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RICS accused of conflict of interest failures over member receivership roles

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RICs has faced accusations of failing to manage conflicts of interest within its own membership.

A Westminster Hall debate was held on Tuesday by Labour MP Jo Stevens on behalf of her constituent Kashif Shabir whose business had been placed in receivership by Lloyds Bank as a result of the 2008 financial crisis.

She said: “Self-regulation, which is what (RICS) represents, leads RICS to its immediate conflict of interest. On the one hand, it represents the interests of members, who fund the organisation; on the other hand, it has an overriding responsibility to the public at large.

“The issue becomes how RICS manages that conflict and whether RICS is achieving the appropriate balance in judging the actions of its members.”

Explaining the case, Stevens alleges that Lloyds was trying to force companies into its recoveries department and says there was a conflict of interest as a partner at RICS member Alder King, appointed as receiver, had also been on secondment with the bank and used a Lloyds email address at the same time.

Stevens told MPs: “Once a business was with the recoveries department, receivers were appointed. They then eliminated the customer and met Lloyds’s objective.

“Any shortfall for Lloyds was met by the Government under the taxpayer bailout arrangement. To add credibility to that manoeuvre, Lloyds needed the support of a professional firm with apparent independence and full RICS endorsement. In Mr Shabir’s case the firm was Alder King, which had at one time been owned by Lloyds.

“The advantages to Alder King were all too obvious: a significant source of extremely profitable consultancy and receivership work, much of which was unnecessary and would not normally have arisen were it not for the position that had been artificially created.”

Responding during the debate on behalf of the Government, Phillip Lee, parliamentary under-secretary of state for justice, said: “RICS has investigated the allegations made by Shabir and has not found evidence of misconduct.

“It has also offered to discuss the concerns, but says that it cannot reopen its investigation without new evidence.

“The Serious Fraud Office carried out an investigation and decided there was insufficient evidence to meet its criteria for prosecution.”

He added that he understood a number of difficult situations have arisen as a result of the financial crisis, but said: “I cannot intervene in specific cases or commit the Government to any particular action to change the legal or regulatory framework relating to receivers.

“I can, however, promise that the Ministry of Justice will continue to keep the issues for which it is responsible relating to receivers under review and pass on concerns raised to other Government departments as necessary.”

RICS has looked into the matter and insists there was no misconduct by Alder King, which also denies any misrepresentation and wrongdoing.

Luay Al-Khatib, director of regulation for RICS, told EYE: “RICS regulates the surveying profession for competence, professional conduct and service standards under an independently led model.

“This is governed by an independent regulatory board that has a majority of non-surveyor members, and a disciplinary regime that always includes at least one non-surveyor on its disciplinary panels.

“Where individuals, or organisations, that we regulate fall short of the standard set, RICS takes appropriate regulatory action.

“In the case referred to in the Westminster debate, we are confident that our decision, which followed a comprehensive investigation, was fair and based on all the evidence available to us. We have disclosed our findings to relevant law enforcement agencies.

“Where a complainant, or other party, is unhappy with the way in which their case has been handled, they may escalate the issue through a defined review process which includes consideration by an independent external reviewer regarding service complaints. Complainants may also subsequently challenge decisions through the courts.

“We have written to Ms Stevens and offered to meet with her to explain our regulatory model in more detail. As with any case, should material new evidence come to light we would of course consider reopening our investigation.”

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Source:: RICS accused of conflict of interest failures over member receivership roles