Agents should pay towards their own regulation, says ex-Ombudsman Hamer

At the recent TPO Conference there was a suggestion (or was it a formal proposal?) from James Munro, the head of the National Trading Standards Estate Agency Team (NTSEAT) that his team would be better equipped to fulfil its regulatory role if sales agents paid a levy towards the cost of regulating the industry.

As the ‘old’ Ombudsman I was not at the conference but I understand there was a mixed reaction to such a concept.

The idea that an industry pays to be regulated is not a new one, as those in the world of financial services will be well aware. In that industry the Government imposed a structure of self-regulatory bodies (initially five with an overseeing supervisory organisation) all funded by a levy on suppliers of financial services which also had to meet the costs of their own internal compliance departments. Despite developments in the legislation, a huge rulebook and bureaucracy still exists.

Regulation of the property sector may not be seen by the current Government as a priority but eventually in my view it is going to happen. Probably that will be in the Private Rented Sector first as that sector seems to be the one ‘under siege’ (as the current ARLA President has commented), but wherever and whenever it strikes it has to be realistic, avoid stunting business and be comprehensible to the consumer.

NAEA and ARLA agree that regulation is desirable to weed out the ‘rogue’ element in the property sector, but again they see this as needing to be at an appropriate level and for costs to be contained.

If the industry makes a contribution at a reasonable level, then some structure could be put in place that makes the agency world a better respected place.

That will be a benefit to all, and those minority of agents that choose not to follow standards and cause grief to consumers or act fraudulently could be found out, with a better world for the agent who conforms to the rules.

A development of the NTSEAT idea could be a system of self-regulation under which the agent would have the opportunity to influence how that regulation would look.

This is not a case of getting the best deal for agents and blocking what the NTSEAT would be trying to achieve because the agents are paying, but establishing a sensible and practical regime reflecting how the industry works and what the consumer needs, and so would be workable for all.

There is however a major area of consideration which needs to be highlighted.

I expect many agents would be willing to pay a small amount to establish a level playing field on which all agents participate in a consistent way.

But those agents who are willing to pay will expect the less diligent (or downright dubious) agent to be pulled up and have action taken against them. I fear that no amount of rule setting and regulatory noise will be of value unless a compliance culture exists and most of all that enforcement activity by the regulator is robust and swift.

I think the NTSEAT concept should be supported.

At this stage the precise structure of that no doubt has to determined, but it should not be dismissed lightly, and subject to an impetus on enforcement I believe self-designed self-regulation in the property sector could avoid a heavy-handed government reaction to what it perhaps perceives as the ‘wild west’.

* Christopher Hamer was the Property Ombudsman until last November

x

Email the story to a friend

44 Comments

  1. Chri Wood

    I echo many of Christophers comments and believe that the simplest, most efficient way to help fund such a scheme would be for the redress schemes to pay a levy per member, per year to the NTSEAT

    However, before any such levy were to be introduced, I also believe that the same agents who would be happy to see greater (any tangible) enforcement of such a levy would expect those agents who have not registered for a redress scheme but who have been happily trading outside of the law, to be fined and, if appropriate expelled with those fines being used to ‘prime the financial pump’ of regulation. The current system is fractured and abused with many agents happily thumbing their nose at it seemingly safe in the knowledge that they are unlikely to face any penalty of any significance.

    Report
  2. Robert May

    There is case at the moment that really ought to  go to court, the valuation was so negligent it was an obvious breach of case law precedent ( Duty of care and skill)  The matter will  likely be heard by a redress scheme who will  adjudicate based on the facts simply because the general public are nervous of litigation

    Assuming  the agent is found negligent a ruling by the redress scheme will be a win for the vendor but an inefficient missed opportunity for the process of redress and industry control: There is nothing as powerful as quotable case law for setting a precedent to shape the way things are, an adjudication by redress doesn’t have that affect; every repeat offence has to be independently reviewed by the redress schemes.

