Today the lettings industry is due to be discussed in the House of Commons – with the Government set to overturn an amendment for the full regulation of letting agents.
Instead, an eleventh hour amendment of its own will require all letting agents to belong to an ombudsman scheme.
Today’s busy workload for MPs includes the Enterprise and Regulatory Reform Bill, where Baroness Hayter has proposed that letting agents be regarded, in law, as estate agents.
However, the Government plans to oppose the amendment and replace it with one of its own, which was announced to MPs only yesterday.
While this would not amend the Estate Agents Act to include letting agents, as Hayter has proposed, the new Government amendment clears the way to make letting agents belong to a recognised redress scheme.
This would require secondary legislation, the objective of which would be to offer redress to all landlords and tenants who use letting and managing agents.
The Hayter amendment only just scraped through in the House of Lords, and proposes redress plus the power to ban letting agents, and prevent banned estate agents from setting up a lettings business.
The government amendment – likely to be heard some time this afternoon – stops well short of this and does also not address the matter of client money protection. It also ignores much lobbying from the industry, including a template for regulation proposed by ARLA where it would have been one of the bodies running the scheme.
In a letter yesterday, housing minister Mark Prisk singles out only the SAFEagent scheme, which has not been supported by ARLA or RICS.
The letter says: “The Government considers that the majority of letting and managing agents provide a good service to their clients.” However, he acknowledges that a minority of agents engage in unacceptable practices.
He says that the Government’s approach is to encourage voluntary self-regulation, and Prisk specifically picks out the SAFEagent scheme for mention.
His letter continues: “The Government does not consider that full regulation of letting agents, as proposed within Baroness Hayter’s amendment, provides the answer and is concerned that this could impose a significant regulatory burden which would ultimately be passed across to tenants and potentially reduce innovation and competition within the industry.”
* On Sunday, a BBC 5 live Investigates radio programme focused on the problem of rogue letting agents, revealing that very few are punished: only 12 prosecutions were carried out last year by trading standards teams in 20 of the biggest councils in England, Scotland and Wales.
Meanwhile, agents in Scotland are still charging tenants fees, despite an outright legal ban that came into force last November.
Researchers on the programme contacted 25 letting agents in Scotland and found that a quarter are still passing charges on to tenants.
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Comments
But I am running rings around you lot.
Does insurance prevent, act as any kind of deterrant if Agents never ever have to face up to doing anything wrong?
One of you reckons as soon as anything at all goes wrong they should be drummed out of the industry another tthings go wrong, both think it fine just to pay off the victims but neither care to get to learn from the mistakes
I think the staggering bit about all this is how you can not see how one system of insurance and a level of qualification so low it defies belief, undermines any attempt to improve standards.
If everyone is regulated, everyone has CMP and everyone belongs to TPO , how can anyone tell good from bad?
The only thing you have convinced me is that CMP is an Insurance for the clients of confident ignorance.
You really are certified stupid. You're talking about two separate things, the fact something can go wrong doesnt excuse the fact that you're still held responsible for it. Forget about examples you child because the point is that ANYTHING could happen, focus on that! (christ is the law of probability not clear enough) The point is also that when it does go wrong your clients are covered, you dummy.
You cant seriously be so dense as to fail to understand the CONCEPT of insurance even when its spelled out you, over and over again.Your primary school understanding of agency is staggering and I genuinely have concerns for any client funds you may hold.
"even with the greatest safeguards in place something can still go wrong"
What exactly can go wrong? name one thing. matey below says when things go wrong you should not be in business as an agent
to quote
"why an agent uses client money is irrelevant because their is no justification for it, once you do it its theft so the purpose of identifying rogue agents is to expel them from the industry"
Perhaps the thing that sets me out from you guys is that I understand that no matter how careful one is with staff and systems, 'even with the greatest safeguards in place something can still go wrong' When they do an agent is not automatically rogue and it is better to allow them to trade out of a situation they have found themselves in, paying back the whole debt and learning from the mistake rather than have the majority of policy holders who will never claim subsidise and write off a debt that need not be a debt
I havent a clue what EW's going on about but if this stupid argument boils down to why have insurance then thats really sad.
