Governance Crisis Rocks Royal Institution of Chartered Surveyors: Resignations and Challenges

The Royal Institution of Chartered Surveyors has once again found itself at the centre of a governance crisis that raises fundamental questions about how it is run and whether it is fit for purpose as the professional body for the real estate industry.

The chronology of the dispute that led to the shock resignations of the entire 10-strong Standards and Regulation Board, the independent board charged with the crucial task of setting and regulating standards, can be unpicked thanks to the airing of private and public statements from both sides since the news appeared on RICS's website on Wednesday.

At the heart of the matter is disagreement, between its governing council and executive versus some of its independent and non-executive members, over how the institution is run. That was the key issue that led two years ago to the resignations of its chief executive, president and other senior members of its executive board.

Those resignations had followed a damning external review into concerns over its corporate governance, sparked by events that took place in 2018-19 following a BDO audit of RICS's finances. This review, chaired by lawyer Alison Levitt, found that the origins of what went wrong lay in the governance architecture of RICS, an "accident waiting to happen," it said.

RICS CEO, President and Other Senior Execs Step Down as Damning External Review Published

In June last year an independent review aimed at rectifying this and other problems conducted by Lord Bichard was published with 36 recommendations for its overhaul, saying it found an "urgent" and "unarguable" need for change.

It is clear that a new threat is also behind this week's troubles: the prospect of government conducting its own investigation into the purpose of the 155-year-old institution with 134,000 paying members that has a qualification as a surveyor that takes four years and is essential for work as a surveyor or valuer. Within this membership, an estimated 10,000 members belong to the so-called Windsor Group of large real estate advisers, which often pay for staff's subscriptions.

So What Happened?

The Standards and Regulation Board plays a critical role within RICS. Among other things, it sets the rules and reviews the performance of surveyors to maintain "appropriate protection for consumer and clients" as it investigates those who may not meet the standards it sets, and it oversees the independent tribunal that investigates these actions.

RICS has said that Dame Janet Paraskeva and then the nine other Board members of the Board resigned after Paraskeva was invited to a meeting earlier this month to discuss a number of matters, most significantly reports that "assurances Dame Janet had given to its governing council may have been at odds with those being discussed elsewhere" from third parties.

The crux of this has been revealed by the RICS to be a meeting Paraskeva had with Rachel Maclean, the minister for planning and housing, on 12 June, which RICS President Ann Gray alleged in a letter to Paraskeva that neither she nor other senior leaders at the body were informed about.

In that letter, published in full by Estates Gazette, Gray writes that Paraskeva allegedly made several statements which were relayed by the minister and other senior officials to RICS colleagues in a meeting the next day. Paraskeva allegedly said that the SRB did not have the independence, support or resources necessary to do its job and was being sidelined; the Bichard reforms were not being implemented; and stated that Clause 221, which would give the government the power to instigate an independent review into RICS and is proceeding through Parliament as part of the Levelling Up Bill, is needed.

This makes it clear that at the heart of the crisis is the looming threat of the introduction of Clause 221 (formerly known as Clause 213), something RICS is passionately fighting.

Gray's letter to Paraskeva makes it clear she is likely, for alleged "breach of obligation," to be removed from the post. In response Paraskeva decided to resign rather than attend the meeting.

RICS said in a statement published yesterday that the meeting was being held in "accordance with our internal process for governance appointments" and Dame Janet had initially confirmed that she would be attending. It added this would have been an opportunity for her to respond to the matters that had been raised.

In support of Paraskeva, the remainder of the board then resigned and they circulated a statement in which they write: “The SRB was set up to regulate the profession in the public interest as an independent board. But we were treated from the outset by the leadership more as the enemy rather than as the regulator within RICS. It became increasingly difficult to do our job,” according to the statement.

Paraskeva's resignation letter has also been published in full by Estates Gazette. She said she had no choice but to resign as it had been made clear there was an intention to remove her from post. "I do not believe I would get a fair hearing and, for that reason, I will not be attending the hearing scheduled to take place later today," she writes.

Paraskeva wrote that she disagrees entirely with the allegations made against her and said she has repeatedly raised serious regulatory and legal concerns "including about the ongoing attempts to erode the SRB’s independence and the failures to implement the recommendations in the Bichard Report," and she alleged that RICS has been "seeking to manufacture reasons for which to terminate my appointment" to penalise her.

Paraskeva argued that she has never said that Clause 221 is needed but had pointed out to governing council at meetings in April and May that the possible use of the "the Clause was evidence of the Government’s interest in RICS and self-regulation as a warning of possible intervention if the institution did not provide the independence required and indeed signed up to after accepting the Bichard recommendations" in full.

RICS Reply

In response to the very public airing of these differences, RICS late this week published a detailed response outlining its point of view and explaining how it intends to proceed.

It said the governing council gave Paraskeva "every opportunity" to convey concerns and to discuss issues relating to operational changes it was making in line with the Bichard review.

In terms of removing resources and power from the SRB, it said that Lord Bichard recommended the creation of a knowledge and practice committee to bring together leading technical expertise from its membership and support the development of high-quality technical standards. As part of this it did move a "small number of technical surveying staff resource on 25 April" and admits that Dame Janet and SRB had disagreed with this move.

But it said the council recognised the importance of SRB retaining the authority to approve all professional standards, including technical surveying standards.

It adds that the SRB remains responsible for overseeing education and qualification, professional standards and regulatory policy, regulation and assurance, dispute resolution and the regulatory tribunal service. It adds that SRB "absolutely has autonomy to set and regulate standards and that has never been and will not be altered," adding there was "absolutely not" an internal move to remove Dame Janet.

On Clause 221 and the need for an external regulation of the profession RICS "passionately believes in robust self-regulation in the public interest" as a group.

It says activities remain in full operation and there is no "break in the continuity of regulatory functions" at the entity.

It has also begun the search for a replacement chair of the and board members. It is now taking forward a process to ensure interim appointments are made "as a priority" to the SRB. These interim arrangements will be in place while a permanent board is recruited.

So who now is leading RICS?

Governing Council, chaired by RICS President Ann Gray FRICS, is the highest governing body of RICS.