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Relationship between RICS Standards and IVS

Linked to the complexity and length of the Red Book is the issue of including the whole of the current IVS alongside the RICS standards.  This was first done in the 2012 Edition.

RICS has always supported the development of the IVS but we suggest has got itself into a muddle over how support for globally recognised valuation definitions and principles should be reflected in its own standards.  Prior to 2012 the IVS had been having an increasing influence over the Red Book, and vice versa.  Indeed the 2003 Red Book stated that wherever possible the IVS had been integrated into the RICS standards to avoid the situation where the two were seen as competing alternatives.  At that time there were some things in the Red Book which RICS was not willing to accept but with successive iterations of both sets of standards these were largely resolved.  By 2012 there was already effective alignment between the relevant parts of the Red Book and the IVS, with the result that a valuation undertaken in accordance with the Red Book would also be compliant with the IVS.  It is therefore unclear to us what purpose was served by putting the whole of the IVS into the Red Book alongside the RICS’s own standards.

It must be recognised that the IVS does not have the same responsibilities as a professional body.   The IVSC has achieved a lot in promoting consistent definitions of value and establishing an international consensus what a professional valuation service should include.  However, the IVSC has no power to enforce its standards and does not regulate any members.  Any organisation wishing its members to use the IVS is always going to need additional standards, ranging from when the IVS apply to additions or variations required for matters specific to the jurisdiction and markets in which they operate.   There are two ways of doing this.   The adopter can either accept the IVS as published and then issue their own supplementary standards alongside or maintain its own standards to ensure consistency with the relevant principles in the IVS.  The RICS has chosen to do both in a single set of standards.   While reproducing the IVS it also produces its own direct equivalents of much of the IVS using different wording.  While having alternative wording for the same concept can sometimes help interpretation, it is just as likely to create uncertainty and confusion.  It is not inconceivable that such differences could influence the outcome of ligation around valuation disputes in ways which are not intended with resulting difficulties for all involved.

One example of a contradiction in the language between the IVS and RICS standards is in the use of the word “should”,  After RICS decided to incorporate the IVS in their entirety in the 2012 Red Book, the IVSC decided to redefine “should” to mean “presumptively mandatory”.  It further provides that if an action the IVS state “should” be taken is not, the specific reasons why must be documented.  Thus in practical terms its usage in IVS is no different from “must” in much of the Red Book.  “Should” is used in RICS guidance in accordance with its normally understood meaning, i.e. to indicate an action that is normally recommended, but that alternatives may be appropriate, and even expected in certain circumstances.  This creates a number of potential conflicts between the IVS and RICS standards.

Another issue is one of accountability and jurisdiction.  Although RICS participates in the development of the IVS, it does not control the IVSC and it is entirely possible the IVS may evolve to include something unacceptable to RICS.   We believe that it needs to have a transparent process involving consultation before accepting changes in the IVS into the Red Book.  

What do you think?
Does the RICS serve any useful purpose by reproducing the IVS in the Red Book alongside its own equivalent material?

Instead, should the Red Book just make a statement that the RICS standards are based on the IVS with additional material and that a valuation that is compliant with the Red Book will also be compliant with the IVS?

Should RICS establish a procedure for consulting its members and other interested bodies before reflecting any changes in the IVS into its own standards?


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