Having CMP doesnt mean you cant be trusted just like having any other insurance doesnt mean you cant be trusted either. Like that person said a few scrolls down its a worse case scenario protection. To suggest that having insurance infers some sort of criminal slant on your character is so fantastically stupid I'm embarrassed for the person who said it.
Be practical because even with the greatest safeguards in place something can still go wrong, THIS IS NOT EUTOPIA. its about the fact that because anything can happen, what do you do when it does?We can use barb wire, state of the art burglar alarms and land mines to protect our home and then think we don't need insurance but trust me some bugger will come along and steal our stuff and then what we do.
I hear what you're saying but we're talking about protecting the interests of our clients, dont forget its their money we handle not ours. When dealing with your own stuff you can do as you please but when dealing with someone else's stuff dont be so arrogant as to expect your word is enough. Its their stuff so protect it from every eventuality and that includes insurance.
In 34 years I have not had an accident but on a daily basis break the speed limit. ( hands up all those who keep to 70 on the motorway)
If I'm caught I get fined, I do not pay the fine with my car insurance.
Well at least you've admitted it and thats the first step to recovery!
Would you buy insurance if were not the law and live where there is nothing for you to drive into? If there is not a single chance of a claim you would be bonkers to spend money out on a non risk.
Explain one instance where an honest agent with 100% reliable systems needs to have CMP, Matey has tried and failed just tell me in what circumstances anyone is ever going to need their money protected when it has been trusted to you. Does it blow out of the door? Do mice eat it? What is the bit of your foolproof system that allows a single penny to go missing?
@if - your an idiot, if I get car insurance i'm not saying I'm a bad driver am I? (i've got 11 years NCD to prove I'm not)
Sorry mate, I've watched you guys going at it and I think the poster for CMP has been very clear. He/she explained the reason for CMP and even the reason for insurance. Reading your stuff is very confusing so I think you must be confused too. Its a bit difficult discussing client money protection with someone who doesnt fully understand what client money is. Hats off to him/her for trying tho!
there is no justification for using clients money and you say you don't use clients money for any other purpose, you trust your staff, trust your software and have things 100% watertight why are you buying insurance to protect something that does not need protecting in your firm
What is it that you haven't mentioned that makes you want to provide your clients with extra protection?
By buying insurance and so strongly advocating CMP you are effectively saying you can not be trusted.
We have established I am a simpleton so in real simple language please explain the mixed messages you are giving out.
You don't grasp why I think it it beneficial for Agents to be responsible for their out mismanagement, and can see how ultimately why helping agents to raise their game is cheaper for everyone in the industry and is beneficial to the public whose cash is being held.
I can't grasp why Agents that, in one breath, want to smother their competition and in another are happy to provide the public with an insurance scheme to bail out the very same competition.
For the love of god I did answer the question, try reading what I wrote. There's no justification for using client money, END OF! If its your business then you are ultimately responsible and if you can't keep better track of your staff, software and accounts then clearly you should not be handling client money and clearly you shouldn't be given a loan to mismanage too.
Try answering some of my questions now, but not on here because I'm done, you make my head hurt!
If your staff or software manage to steal or mis-account client money are YOU, the principle, rogue?
Stop trying to make your own point and answer the question, you might then start to understand why being unable to account properly for the clients money is not always an indication of rogue trading. In those circumstances you might welcome the opportunity of trading out of a situation not of your making.
I already said send the thieves to jail but I am not talking about crooks I am talking about folk too arrogant to consider than what they are doing could possibly go wrong until it does, too reliant on processes that they are not properly overseeing or too trusting of systems that ought to be right but are not
Oh come on lets at least try to have a grown up discussion. Client money includes rent not just deposits, surely you understand that? If you let property then rent goes through your accounts and so you hold client money, jeez am I really having to explain this...
If you don't own then a car then of course you don't need insurance but if you do... I'm going to go out on a limb and assume that as an agent you have access to a car right?
Once again you ignore the fact or fail to understand that whatever the cause, if you use client funds then thats theft and you are rogue. What don't you get about that?
If your business is failing then shut up shop and return all client money, if you continue to operate using money that does not belong to you without the express permission of its rightful owner then thats theft and you are rogue, is that not clear enough?
Are you seriously mitigating theft to having to pay for staff, software and support, is that how you would justify using some one else's money to prop up your business?
