Fraud

Definition

The Fraud Act 2006 creates three offences: fraud by false representation, fraud by failing to disclose information, and fraud by abuse of position. In an APC context, fraud means any deliberate act of deception intended to secure a financial or other advantage, whether by the surveyor, a client, or a third party. Surveyors can be victims, unwitting instruments or active participants, making awareness critical at every stage of an instruction.

Why this matters for Ethics, Rules of Conduct & Professionalism

• A surveyor who knowingly assists fraud commits a criminal offence and faces prosecution under the Fraud Act 2006 and, where proceeds are involved, the Proceeds of Crime Act 2002.
• Even unwitting involvement can lead to disciplinary proceedings if the member failed to apply reasonable vigilance.
• Rule 5 (Responsibility) requires members to act in the public interest; failing to report known or suspected fraud breaches that obligation.
• APC candidates at Level 3 are expected to advise on what to do when fraud is suspected, not merely describe what it is.

Key principles

The three forms of fraud

Fraud by false representation covers a client misrepresenting a property's planning status or rental income to obtain a higher valuation. Fraud by failing to disclose applies where a surveyor stays silent about a known defect at a client's request. Fraud by abuse of position catches a surveyor who uses confidential market data to benefit themselves or a connected party. Candidates should be able to categorise a scenario under the correct limb.

Mortgage fraud and back-to-back transactions

Mortgage fraud involves misrepresenting the purchase price or condition to a lender. Key red flags are the back-to-back or same-day resale at a significant uplift, client pressure to reach a predetermined figure, a purchase price well above apparent market value, and an unusual number of parties. Where any of these are present, the surveyor must pause, document concerns and, if the instruction cannot proceed honestly, decline.

Distinguishing negligence from fraud

A negligent surveyor makes an honest mistake falling below the professional standard; a fraudulent surveyor intends to deceive. Negligence gives rise to civil liability; fraud gives rise to criminal prosecution and almost certain loss of RICS membership. The correct response to pressure to adjust a valuation is to refuse, document, and report.

Cyber fraud and identity fraud

Conveyancing fraud through email interception can divert completion funds by impersonating a solicitor. Identity fraud sees a fraudster register as owner of a mortgage-free property and raise finance against it. Where the apparent owner's identity is inconsistent with Land Registry records, raise a query before proceeding. Firms must verify client identity under the Money Laundering Regulations 2017 (as amended).

Relevant RICS guidance and legislation

• Fraud Act 2006 — creates the three fraud offences relevant to surveying practice.
• Proceeds of Crime Act 2002 — criminalises handling criminal proceeds and imposes a duty to submit a Suspicious Activity Report (SAR) where money laundering is suspected.
• Money Laundering Regulations 2017 (as amended) — require regulated firms to apply customer due diligence and report suspicion to the National Crime Agency.
• RICS Rules of Conduct (effective 2 February 2022) — Rule 1 (Honesty and Integrity) and Rule 5 (Responsibility) are directly engaged by fraud scenarios.

Ethics and Rules of Conduct angle

Fraud is the sharpest test of Rule 1 (Honesty and Integrity). A surveyor who produces a knowingly misleading report, or stays silent about suspicious circumstances to preserve a fee, breaches Rule 1 at its most fundamental level. Rule 5 (Responsibility) requires members to act in the public interest by not facilitating financial crime. Where fraud is suspected, the surveyor has a statutory duty under the Proceeds of Crime Act 2002 to submit a SAR; failure to do so is itself a criminal offence.

APC-style Q&As