Property Ombudsman in
fresh plea for law change
The Property Ombudsman,
Christopher Hamer, is using his 2010 Annual Report, released today,
to make a fresh call for more control over the actions of residential
lettings agents.
The government has made
it clear that it will not introduce any new laws that could lead to
better protection for landlords and tenants from those agents who
fail to treat consumers fairly and who potentially can put consumer
money at risk.
He has seen the number
of lettings offices voluntarily covered by his scheme climb to almost
8,000 by the end of 2010 but is concerned that agents who do not sign
up to and adhere by the standards in the TPO Code of Practice can
continue to operate, potentially to customer detriment.
'Many agents conduct
their business by following the TPO Code of Practice but there are
still too many who are operating without that commitment to standards
and without any external controls over what they do with client
money,' says Mr. Hamer.
'The Code of Practice
represents a comprehensive set of standards by which firms conduct
their business. Knowing a firm is complying with those standards will
give consumers confidence that they are dealing with an organisation
which has a committed approach to customer service and that best
practice is being treated as a priority by agents,' he adds. 'I had
hoped to gain accreditation from the OFT to further strengthen
consumer confidence in the Code but I am disappointed that having
submitted it to the OFT some three years ago I remain unclear as to
when that endorsement will be given.'
From this summer, the
TPO Lettings Code of Practice will include a requirement for lettings
agencies to hold a separately designated client account to protect
money the agencies receive.
Currently there is no
compulsion for letting agents to join an Ombudsman scheme and Mr.
Hamer notes that this is inconsistent with the obligations on estate
agents who market property for sale.
Industry support for
regulation
'Whilst the Code of
Practice is not intended to be a substitute for formal regulation it
would at least mean all letting agents would be following a
comprehensive set of standards designed to protect the consumer.
Consumers should therefore look to use an agent that displays the TPO
logo – that means they are committed to operating fairly.'
Mr Hamer believes that
there is general support from within the industry for some form of
regulation of letting agents and to see all agents taking a secure
approach to the protection of client money with insurance to ensure
clients are covered if the business fails or money is
misappropriated.
'There can be no excuse
for client money not being held in separate and properly audited
client accounts such that it is less easy for unscrupulous agents to
misappropriate it. Furthermore, there needs to be an obligation that
such monies are protected by suitable client money insurance. An
appropriate regulatory regime could ensure that the necessary
separation of client and business money is enforced.'
'An agent who uses
client money because they are operating on the edge of viability and
needs to bolster the business, or more worrying still is using the
money for personal enjoyment, is entirely unacceptable and against
the law.'
Mr. Hamer pledges he
will continue to campaign with the industry for higher standards. He
believes these are being achieved in the residential sales sector,
although complaints against sales agents still remain unacceptably
high.
Room for improvement
'The sales sector has
room for still greater improvement, of course, but the growing impact
of the TPO Code of Practice is further borne out by my average award
to compensate complainants for the agent’s actions for sales in
2010 being £258 when in 2007 it was £547, an indicator that the
gravity of complaints is diminished.'
Mr. Hamer says the
number of cases relating to sales and lettings referred to TPO was 40
per cent ahead of his forecast for 2010 and despite a significantly
reduced number of housing transactions the excess has been purely
down to the number of sales disputes received.
There were 1,338 new
referrals, 646 sales and 672 lettings with the remainder related to
HIPs and Residential Leasehold Management – the highest ever
recorded in the 20 years of the scheme’s existence and 28 per cent
above the previous peak in 2008 of 1,043. They arose from a total of
11,794 enquires, compared with 11,165 during 2009 and 11,201 during
2008.
The largest single
cause of complaint was communication failure between the agent and
consumer (214) followed by complaints handling by agents (163) and
sales details / advertising / marketing (138).
South East England was
the source of most complaints (26 per cent), followed by south West
England (13 per cent) and the eastern region (12 per cent). Wales
generated only 3 per cent of the total, a figure matched by Northern
Ireland and Scotland combined.
At the end of 2010, TPO
had 8,008 member firms operating 11,321 sales and 7,851 lettings
offices. This compares with 7,332 member firms operating 10,577 sales
and 7,276 lettings offices at the end of 2009 and 6,322 member firms
with 11,215 sales and 5,100 lettings offices at the end of 2008.
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