    It makes sense to me that where there are obvious landmark examples that can be tested in court  there is an efficiency in the 3 redress schemes pooling together to fund an update of case law.  In simple terms  the 3 redress  schemes  should agree to underwrite the NTSEAT legal team taking test case to court.   If justice is served wrong-doers end up paying for their wrong doing, the costs of confirming the law, as well as setting precedent  for everyone else wronged  to make a claim based on the precedent set.

    The  consequences of falling foul of case law are far greater that  any fine imposed by redress.

    Report
    1. Robert May

      Oh no! a expert (sic) is worried about  having the  contract laws of agency updated to cover looking up valuations on random number generators and cracking down on them whacking  absolutely anything on the internet whether or not it will sell.

      Report
  3. smile please

    IMHO this is dangerous. Where does it end?

    I do not want to pay yet another “Tax” that will enviably be increased year on year to a body that decides how to spend it.

    Also you can see them then stealthy bringing in all manner of other hoops to jump through.

    In a time where high street agents are losing more control over data etc I do not want to give away yet more control over my business.

    Simple answer is we have enough rules and regulations. There are enough people to police the industry. If just a number of criminal agents were made an example of others would fall into line.

    Report
    1. Eamonn

      I couldn’t agree more with Smile please comments. This  is a very dangerous footpath.

      I would add that imposing and paying for more regulation  would be great news for big corporate agents who would likely welcome regulation burdens placed on their on smaller, stickler and more  efficient competition.  Regulation nearly always stops the little man.

      The question that’s not being asked is why is NTSEAT suddenly looking for money that we already pay in corporation tax to fund them.    Proberbly lobbied with so much data they thought,  “excellent chance for us to get even  more cash and keep our jobs”   In government circles your importance is measured by your size and how much money you have to spend.

      I said weeks ago, bring the NTSEAT into policing your own shop would be opening Pandora box.

       

      Report
      1. Robert May

        This favours the  smaller agent who knows their patch, sticks to what they know and what they do.

        This won’t be about new regulation it will be about adherence to legislation that already exists.  The  contractual duties to act obey and exercise due care and skill. Those are  precedents  currently being flouted by  agents who don’t know  there  laws governing the industry.

         

         

        Report
        1. Eamonn

          this favours the small agent.

          He has opened Pandora’s box and now his heads gone.

          Report
    2. Chri Wood

      “Simple answer is we have enough rules and regulations. There are enough people to police the industry. If just a number of criminal agents were made an example of others would fall into line.”

      I agree that we have enough rules and regulations and that a few high profile cases would bring a change in attitudes in some quarters. However, I disagree that there are enough people to police the myriad of rules and regulations we are all bound by and need to change a system that is not so much groaning at the seams but split entirely.

      Whether agents regard a levy paid by a redress scheme to the NTSEAT is regarded as yet another tax or an increase to existing taxes/ expenses of running a legitimate and professional estate agency, the fact remains that the NTSEAT has a low single-digit team to attempt to police an industry of around thirty thousand and worth billions of pounds each year. It is self-evidently not possible.

      Report
      1. smile please

        Chris you are suggesting that NTSEAT are the only body that regulates estate agents.

        Many others could and should step up.

        Redress schems, HMRC, NAEA, ASA, Local Councils, MLO, Data Protection, portals, Fraud teams, and a whole host of other bodies / department’s should step up.

        I know you are championing NTSEAT after they have fantastically supported Portal Juggling but in my opinion this is too much to ask the industry to back.

        If redress schemes need to make a contribution per member, what will happen? They will increase membership fee to Redress scheme to cover. Instead of £300 per office it will go to £600 -£200 to NTSEAT and £100 Admin to Redress.

        Then we will have the enviable yearly increase.

        Soon we will be paying a few hundred pounds a month to this “Body” and once they are well funded no doubt they will bring in further useless hoops to jump through, worthless qualifications, more unnecessary insurances, more “taxes”.

