Clause 53
Consumers, Estate Agents and Redress Bill
11:30 am
Lorely Burt (Shadow Minister (Small Business), Trade & Industry; Solihull, Liberal Democrat)
Thank you, Mr. Weir. I shall speak first about new clause 4, which would require estate agents to register with the Office of Fair Trading. It is likely that for estate agents the ombudsman will be the only redress scheme in this place. At present, about 70 per cent. of estate agents are members of, and licensed for, the redress scheme for home information packs. As the ombudsman is doing a very attractive two-for-one offer at the moment, it is likely that by the time the Bill has completed its proceedings the vast majority will be members of the scheme.
Despite the Minister’s comments earlier, the Liberal Democrats reiterate our concern about competition for redress schemes and the possible danger of a race to the bottom. However, we do not want to press that argument, because we take the Minister’s point.
The proposal is about two important things: first, positive, as opposed to negative, licensing. It is important that a service should be good from the beginning; it is not appropriate to wait until one has to pick up the pieces when things go wrong.
Secondly, it is about actively looking for compliance. The proposal will facilitate things such as mystery shopping exercises. Consumers will not necessarily know if they have been misadvised. For example, there may be interests that the seller of a property may not be aware of, when a lower price than might otherwise have been achieved is recommended. Unless there are individuals such as mystery shoppers and an active, positive constraint on how estate agents practice, the vast majority of misdemeanours and mishandling against the interests of the consumer may never come to light.
As drafted, the Bill will catch the absolute fraudsters but not the majority who mislead customers in what for most people is the biggest purchase of their lives, involving what to them is a very large amount of money. We feel that this is more important than how much the fine should be when those individuals are caught, which is covered by amendments 26 to 28. I remind the committee that this was originally drafted with a Labour colleague and was based on an amendment that we drafted in collaboration with a Labour colleague. We would, therefore, like to ask the Minister to reflect on how consumers will know if they are being ripped off and losing thousands of pounds unless there is a positive requirement for someone actively to look at this.
The new clause 2, which is proposed in my nameand the name of others, similarly relates to positive licensing as opposed to negative. Here, we give the Secretary of State the power to designate a body of persons as an approved body to which estate agents must belong, as opposed to the Office of Fair Trading. This does the same thing, but in a different way.
This amendment was first tabled in another placeby the Earl of Caithness. It does two new and very important things. It broadens the scope of the Bill to incorporate lettings and, in subsection (2), it lists the things that an estate agent—or a member of a scheme—would have to do to be eligible to join. This includes vital things like professional indemnity insurance; a minimum requirement for professional development; and minimum competency standards. This introduces—