Is this a wind up?
If i do not hold client money why do I need to protect it?
If I do not own a car wouldn't I be daft to have car insurance?
Are you 100% sure that all your sustems are 100% watertight? Please humour me one more time. Let us consider you are paying for staff, software and support to run your business, what happens to you if one element fails, are YOU rogue?
Against my better judgement and in leu of your appeal to be reasonable I'll have one last stab at this and hopefully convince you to engage some lateral thinking.
The concept of insurance is to protect against worse case scenario, theft and damage to our personal belongings or a third party. We both have insurance for our home and their contents and the government forces us to have it for our vehicles. We could go years without claiming but that doesn't forgo its need, we pay for it and it protects us and our victims which is precisely the same thing with CMP; however with CMP its in place to protect against our own criminal behaviour so its only available via affiliation. As I said before, you cannot insure against your own misdeeds which would be a ridiculous idea so we have to first show integrity., proper banking procedures, audited accounts etc but the constant is that if we do wrong we should pay whereas your proposal is that if we do wrong, others should pay.
We can and should agree that the moment the moment client money is used then the agent is rogue, with that said why should I pay for their dishonesty.? If your home was burgled would you expect your neighbours to pay for it? Rogues agents should be responsible for their own crimes so let them pay for CMP and let the insurers whom you say profit from this spend some of it to repay the victims.
The reason why an agent uses client money is irrelevant because their is no justification for it, once you do it its theft so the purpose of identifying rogue agents is to expel them from the industry so that we stop them from doing the same thing again, your idea is to keep them in situ with the same access to client money. You would hand them further opportunity to steal but make other agents pay for their crimes and that makes no sense.
A 'one off' payment will only produce a kitty of a certain amount and handing out loans and praying on repayment means it will eventually run down so what happens when there is not enough left to cover yet another set of victims? Do you come back to us for another 'one off' payment?
If I remain in the industry for 25 years without incident then why would I want to contribute to this kitty to pay for others who do not? I would happily foot the bill for my own protection and that of my own clients rather than those of others whom I have no control over.
You see CMP as negative insurance but at least its bought and paid for by the offender and benefits the victims of crime. The fact that agents pay and don't claim isn't a negative, its a badge of honour that you should be proud to display. Its our version of a "no claims" entitlement but instead of a discount we can hold our heads high.
I've said before that your proposal is unworkable in theory or practice but the bigger picture is your perception of this whole issue and thats something I can't help you with. I can only point out the shortfalls of your idea and ethos of CMP but its up to you to get your head around it.
I am happy with that, I comprehend that focusing the debt on the Agent is better than providing insurance for a crime they are going to commit. Focusing the debt on the Agent and making them pay off the debt whether t it was caused hrough their own negligence, the negligence of their staff or theft by either party means that only the Agent concerned rather than a whole industry is paying for stupidity or crime.
As for having the last word,I am more than happy for you to have it if that is important, but it seems only reasonable to keep going until you provide some reason why paying £200 once is less sensible than paying in perpetuity to provide profits to an insurance firm.
'was there any requirement to shell out thousands? try less than £200 per agent as a one off fee, not annual, total'
Wow, you really don't get it do you. Considering the payouts to the victims are in the several thousands against the number of UK agents, just how long do you think the kitty of one off payments will last?
'you are one of that select group of people who think handing out cash to cover up wrong doing is a good thing'
Hardly select when you too belong to this 'group' or have you already forgotten you said 'the loan from the central fund replaces misappropriated client's money'...
You're either a slave to contradiction or a simpleton with no concept of the meaning of your own words. No doubt you'll want the last word and you can have it but try removing your dummy first.
was there any requirement to shell out thousands? try less than £200 per agent as a one off fee, not annual, total.
You carry on paying a tax on your own gullibility, perhaps you are one of that select group of people who think handing out cash to cover up wrong doing is a good thing.
Ok so lets ignore the fact that you have consistently contradicted yourself, that you pose an idea unworkable in theory or practice, that you would have us shell out thousands to cover the losses of dishonest agents under the guise of 'paying less' and that its 'OK' even when evidence and common sense clearly shows otherwise and from all of this your last stance of any credibility is that I must work for the Insurance company, jeez just how old are you?