        Once they are in power they will have unprecedented power over the industry. I for one do not want to have my business leached for yet more money for ideas I do not agree to.

        My humbe opinon is NTSEAT have a small team. They should concentrate on 1 large cases that will send ripples through the industry. Show they have teeth. Almost like a task force. If they proscute and are successful others will fall in line.

        Report
      2. Eamonn

         

        LET THEM STAY A SINGLE DIGIT TEAM.

        By supplying them vast with amounts of information and evidence collected against your  big corporate nemesis, it now looks like it could come back and burden the respectable ones amoungst us.

         

        There needs to be legal paraminters but self regulation has always proven to be the most efficient method in business coupled with trusting in the public.  Eg.  I would support a notion to cap tenant charges widespread but I don’t want it imposed on me.

         

        everyone rallying for regulation, including the NAEA stand to make money from it, put and simple.  Either subspriction fees, required  training and exams or admin.   Do not fool yourself, claiming the system is split, that is a complete and total exaggeration.

         

        Keep it real…

        Report
    3. Trevor Mealham

      NTSEAT sub out initial enquiries via Citizens Advice. Much stock is let by landlords direct, so policing is under staffed.

      2-3 years back Trading Standards estate agency budget was only £170k and near £100k got taken by a lost court case.

      NTSEAT are under funded by a long way and lack enough staff for the national role needed.

      James Munro is a decent chap and plays fair, working hard.

      In fairness to NTSEAT and play fair agents and consumers, government should allocate £1m upwards to help the agency police do a job that shouldn’t run on lack of funds, or expect to be supported by the industry that serves consumers.

      A lot of portals allow budget list models in which can be a back door route to rookie property businesses. Good agents shouldn’t have to pay for rookies that portals and lack of regulation to the wrong type, that create the real need for policing.

      How many ‘avoid an agent‘ rogue landlords and developers should be regulated. Who pay nothing and cost consumers biggest problems.

      Report
  4. BrandNew

    Those of us who are members of the RICS already pay a substantial amount for just such regulation. Our firm has been audited twice in the last three years. I’m sure they would be happy to put themselves forward to do this for all agents (for a substantial fee) -;

     

     

    Report
    1. Trevor Mealham

      @ BrandNew: correction. You pay for training and compliance. NOT regulation

      Regulation comes from those above RICS (is government).

      Report
      1. BrandNew

        You’re obviously not a member or you would know that as a ‘Chartered Institute’ any changes to our regulations has to be signed off by government. They are also a ‘designated’ body for the  regulation of insurance. The RICS is a regulatory body.

        Report
        1. Trevor Mealham

          Im not a member of RICS.

          But I attend many of the ‘estate agency‘ consultations with government that RICS go to as well.

          Its government. Treasury, BIS that set the rules.

          Others are regulators who enforce. Not set law.

          Report
          1. BrandNew

            I don’t believe I said that RICS ‘make’ the law, but as per your last line they are regulators.

            Report
          2. Woodentop

            “But I attend many of the ‘estate agency‘ consultations with government that RICS go to as well” and your qualifications are what?

            Report
            1. AgencyInsider

              A very good question Woodentop. In what capacity do you attend these meetings Mr M? And exactly who do you represent?

              Report
              1. Woodentop

                I doubt you will get an answer, he may be to embarrassed? As for (c) I have never found anyone who said they wanted him to represent them with the government. Has anyone?

                Report
  5. pierce

    Why don’t all these bodies that we currently have and subscribe to, join forces to be one unit? It has been successfully done in the public sector and at the same time reduced costs to the end user. Not only will they become more efficient, but they won’t be able palm off their responsibility to another organisation

    That way, they will plenty of resources available to enforce the current rules and regulations and a bigger budget to work with. I accept there will be some casualties, but this should be the the most sensible way forward instead of creating more bureaucracy and fees to agents who comply with the law…

    As a side note, maybe the consumers who make spurious complaints in the vain hope of scoring points against an agent should be made to pay a fee by the Ombudsman for example, which is refundable in the event the complaint is upheld. We’ve never had a complaint in 6 years of trading but I can imagine it is very time consuming!

