A disagreement with four directors has turned into a wider dispute about the institution’s purpose and direction that has left its members angry and disillusioned. Tom Lowe analyses the issues
It was on 13 December last year that the first details of a scandal that has since engulfed the RICS began to surface. The Sunday Times revealed that a financial report into the RICS’s treasury management processes had not been shared beyond its audit committee.
After months of wrangling with the RICS management board, four non-executive directors, who had learnt of the existence of the report in early 2019, obtained a copy. The report, by accountant BDO, turned out to be damning. But, when the four directors raised concerns about how it had been handed, they were abruptly dismissed.
The reaction has been explosive. Over seven fraught weeks since the events were first exposed, the saga has torn a lid off a simmering discontent among some of the institution’s membership. Rumblings over the direction the RICS has taken over the past decade – which has seen it pursue ambitions to become a global leader in chartered surveying standards and qualifications at what some see as the expense of its core UK membership – have erupted to the surface. The fallout, and RICS’s handling of the crisis, have led many to question the decisions being taken at the heart of the 152-year old institution.
The audit committee report
The BDO report had given the RICS – whose headquarters on Parliament Square is sandwiched between HMRC and the Supreme Court – the lowest possible “no assurance” rating for its treasury controls. It found that, for 26 out of 35 international banking locations, the RICS was “neither sure of how many bank accounts are in existence nor how much funds they hold”. This put the institution at risk of “unidentified fraud, misappropriation of funds and misreporting of financial performance”.
In mid-2019, when the four non-executive directors – Amarjit Atkar, Bruce McAra, Simon Hardwick and Steve Williams – had asked why the report had not been made public, Paul Marcuse, the chairman of the management board, commissioned a probe by the RICS’s in-house lawyer. When the probe proved inconclusive, the four turned to then-president Chris Brooke for answers. Brooke responded by writing them a letter in November 2019, accusing them of passive-aggressive behaviour - and abruptly terminating their contracts.
What they seem to want to do is brush the findings of the auditors under the carpet and just move on. I don’t think this shows them up in a good light
Richard Steer, Gleeds
It took over a year for these events to be uncovered but, when they were, the reaction was immediate. Four former RICS presidents including Christopher Jonas and Amanda Clack wrote to the current RICS president, Kathleen Fontana, demanding to know why the four directors had been ousted and calling for an independent inquiry.
In response, the RICS published a statement saying that its governing council was “confident in the integrity of the work undertaken by its audit committee between 2018 and 2020” and adding that an external review of “past matters” was “not necessary”.
But far from diffusing what had by now become a significant crisis, the statement lit a touch paper. One surveyor with over four decades of experience told Building that the RICS had been “hijacked,” adding: “The sheer arrogance of it is staggering isn’t it?”. Another at a global property consultant said: “These people have lost sight of the real world.”
Of the RICS’s handling of the affair, Richard Steer, chairman of Gleeds Worldwide, said: “I think most people would say that it’s been very badly handled. From the coverage, it appears they have given the impression that what they seem to want to do is brush the findings of the auditors under the carpet and just move on. I don’t think this shows them up in a good light and leaves many of the 130,000 members wanting to know more.”
As the heat from members intensified in the two weeks following the former presidents’ letter, the RICS changed its position. In a full 180-degree U-turn, the governing council announced that it had unanimously voted to proceed with an independent review after all, and confirmed that the results would be made public.
In a statement on 21 January, it said that “having listened to the views of members in recent weeks, and appreciating their need for further reassurance”, it had decided to appoint an “experienced, fully independent individual to undertake the review according to terms of reference which it will set”.
On the following day, the organisation’s chief executive Sean Tompkins sent a mea culpa email to the entire membership entitled “Bringing clarity to maintain trust and confidence”. The email read: “I understand that many of you will be concerned about recent reports and the reputational impact on our profession.” He added that the body’s leadership was “listening” and wanted to “ensure that we adequately address what has been raised”.
Until the findings of the review are published, confidentiality agreements mean that many of the finer details of why the four directors were dismissed are likely to remain under wraps. A spokesperson for the RICS told Building that the findings of the BDO report were not shared because they had already been covered in four other reports.
So why the BDO report – which a source close to the events told Building had probably been commissioned by then-finance director Andrew McManus – was deemed to have been necessary, is unknown. The RICS press office has not provided a timeline of when the other four reports were carried out, or revealed what they contain.
The non-executive directors
Adding to the confusion is the mystery of why the dismissal of the four directors was not made public immediately. Asked last month why the directors had been fired, the RICS spokesperson said the reasons could not be disclosed because of contractual issues.
