2 Conditions for acting as the responsible principalThe nominated responsible principal will need to meet conditions A, B, and C in section 7 of the rules.

‘Condition A is that the Head of Regulation is satisfied that the person is appropriate to hold that appointment.’

RICS will determine this by asking each responsible principal nominee to answer a set of questions during the nomination process. Further information on these questions can be found in section 2.6.4 of this guidance.

‘Condition B is that the Head of Regulation is satisfied that the person:

a. is able, through the exercise of executive leadership responsibility, to influence strategic objectives of, and significant decisions made by, the Firm; or

b. reports directly to a person who is so able and can demonstrate they have been delegated authority by the firm to fulfil the role of Responsible Principal.’

It is the responsibility of the regulated firm to ensure that the responsible principal nominee can meet the requirements of condition B and will act in a manner that supports the intended purpose of the responsible principal role. RICS reserves the right to ask regulated firms for information on how a nominee or appointed responsible principal can meet condition B.

‘Condition C is that:

a. the person is an RICS Member; or

b. the person is not an RICS Member but the Head of Regulation is satisfied that:

i. it is impracticable for the Firm to appoint an RICS Member; and

ii. the person selected has sufficient experience in, and understanding of, regulatory compliance activities to carry out the duties of a Responsible Principal.’

If a firm nominates a non-RICS member, RICS may request information as to why it is appropriate for the firm to appoint this individual, and how the individual is able to successfully carry out the duties of the responsible principal.

2.6.3 Responsibilities of the responsible principalSection 7.6 of the rules states that the responsible principal will be responsible and accountable to RICS for but not limited to:

a. ‘taking reasonable steps to ensure the Firm has implemented appropriate policies, systems and controls to ensure compliance with all RICS standards and other requirements of RICS registration by the Firm, its Principals and employees, and is able to demonstrate evidence of this to RICS if required to do so;

b. taking reasonable steps to ensure the Firm has implemented systems and controls to ensure compliance with legal obligations and is able to demonstrate evidence of this to RICS if required to do so;

c. ensuring all information provided to RICS is truthful and adequate for the required purpose and that any material changes in circumstances are reported to RICS [in accordance with the Rules for the registration of firms]; and

d. ensuring there are processes and systems to record any failure to comply with RICS requirements or statutory obligations and making such records available to RICS if required.’

RICS will audit the responsible principal’s declaration of meeting these requirements through the standard RICS audit regime.

Before 1 April 2020, RICS will release guidance material to help ensure any individual selected as the responsible principal is able to perform the role to the required standard.

rics.org/regulation


2.6.4 Nominating a responsible principalRegulated firms must have a responsible principal in place before 1 April 2020. RICS will notify regulated firms in due course when nominations for a responsible principal can be submitted online.

It is the responsibility of firms and the individual nominated to be the responsible principal to ensure that the role and responsibilities of the responsible principal are understood.

RICS will assess the responsible principal nominee to determine their suitability for the responsibilities and duties required of the role. During the nomination process all nominees will have to answer the following questions.

Responsible principal questions

1 Have you ever been convicted of a criminal offence?

2Have you ever been subject to any proceedings that have led to a judicial or administrative order against you?

3Are you currently subject to a bankruptcy order or insolvency agreement or have you been subject to such an order or agreement in the last five years?

4 Have you been disqualified as a director in the last five years?

5Have you previously been the subject of any disciplinary or regulatory findings or are you or have you been under investigation by any professional regulatory body, including RICS?

2.6.5 Contact officer roleRICS considers that the responsible principal should be the primary regulatory contact for RICS within the regulated firm. However, the responsible principal may wish to delegate the day-to-day task of being the primary regulatory contact officer to another individual within the regulated firm, such as the current contact officer. This delegation should be confirmed with RICS in writing. Note that accountability to RICS for compliance remains with the responsible principal.

If you are currently the contact officer for your regulated firm and intend to be the responsible principal, you must follow the nomination process as outlined above.



3 New rules for the use of the RICS logo and designation by firms

The new rules include the following principal changes:

• the use of the RICS logo has been restricted to members and regulated firms only

• the requirements for how the ‘regulated by RICS’ designation must be displayed have been strengthened, to ensure visibility

• a requirement has been added that regulated firms must include a prescribed text in the terms of engagement issued to clients in respect of its surveying services to explain what being regulated by RICS means and

• a partnership or a company can use the designation ‘chartered surveyor(s)’ in a trading name only.

3.1 New rules in force 1 April 2020The rules come into force on 1 April 2020. RICS is providing a 12-month transition period to ensure there is enough time for regulated firms to understand and adopt the new requirements.

Regulated firms must comply with the new rules by 1 April 2020 to avoid any disciplinary action by RICS.

Before 1 April 2020, regulated firms must remain compliant with the rules outlined in Use of firm designations (version 3).

3.2 Permitted use of the RICS logo and firm designationThe new rules have restricted the use of the RICS logo to regulated firms only. Previously, a firm that conducted surveying activities outside the United Kingdom was able to use the RICS logo without being registered for regulation if the firm had one chartered surveyor principal employee.

By adopting a globally consistent approach towards the use of the RICS logo, it will become easier for clients in the marketplace to identity firms that work to RICS globally recognised standards.

Non-regulated firms using the RICS logo have until 1 April 2020 to register for regulation with RICS or to cease using the logo. From 1 April 2020 RICS will enforce any non-compliance with the rules through legal and disciplinary action.

Detailed guidance on the correct use of the RICS logo can be found on the RICS website.

3.3 Text for inclusion in terms of engagement Every regulated firm must include a prescribed text in the terms of engagement issued to clients in respect of its surveying services. The text that must be used can be found in Appendix A of the rules.

rics.org/regulation


https://www.rics.org/globalassets/rics-website/media/footer/media/rics-use_of_designations_and_logo_guidance_250216_rt.pdf

https://www.rics.org/globalassets/rics-website/media/footer/media/rics-use_of_designations_and_logo_guidance_250216_rt.pdf

http://www.rics.org

http://www.rics.org

3.4 Use of the ‘chartered surveyor(s)’ designation

3.4.1 Sole practitioners The rules allow the designation ‘chartered surveyor(s)’ to be used by a sole practitioner who is a chartered member.

3.4.2 Partnerships and company namesThe rules allow a partnership or a company to use the designation ‘chartered surveyor(s)’ in a trading name only. Previously, a partnership or a company was able to use the designation in a company name and a trading name.

The new rule is not retrospective in application; therefore, any firms that currently use the designation ‘chartered surveyor(s)’ within a company name are not required to remove the designation. However, over time, RICS expects firms to move away from using the designation as part of a company name.



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Confidence through professional standardsRICS promotes and enforces the highest professional qualifications and standards in the valuation, development and management of land, real estate, construction and infrastructure. Our name promises the consistent delivery of standards – bringing confidence to markets and effecting positive change in the built and natural environments.

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United Kingdom RICS HQ [email protected]

Chartered Surveyor™ is a trade mark of the Royal Institution of Chartered Surveyors.

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