At every stage of your explanations you have further shown that the end result of your idea is no different to CMP other than agents paying for the losses instead of the Insurance companies. You display complete ignorance of the principle behind CMP in that its only available via affiliation so you cannot insure against your own misdeeds; affiliation which in itself comes with further criteria and instead presented rogue agents with even more incentive to use client funds yet when it's all pointed out to you, you throw your toys out the pram...
I'm not from Insurance and I don't sell CMP, I'm an agent thankful that there's something in place to protect the consumer rather than nothing at all, probably an apt description of the vacuum occupying your headspace if you actually believe what you've been posting.
Dip a toe in the real world you might just like it....
It is OK for everyone to pay an anual insurance to bail out the real rogues but you object to paying less in once to do the same thing. Slightly strange way of thinking about things. I guess you must work for the insurance company!
'the loan from the central fund replaces misappropriated client's money'
Are you kidding me? You've been ranting about rogue agents being identified and going to jail but now here you are happy to pay back their misappropriated funds and instead of jail, let them keep their jobs so they can pay back a loan. You might want read back your own postings, here's a little reminder,
'I certainly don't feel obliged to bail them or their customers out of a hole,
Why on earth would you give a thief a loan? Why on earth would you think other agents would give a loan to an agent who has stolen client money?
The point of identifying a rogue agent is to expel them from our industry, not allow them to remain and certainly not to give them access to more money, our money!
With CMP the rogue agent pays for it and the Insurer pays the victims. Your idea is for us to pay for everything so once again, are you kidding me?
Sorry I haven't explained properly; the loan from the central fund replaces misappropriated client's money in exchange for a charge of the ailing Agent's property.
It focuses the debt where it should rightly be and allows the client money to be distributed correctly The Agent can then chose to work themselves out of the loan or lose their lifestyle.
Yeah.....didn't really answer my question.
'There should be no moral obligation on my behalf to pay for my competition to undecut me'
But isn't that the whole point of your central loan fund in that by giving ailing competitors a 'wad of cash' you are in fact helping them back on their feet in order to compete with you?
Agents are in business to make money and competition is fierce so are you really ask me to invest in my rivals? If a business is genuinely failing then why throw good money after bad?Sometimes it's just not meant to be but that doesn't escape the fact that your idea does not protect the victims of client money misappropriation.
I don't think you've thought this through...
But there are less victims if the decent folk in difficulties are given a way to trade out of the problem. Lending an agent with an 'issue' a wad of cash means all the potential victims are identified and the problem averted.
The crooks and rogues are identified as just that and simply go to jail.
There should be no moral obligation on my behalf to pay for my competition to undecut me, I certainly don't feel obliged to bail them or their customers out of a hole.
CMP cuts both ways, whilst some may argue that given the compliance in order to receive CMP, this would mean the agent is unlikely to offend. Others can argue that it presents a direct path to misappropriate funds with a clear conscience due to the protection it affords. Even the honest agent who mis-manages the finances can seek to balance the books with client money, safe in the knowledge that if discovered, his clients will not suffer.
One thing is clear, whilst CMP may 'encourage' the rogue agent, it is in place to benefit the victims; it's not for us its for them and this is something the 'central loan fund' does not do.
Don't be naive to think that this scheme will not harbour rogue agents too so the question is, what happens when a member of the 'central loan fund' disappears with with client money?
You're right, 'Joe public will soon latch onto who he ought to be dealing with' but not in the way you're thinking...
Thank you for the discussion and thank you for your civility, both tend to be rare on LAT which itself is quite surprising; LAT is the only place where RICS, NFOPP, NALS, Safe Agents and others can discuss what is going on in the industry. Normally any attempt to wash dirty laundry is met with silence or insult.
Being truthfully honest no amount of regulation will stop wrong doing, there are quite clearly understood criminal laws saying one should not steal, speed, murder etc but some people just can not help themselves.
I agree that an agent bothering with all you mention ought to be well motivated to do the right thing but as demonstrated in the case of an RICS firm, when there seems no other option to deal with a catalogue of financial mismanagement other than a quick but very substantial dip into the Client account, even those with a lot to lose including professional qualification will take the chance of not being found out.
