The Royal Institution of Chartered Surveyors (RICS) is planning to review its valuation practices amid fears that advisory firms could face conflicts of interest. A report in The Times newspaper said that surveyors could be conflicted if “they are appointed valuer of a fund manager or property company’s assets at the same time as charging them fees for other consultancy services.”
The review was to form part of RICS’ ‘2020 Futures Report’, which the regulator said would set out its agenda to keep the chartered surveying profession at the heart of the built and natural environment. The review of its valuation standards, known as the ‘Red Book’, will focus on valuation for financial reporting.
The Times expected RICS to propose a more frequent rotation of valuers and a requirement for valuers to report to non-executive audit committees, rather than company directors. The newspaper reported that the move will ensure that property owners do not retain the same valuers for extended periods.
Announcing the review, RICS global chief executive Sean Tompkins, said: “RICS plays an important role in leading the development of respected international standards and assuring the conduct of the profession through robust and independent regulation. In order to maintain public trust, we know that – just like the profession – our work to guide and regulate the profession must evolve too.”
James Burgoyne, Director – Claims & Technical, Brunel Professions cautiously welcomed the potential move. “Surveyors perform a vital role in valuing property for investors and businesses. RICS is rightly taking steps to ensure that the public confidence is retained in the independence and quality of property valuations,” he said. “PI insurers have seen regular losses arising from valuation work, so steps which encourage the updating of valuations and another pair of eyes reviewing past work will certainly help,” he added.
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