Zero Deposit firm demands code of conduct to stop pressure-selling

One of the leading deposit alternative services has called for a code of conduct to step, amongst other things, alleged pressure selling of such products by letting agents.

At the weekend The Observer ran an article alleging it had “uncovered evidence of pressure-selling tactics by some agencies in England, including cases where people were told they were required to sign up as a condition of securing a tenancy.” It cited a case study of a couple who paid a £225 non-refundable joining fee for such a scheme, having originally asked to instead pay a traditional larger deposit which would then have gone into an approved deposit scheme. They had been told the landlord would probably favour a prospective tenant using a zero deposit scheme if they chose not to take this option.

Now the Zero Deposit company chief executive, Sam Reynolds, has issued a strong statement demanding stronger consumer protection for this kind of product.

"We are at the point where enough is enough” he says. “We are calling for a code of conduct across deposit alternatives that makes Financial Conduct Authority regulation and consumer protections mandatory. We have long warned of the risks of certain unregulated alternatives and we are seeing that in practice, in terms of pressure selling, unfair pricing and punitive charges at the end of tenancy.

“We partner with over 2,500 branches and have helped over 105,000 tenants move with our product. Since launch in 2018, we have had just one complaint of pressure selling, where we immediately offered to refund. Our partners have upheld the highest standards and selected Zero Deposit because of regulatory safeguards. 

“A strong, competitive market is only good for deposit replacement schemes but uplifting standards is essential. Now is the time to do it.” 

He suggests that a deposit replacement code of conduct would seek to cover adoption of FCA regulation across the industry “ensuring that firms treat customers fairly, act with integrity, skill, care and diligence and manage conflicts of interest.” 

It would also offer protections for tenants and landlords, and positive support for letting agencies operating deposit replacement regimes, with vetting and checking, where deposit replacement providers review and assess the actions of letting agency partners.

Reynolds adds that such a code of conduct would provide safeguards to ensure that deposit alternatives were introduced - rather than sold - by letting agents “as part of a balanced choice.”

There would also be a cap on the cost of deposit replacement and no end of tenancy charges to dispute claims for tenants and landlords. In addition there would be a cap on the amount that a tenant can be charged, and is liable for, at the end of tenancy, with consumers having the right to complain to an appropriate Ombudsman scheme in the event of an unresolved problem,