Instead of CMP insurance that benefits only the rogue agents, cheapskate landlords and the insurance provider, to the financial detriment of the majority of un-corruptible and financially prudent agents, it would be better for all Agent to pay a central loan fund where those in trouble can come to borrow money to resolve the difficulties they face.
Naturally an amnesty system will require an admission of the need for help but such an admission can be the trigger for education and an effective review of flawed procedure. With help well intentioned firms can work their way out of difficulties and pay back the loan from the central fund.
If the central loan fund is only available to members of professional and qualified firms Joe public will soon latch onto who he ought to be dealing with.
The cost should be no more than CMP insurance and will probably be less , once a fund is established at a level to deal with normal levels of activity there is simply no need for an annual subscription other than for administration costs. It certainly cuts out the commission and profit elements of an insurance scheme.
No, no hoops at all, apart from providing proof of your written complaints procedure, memebrship of a redress scheme, a separate client account, PI cover and CMP cover.
Unless of course you take the affliated route to membership, in which case you would already have to have proven the above to ARLA/RICS etc.
If a firm has bothered with all that they are unlikely to be that bad. If they do turn out to be bad (or just unintentionally go out of business) then at least everyone's money is protected. It's the same principle for all insurance - not everyone claims, and those that don't claim share the cost of those that do. It doesn't mean insurance is a bad idea.
Surely a separate client account, CMP, PI cover and access to a redress scheme is a good idea for both tenants and landlords? Our customer feedback tells us that people use us becasue we have all those things.
The answer is none. NALS membership and CMP simply give the opportunity for the Skanks to hide amongst the good, which makes the point that compulsory regulation and membership to an ombudsman scheme only benefits the wrong doers and those flogging CMP/ redress to a widened audience.
The hoops required to join NALS are?
I think you have failed to understand the concept of CMP.
You can only obtain CMP if you're signed up to a recognised body such as RICS, ARLA, NALs etc. and abide by their respective codes of practice. So the logic goes that if everyone has to have CMP it will raise standards and you won't have so many 'skanky outfits'. CMP protects tenants as well as landlords, so your argument doesn't really make sense.
If your 'skanky outfit' bothered to jump through the hoops to acquire and pay for CMP then they are unlikely to actually be a skanky outfit undercutting decent agents.
Who pays for it? sorry it is a retorical question. The majority, all the good agents who do not nick client money
Who does it benefit? the clients of some skanky outfit who undercut the decent agents.
The effect is reward the Landlord not prepared to shell out a living wage to the honest and decent agents and provide them a safety net when the cheap commission deal goes udders upwards.
CMP is a silly idea for any decent agent to support.
If landlords are not educated why they should use a qualified agent and are protected for not doing so how will they ever learn?
CMP=Client Money Protection, insurance to compensate landlords and tenants if an agent goes bust or misappropriates rent, deposit or other client monies.
What is CMP? Please explain it and how it works.
The Property Ombudsman has 11.9k registered Estate Agents compared to 9.7k Lettings Agents.
His anuual report states that 40% of complaints related to Sales and 59% Lettings. This is only a 2% shift towards lettings over the previous year.
Given the numbers above and the much higher number of lettings transactions compared to sales, I would say that regulation of Estate Agents has done very little to improve the situation for consumers. Why can we expect it to work for letting agents?
Furthermore, the separate Housing Ombudsman who regulates 2,067 social landlords received 5,884 complaints over the same period. Social landlords are clearly no paragons of virtue, but no one seems to be slinging mud at their door all the time.
I for one applaud the government's lack of enthusiasm for greater legislation of the Private Rented Sector other than forcing agents to be a member of a redress scheme. Although they should have insisted on CMP too.
"...this could impose a significant regulatory burden which would ultimately be passed across to tenants and potentially reduce innovation and competition within the industry."
Priceless. The only innovation I see from non-regulated agents is cutting corners and ignoring current legislation in order to offer very low fees and undercut those agents trying to do things properly.
I would say 90% of agents in our area are still telling Landlords not to bother with wasting money on an EPC. Makes us look stupid and is costing us a lot of business when we insist. We naively thought it might be policed but of course not.
Without regulation, each new change in legislation only tends to impact on the agents that were doing things correctly in the first place, those that ignored the law previously will continue to do so.