Schedule 6
Consumers, Estate Agents and Redress Bill
4:00 pm
Ian McCartney (Minister of State (Trade & Investment), Department of Trade and Industry; Makerfield, Labour)
I welcome you to the Chair again this afternoon, Mr. Weir. I hope that we enjoy the sitting as much as we enjoyed the first sitting today. Before dealing with amendment No. 28, I should like to report back to the Committee following the discussion of clause 13 in last Tuesday’s sitting. I told hon. Members that I would raise the issue of the recalibration of token payment metres with Ofgem. I have today received a written response from Ofgem, which has also written to the Clerk of the Committee in that regard. I was not sure this morning whether the Clerk had received that response, so I apologise for that. In case hon. Members have not received the response, I have brought copies of both the letter and the memorandum that Ofgem prepared for the Committee. I hope that they will bring hon. Members up to date on Ofgem’s position and help them to consider whether they might want to raise other issues on Report stage. Copies are on the Table.
On amendment No. 23, I shall first respond to the hon. Member for Solihull and then deal with the issues raised by my hon. Friend the Member for Ealing, North and suggest a way forward, which I have not yet discussed with my officials. The Government’s aim in introducing the estate agents’ redress provisions is to require all estate agents to join a high-quality redress scheme. I am happy to make it absolutely clear to the House, as I did in numerous debates this morning, that we intend to ensure that they are high-quality, not Mickey Mouse, schemes. [Interruption.] I will say Donald Duck schemes then.
A high-quality scheme is one that uses generally accepted criteria for best practice, which include accessibility to all consumers, including vulnerable consumers; ease of use; clarity of operation; timeliness of complaints resolution; and responsiveness and transparency of decision making. We want to ensure that all home buyers and sellers have access to redress for legitimate complaints against estate agents. The amendment would make it compulsory for the Secretary of State to lay an order requiring estate agents to belong to a redress scheme. We cannot accept the amendment, as it is possible to envisage scenarios in which, for short periods, there is no approved scheme for agents to join.
The Office of Fair Trading can withdraw its approval from a scheme if it no longer meets the approval criteria. We discussed the circumstances in which that could happen during our consideration of an earlier amendment. For example, approval could be withdrawn amid serious concerns that scheme was not providing to the OFT information that it had about agents not complying with legislation. Approval might also be withdrawn after a change in the governance structure that, in the OFT’s opinion, compromised the ombudsman’s independence. The OFT must be notified of any change to the running of the scheme within14 days of the change taking place. The OFT will quickly be aware of changes to the scheme and will be able to assess whether they affect its approval.
Approval would also be withdrawn if there were concerns about the effectiveness of the complaints handling system, where an unacceptable backlog of unassessed cases had built up. If a scheme was unable to handle the number of complaints, because it was not adequately resourced, for example, the OFT could withdraw its approval. The amendment would make no difference to what would happen in practice; all estate agents would be required to join a redress scheme. I hope that the hon. Member for Solihull is reassured about the drafting of the clause.
My hon. Friend the Member for Ealing, North raised the issue of fly-boarding, which is the practice of putting up false “for sale” or “sold” boards, to represent to consumers that an estate agent has more properties on the books than is actually the case. “For sale” boards must comply with the Town and Country Planning (Control of Advertisements) Regulations 1992. Fly-boarding can be addressed under the Trade Description Act 1968 and the Control of Misleading Advertisements Regulations 1988. Abuse of that type appears to have fallen considerably. I shall come back to that in a moment.
As a consequence of enforcement interventions by the OFT and local authority trading standards services, many more estate agents are signing up the relevant parts of the ombudsman’s code of practice for estate agents, which forbids fly-boarding. The OFT took action against fly-boarding in 2004 against a company called Mankind Property Services, trading as Bairstow Eves Countrywide. Its new office in New Cross, London, had to give written undertakings not to erect false “for sale” boards in contravention of the Control of Misleading Advertisements Regulations 1988. Fly-boarding is to some extent self-policing, as complaints are usually made by rival estate agents who have a knowledge of the local market and spot false sale boards. That is the background to the issue, but it does not help my hon. Friend with his complaint.
The Office of Fair Trading recommended that agents should be required to identify the specific property in question on their sale boards. That was not proposed in the Bill, because we needed to consider compatibility with the unfair commercial practices directive, which was not completed at that point. Although abuses of that sort are half folly, I take this recommendation seriously, and I assure my hon. Friend that the OFT, my team that will be established to implement the legislation and the team that is currently in place to implement the unfair commercial practices directive will be brought together to have a meeting to consider what more can be done to resolve the issue. Without prejudice, I hope to try to have that discussion before we next meet on the Floor of the House when the Bill is considered on Report. I cannot guarantee that, but I will try to do so and report back to the Committee on the discussions held.