Pressed on the matter, the spokesperson said that, at the time of their departure, the directors had “asked for confirmation that the RICS would not make a unilateral statement to the media concerning their departure”.
A few days later, the four directors hit back in a joint letter sent to Building. They claimed that the day after their appointments had been “unexpectedly terminated”, they had “suggested that a joint statement be issued to enable all involved to make clear what had happened and why”.
They said the request was made because they foresaw “likely media interest in the sudden departure from [the] management board” of four out of its six non-executive directors. But, in response to the request, the directors said that Brooke had written to them to say that the RICS “considered this to be a private matter and did not intend to make a public statement”.
Far from providing clarity, these disclosures have posed even more questions. If the BDO report was deemed surplus to requirements, why was it commissioned in the first place? Why had the RICS considered, according to the directors’ account, that their dismissal was a “private matter”?
What is clear is that the saga has exposed the depth of unease among some members of the institution over what they see as its global priorities. Steer at Gleeds said: “There is definitely frustration within the industry with regard to the RICS but, to be fair to them, this is not a new thing. There have been rumblings of discontent going on for some time.
“There is a feeling that they have commoditised certifications and qualifications in a desire to expand their global reach. Global is good – but not at the expense of quality control.”
The RICS’ spokesperson said: “Quality assuring RICS education and qualifications activities consistently across geographical boarders and within different disciplines of the profession is paramount.”
She added: “All programmes are reviewed by RICS staff and professionals and have minimum criteria and standards. RICS’ global and local review processes support this, including a yearly audit of data relating to all our professional assessments, assessor training, direct entry routes, vetting panels, nomination routes and qualification checks.”
Meanwhile, other RICS members said that UK surveying firms, which typically pay hundreds of thousands of pounds to ensure their staff’s chartered status, feel neglected.
Now would be a good time to review the purpose and relevance of RICS, and this will be a great opportunity for all our members to help us shape the future of RICS
RICS president, Kathleen Fontana
One surveyor said that the organisation’s expansion had caused it to lose touch with its UK-based SMEs: “I feel, like so many of my peers, that it is losing its roots in terms of its engagement with grassroots membership in the UK.” He said that he had written some “pretty strong” letters raising his concerns, but had found it difficult to get further than the “account sales manager who’s trying to sell you training”. He added: “My perception is that we’re not taken seriously.”
Another surveyor who spoke to Building has had more than 20 years of involvement with the institution. He said he was due to speak to trainees who were about to sit their professional exams, explaining why the RICS is so important in the industry. He feared that they would be thinking, “What the fucking hell is going on with that organisation?”
The reaction seems to have taken the RICS leadership by surprise. When told of the level of frustration among some of its members, Fontana told Building: ”From talking to members far and wide, I recognise that they just need some further independent reassurance on the matters in 2018/19, even though the governing council felt further investigations would not reveal anything more in terms of the audit.
“Listening to these views, it is clear that we need also to take stock for the future.”
She added: “Now would be a good time to review the purpose and relevance of the RICS, and this will be a great opportunity for all our members to help us shape the future of institution.
“Governing council is agreeing how to proceed with its forward-looking strategic review into governance and member engagement. All the many ideas and suggestions gratefully received in respect of this review have been captured and will be considered as part of council’s decisions. No voices will go unheard.”
But the handling of the BDO report is not the only cause for concern - a backlash over pay to senior staff has also contributed to the unease. Despite furloughing 200 employees during the covid-19 pandemic and making a further 140 redundant, bosses at the organisation were paid bonuses last year.
The RICS responded by saying that only about 30% of the bonus pool was awarded during the 2019/20 financial year. The payments were agreed by an independently chaired remuneration committee advised by Mercer, an independent external consultancy.
Part of the problem seems to be what another surveyor described as the “total monopoly” that the body holds on professional accreditation. He said the firm he works for, which pays £500,000 a year in membership fees, feared that walking away from the body would risk damaging its chances of winning public sector work, because it “would look as if our staff are unqualified”.
He said the grip that that the organisation holds over the industry has meant that its leadership had “lost touch with reality and just got into their ivory tower, where they think the world dances to their tune”.
All of which poses the question: how does an institution as august as the RICS reclaim its credibility in the eyes of members who seem, regardless of the findings of the independent review into the handling of the BDO report, to have run out of patience?
“I hope that this is a bit of a wake-up call,” one surveyor said. “I hope that they can see that, irrespective of whether it’s true or not [that the RICS has not been transparent over the BDO report], that it’s embarrassing for the membership. On the back of this, they will hopefully use it as a reason to reach out and engage more with their members.”