Regular readers of our blogs will be aware the focus is often based on the core themes of independence, oversight, culture and behaviours. The recent update from the standards and regulation board (‘SRB’) of the Royal Institute of Chartered Surveyors (‘RICS’) confirms a focus on similar issues – and we therefore support it. Many of our clients will also pay close attention to it.
Our clients include businesses from across the range of financial service activities, and a reliance on the underlying value of assets underpins the stability of the asset classes many of them rely upon. Some of them were concerned to read comments from the independent author of the review such as, “….several examples of embedded conflicts were provided during the Review that in my opinion would seriously test the patience of the layman. Some were really quite surprising in this day and age.”
The key recommendations, which interestingly mirror our ongoing campaign for greater independence and transparency within all areas of financial service activities, include:
• The creation of a dedicated, independently led valuation regulatory quality assurance panel, under the jurisdiction of the SRB. An independent ‘third line’ position receives our endorsement.
• The creation of a formal valuation compliance officer role within RICS firms who undertake valuations. This person will have responsibilities that ensure services are delivered independently, objectively, and to standards appropriate to today’s financial services industry. We are always supportive of improved ‘second line’ oversight and this change should provide a robust foundation for full accountability and responsibility of valuation firms to their clients.
There is, of course, further work that needs to be done, and the report acknowledges this. We wait to hear how RICS will address conflicts of interest, culture and behavioural issues. There is increasing recognition that conflict of interest issues are not simply extinguished by declarations alone – it is how the right culture and behaviours are embedded in firms that matters.
It is not just RICS who are addressing these issues. There is a change afoot as regulators, particularly in the financial services world, demand greater awareness of previous failings and more robust independence, oversight and challenge. It’s time to change.
If you would like to discuss how we can help, give us a call.