There’s no question at the moment that these are challenging times for the RICS. Bonus structures are just the tip of the iceberg, and concerns about relevance, value and appetite for change won’t be resolved in a matter of weeks. Nor should the conversation be limited to those who have spoken up so far. With the property sector’s governing body at a crossroads, real, enforceable change needs to come from more than internal and external reviews. We need more voices and more collaboration.
Ultimately, the RICS needs to be more independent. It needs better funding structures and more resources. It needs a proper remit, and its regulatory side needs to be entirely divorced from promoting the industry and its interests.
We should all be advocating for greater, more rapid improvement. Because right now, it is clear that something is broken and we would do well to heed the warnings coming not just from our own industry but that of our peers in other areas, particularly audit, which has such clear parallels with the valuation industry.
Root and branch change
Personally, I am sceptical about whether “excellence” in self-regulation is achievable. This has been the party line for the past 10 to 20 years and the truth is that we’ve not made enough progress.
External regulation isn’t a silver-bullet alternative though. We only need to look at the issues the accountancy world is facing; confidence in real estate is equally important. But if we are going to continue to enforce standards ourselves, we need root-and-branch changes that deliver wide-reaching improvements. Yes, even if that impacts member firms’ profits or the cost of services when we come to the thorny issue of who pays.
While the contributions of larger firms may well help keep the wheels turning day to day, it could be argued that they’ve also committed us too much to the status quo. But the reality is that these deeper pockets can be mobilised, with renewed appetite for clear and enforceable rules on conflict that work. Just this week we’ve seen moves from the big accountancy firms to improve audit quality and reduce conflicts of interest, with non-executives appointed to oversee audit partner pay and increase auditors’ independence by preventing the audit divisions from receiving cross-subsidy from other parts of the business.
With this in mind, I am hopeful that the independent review – being conducted by Peter Pereira Gray for the RICS Standards & Regulation Board that is due to report at the end of the year – centres on far-reaching reforms along the lines of those now coming from the audit world.
Any proposed changes should be viewed through the eyes of the members of the public who rely on the valuation industry to protect their hard-earned savings that are invested in these funds and publicly listed entities.
Once we’re clearer here, then how to widen debate? Notably absent from our recent discussions with the RICS has been the end-user – an ugly shorthand for the huge range of people our buildings, spaces and infrastructure investments are actually for – and what serves them best.
The RICS’ Global Professional and Ethical Standards includes a clear line about “acting consistently in the public interest when it comes to making decisions or providing advice”, but it feels like this is getting lost in the current furore.
Property isn’t just a business-to-business environment. We have a responsibility to everyone who invests in properties and in REITs, whose pensions are tied up in institutional funds and who rely (increasingly) on bricks and mortar for their homes, livelihoods and hard-won leisure and social time.
Over this next decade, with low interest rates and more people struggling to secure a return on their money, we will see greater allocations to real estate. Property has played a part in most economic crises and recoveries since the Great War and our responsibility will increase as more and more people in the UK, Europe and around the world put more of their savings into property.
This moral responsibility of enterprise means everyone stepping up to engage over the type of organisations that govern our businesses and our work. It will mean some very hard choices for the profession and those that seek to regulate it, with no perfect answer. But we should start by reframing the discussion to focus on wide-reaching change with society’s best interests at its core.
There are so many truly impressive and inspiring things about our profession and our industry; what we do and how we do it. But we do need to look properly at regulation if we’re going to maintain public trust, and we need to look first to ourselves for the reform that is so clearly needed. Personally, I am awaiting Pereira Gray’s conclusions with much interest.