The compulsory redress scheme for letting agents introduced this month is welcome but does not go far enough according to Leaders.
Carole Charge, Leaders' technical and compliance director, says it is concerning that some weeks after the October 1 legal deadline, over 30 per cent of agents have not registered with one of the three approved redress schemes, according to research by the Property Redress Scheme.
It is also worrying that public awareness of the importance of choosing an agent that belongs to a redress scheme is low. [Compulsory redress] falls well short of formal regulation of letting agents and will not stop inexperienced, unqualified or unscrupulous agents from setting up and practicing in the first place. Nor does it address the problem of agents without client money protection in place says Charge.
This is not the first attack on the redress regime for its apparent toothlessness. Last week
Ajay Jagota, chief executive officer of lettings agency KIS, claimed no more than a handful of tenants probably knew of the new scheme.
Even assuming their complaints would otherwise be dealt with to their satisfaction, if tenants don't know the scheme exists they can't complain. If no-one has noticed the schemes exist, they may as well not exist he said.
Carole Charge says that although the redress scheme appears a good idea wouldn't it be far better to prevent sub-standard agents from practicing in the first place so there is less cause for complaint
To achieve this, she says, the government needs to go much further and make it mandatory for agents to abide by an agreed code of conduct; be professionally qualified with a sound knowledge of the laws governing lettings; and to have Client Money Protection and Professional Indemnity insurance.
This really is the only effective way to protect the public from bad practice by agents she insists.
Comments
It is very interesting that since the introduction of compulsory legislation that a growing number of respected industry leaders are now voicing their concerns that the consumer is blissfully ignorant of the redress schemes. I would add to that a large number of agents were also totally in the dark as one nameless individual demonstrated when they rang us to ask what is this omnibus scheme all about (to which I replied it some something you have to get on PDQ!)
Whilst I do accept that the awareness of the scheme is currently low and if the same level of recognition is still prevalent, six months or a year from now then alarm bells will be ringing, the industry does have a duty to promote and support the initiative and to educate and inform their consumers. (For the elimination of doubt, consumers in this context are both tenants and landlords.) There is still a lot of work to do.
I also find it strange that whilst the compulsion to join a redress scheme is only three weeks old, redress in the property industry is not. Prior to this, there were in existence, two voluntary schemes and the concept of redress has been in the property industry for over ten years. This is a long time for the principles of the scheme to have disseminated into the public conscience. The fact that it has evidently not is a disturbing notion. Many agents decided to choose to join a scheme, display the window sticker and comply with the rules and code of conduct. That the consumer has failed to use this as a differential consideration when selecting an agent is something that influenced the introduction of compulsion.
The scheme is now compulsory and also has the added benefit of competition with three schemes vying to attract customers and keen to advertise and promote their schemes, not just to the agent, but to the consumer as well who will use selection power to determine which agent to use. Awareness will rise and we at the Property Redress Scheme are committed to doing our bit.
In addition the fact that there are now stringent penalties for compliance, local authorities will be keen to demonstrate that they are coming to grips with the private rented sector in their patch. All three schemes will actively work with local government to raise awareness of the scheme and publicise where agents operate outside the law.
Caroles other points in the article are well made and it is worth noting that her view is very clearly at odds to a number of regular comments post on this website that feel the industry is over regulated and shun what they see as unwelcome interference from government.
For the record, I support the introduction of mandatory client money protection; however I am caution about rushing into to full regulation too quickly. The reason for this is the apparent contradiction between two of the redress schemes, when it comes to the proportion of the market that has complied with the new law. TPO maintain all but a handful of agents have now joined a scheme. We at PRS maintain a significant proportion have not. The reason for this discrepancy is that the new law has widened the definition of agent and therefore a large number of different and legitimate models of agency are now encapsulated in this legislation. A good example is the growing Rent to Rent market, that I believe now are captured by this law. We have a complex letting industry and until it we fully understand it, the risk is that regulation will be too simplistic and could end up as toothless and without credibility in the market. We should as an industry line up our ducks and build the tool kit for a safe and professional industry. Redress is a vital component of the equation so shout this from the roof tops and make sure it is an unqualified success.