    Just a a couple of thoughts to ponder 🙂

    Report
    1. Trevor Mealham

      Bodies often have their own remits. Some overlap.

      Its healthier having different views so agents etc can join groups or bodies that they feel better supports their needs.

      There are time waste consumers. But also rookie traders that consumers shouldnt have to pay to be investigated

      Report
      1. Woodentop

        Would one of those bodies be INEA?

         

        “bodies that they feel better supports their needs” like AM/OTM?

         

         “rookie traders” should that include those that like to make themselves out to be a King but has no cloths?

        Report
    2. Woodentop

      Consumer redress by EU law is required to be free to complain. Any penalty is considered a restriction for the consumer to make a complaint. One sided I know. If it wasn’t for this we wouldn’t be seeing so much “injury lawyer for you” no win = no fee costing the UK £billions. They take advantage of those who need compensation, allowing false and malicious complaints which often end up being financially settled, as its cheaper and less hassel!

      Report
      1. pierce

        How come as a consumer I have to pay £65 to get some advice fro TS?

        Report
      2. Neilw

        I’m with Ombudsman Services Property who charge Agent £250 + VAT if someone makes any complaint about them.

        Report
        1. Woodentop

          Are you sure about that Neilw, it is prohibited and to quote their web site, if in doubt …

           

          “Ombudsman Services will make no charge to Complainants for the consideration of their complaints”

           

          Report
  6. Mark Walker

    Soooooo.  So far, we pay:

    To ICO to data protect us;

    To HMRC to money launder us;

    To an ombudsman redress scheme to ombuds us;

    Now we need to pay to Trading Standards to Trading Standards us.  In order for them to clamp down on the rogues who are, unsubtly and very publicly, breaking UK laws.  When Powys bid for, and were rubber stamped as being capable of, the discharging of the duties to be the Trading Standards of the estate agency sector, was it all just money for bubbly at the Powys Christmas party?

     

    Report
    1. Woodentop

      Wasn’t Gwynedd Council (based on Anglesey) jointly accepted and supposed to do the bit about lettings?

      Report
  7. smile please

    For all that think a regulated and mandatory compliance business is a good idea …..

    Look into today how much it costs to set up an authorized mortgage advisers. Look at the hoops you need to jump through, insurances needed, qualifications, network fees, admin fees, compliance fees, CPD fees. Audit checks.

    If you are looking at it correctly you will be shocked at the set up costs and monthly costs.

    And what does the FCA do? Nothing until you make a mistake! – At that point they fine you or close you down.

    They offer no advice to members, they issue “guidelines” not “rules”

    You pay a fortune to trade and year on year this increases. You think RM is bad? you have not seen anything yet!

    Anybody that wants the above has not investigated fully or does not understand it fully.

    Report
    1. Woodentop

      We pay the FCA  £2K a year to just be on the register.

      Report
      1. smile please

        Without prying into your business too much Woodentop.

        If your FS side to the business does circa 100k would i be safe in assuming all fees / splits tallied up for networks, insurances, qualifications, compliance, PI, necessary software from networks, CRM systems that are mandatory for factfinds as they do not like you using your own is in the region of £30,000?

        And that £30,000 does not include the extra staff you need to process the RWL letters, compliance documents all of which are necessary.

        I know you can be directly authorised but this again has comparable costs.

        So a semi good agent doing 200k could probably expect a running cost of £50,000 added to their outgoings every month.

         

        Report
        1. smile please

          Sorry Year not month!!! – That is scaremongering!

          Report
          1. Woodentop

            You had me worried there. No we are directly authorised.

