Three more deposit alternative supplier have issued statements seeking to distance their product from criticisms raised in a BBC investigation.
Yesterday we carried a statement from one of the many suppliers in the field, Zero Deposits, saying it was concerned that deposit alternatives not regulated by the Financial Conduct Authority were being sold to tenants “aggressively.”
This followed a BBC story suggesting that some agents may be mis-selling deposit alternative schemes to tenants who - unwittingly - are then hit by what the probe says are hidden costs which were not explained to them at the outset.
Now another deposit alternative firm, flatfair, saying it’s vital to indicate that there is a difference between insurance solutions charging tenants excessive or recurring fees and payment technology companies “like ourselves” offering tenants a transparent one-off fee without hidden costs.
“From the outset, we offer a clear sign-up process where tenants have to agree to statements making it clear of our offering, including the fact that the membership is non-refundable and is an optional alternative to a traditional deposit.“
"The BBC article refers to insurance solutions, which despite being FCA regulated are being mis-sold. Some insurance solutions count estate agents among their investors, which removes any sense of independence.”
A further deposit alternative supplier - Ome, owned by Hamilton Fraser - has also issued a statement, stating the problem isn’t with deposit alternatives but with transparency across the rental sector as a whole.
“Tenants must always be fully aware of the terms and conditions of whatever choice they make. With a traditional deposit, this means reading the tenancy agreement to understand when a landlord can deduct monies from their deposit, and for a deposit replacement they understand that they will always be responsible for deductions at the end of the tenancy even though they will have paid a fee for the product” says Eddie Hooker, group chief executive of Hamilton Fraser.
And he continues: “I’m not sure that all [deposit alternative] products put the tenant at the heart of the decision-making process even though the law states that tenants must be offered a choice of both a traditional deposit and a replacement product. But I believe the deposit replacement space has a real opportunity to not only push the changing face of the rental sector towards a tenant first mentality but to do so with a proper set of industry guidelines that hold everyone accountable to the same standards.”
And a statement from Jude Greer, founder of yet another supplier - Reposit - says: "When we founded Reposit in 2016 as the first deposit alternative offering in the UK, we believed that FCA regulation, security and transparency had to be at the core of our business. This is ingrained to the very core of how our company does business. Because we are FCA regulated we are audited regularly to ensure that we treat our customers fairly and clearly communicate our product.
"We consistently endeavour to provide the highest standards of training to our partner agents to minimise any misinformation or mis-selling. Tenants are provided with detailed marketing materials and our full set of TC’s is publicly available. To maintain our high standards, Reposit has cut off partners from using our product when it has been mis-sold or when tenants have been pressured into choosing Reposit."
Some agents commenting on Letting Agent Today stories on deposit alternatives have likened the principle to PPI in terms of the dangers of mis-selling.
The BBC story featured a case study of a tenant who claimed not to have understood the terms of the deposit alternative he used, and was then surprised to have to pay a monthly ongoing fee for the service.
It also quoted The Property Ombudsman, Katrina Sporle, explaining that one of her cases has involved a tenant who was forced to pay an administration fee to switch to a traditional deposit - even though they said they had not understood the terms of the deposit-free option. Others were told they had to use a deposit-free scheme to rent with an agency.