            Report
      2. Robert May

        £2k to FCA? I wonder how many of the self employed experts have FCA registration.

        Report
        1. Woodentop

          They join a network and work under the network paid registration. The catch though is most networks will only let you join/stay if you do so much business.

          Report
          1. smile please

            And pay them a split circa 70/30

            Report
  8. AgentV

    What about setting up a brand new network of just small independent (say for instance less than 10 branches) agents that agree to abide by the ombudsman’s rules etc. and have their own higher level ‘Code Of Conduct’…..initially perhaps concentrating on sales to get going. Back it up with mystery shopper viewings and surveys of customers completed sales. Create a ‘Gold Standard’ backed up with true evidence that the general public become aware of and can trust to deliver them honest great service at a reasonable cost. This will inevitably (hopefully) lead to increase in business for those participating which will more than cover any fees necessary to cover the running costs.

    Perhaps it would even get recognition from the ‘powers that be’ and form a template to lift standards in general.

    Just an idea…though I suspect a controversial one !!!.

    Report
    1. Trevor Mealham

      AgentV: I have a structure that could do that. By all means contact me.

      Im easily found on linkedin

      Report
      1. Woodentop

        Yep but no legal process. BPR’s …. think about it.

        Report
        1. AgentV

          Maybe I am have a mental block or maybe just being thick, but apart from ‘business property relief or business process reengineering’ what do you mean by BPR’s? Can you expand , so I can follow please?  

          Report
          1. Woodentop

            In a nutshell you need to look up “Commercial practices” .

             

            Broadly speaking, if you treat your consumers, business customers and competitors fairly, then you are unlikely to breach the CPRs or BPRs. However, if you treat them unfairly, you may face criminal or civil enforcement action.

             

            Ode to Trevor = Cartel comes to mind (you know all about that subject, apparently), as you are indicating “general public become aware of and can trust to deliver them honest great service at a reasonable cost. This will inevitably (hopefully) lead to increase in business for those participating which will more than cover any fees necessary to cover the running costs”.

            Report
            1. Woodentop

              Were you around some years back when the NAEA sent marketing materials basically telling the consumer they should only be using an NAEA members? Wow that was a big foo par.

              Report
  9. Woodentop

    I made a comment last week about the possible need for self-regulation something along the lines of the past LAUTRO as the current system is biased and not fit for purpose. I still haven’t changed my mind but if one takes a closer look at the situation it isn’t regulation that is the problem. We have oodles of it, what we really are talking about is effective policing and prosecution.

     

    The NTSEAT is never in your wildest dreams going to be effective, they might be the nicest chaps but they are a local council trying to do a national job and not the resources or expertise in Estate agency. The regulator if any should be The Property Ombudsman but her remit is to only for consumers, only if they complain. It is not fit to regulate the industry under that methodology and needs reforming. As we already pay The Property Ombudsman an increase in levy would be required, as they too do not have the expertise or resources to operate policing. It will require additional staff but does have power to fine if the codes of practice or legislation is not complied with or expel membership, so they are half way there for the industry.

     

    The only other alternative is to have a separate self-regulating body funded by agents to be proactive in POLICING the industry. Everything at the moment is always after the horse has bolted. There is no incentive for rogue agents to stop what they are doing when they know no-one is looking to catch them.

    Report
    1. Woodentop

      How much manpower and costs? Having previous experience … you will require at least 1 per council area to investigate, more for cities with problems! By its name, self-regulating is actually policed by agents themselves reporting to The Property Ombudsman? (currently not permitted) who as required send in the investigating team, who’s funding would be supported by fines/government implementation for legal process. A lot of investigating doesn’t need footwork!

      Report
X

You must be logged in to report this comment!

Leave a Reply

Thank you for signing up to our newsletter, we have sent you an email asking you to confirm your subscription. Additionally if you would like to create a free EYE account which allows you to comment on news stories and manage your email subscriptions please enter a password below.