Download OFT guidance for estate agents: Consultation Questions

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Mark Glover, Policy Manager
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8/12/11
0.4
OFT
OFT guidance for estate
agents:
Consultation Questions
Response of Ombudsman Service Ltd (Ombudsman Services)
Introduction
1.
The Ombudsman Service Ltd is a company limited by guarantee (not-for-profit)
that provides ombudsman services for the energy, telecommunications and
property sectors, by appointment or approval from the relevant regulators. We
provide dispute resolution and redress to domestic consumers and micro
businesses. Established in 2002, Ombudsman Services now has over 8,500
participating companies and last year sent out over 20,300 complaint forms.
The company employs over 170 people and has a turnover in the region of £6.4
million.
3.
The redress service we provide in property developed from appointment by the
Royal Institution of Chartered Surveyors, followed by approval from the Office of
Fair Trading to provide alternative dispute resolution services for estate agents.
This scheme now covers the range of property professionals.
4.
To help ‘level the playing field’ between consumers and companies, we have a
contact centre which provides information and assists those who have difficulty
in making a complaint. We achieve proportionality by providing alternative
dispute resolution through different processes, from informal resolution and
telephone mediation to in depth investigation. Our decisions are enforceable
through the courts. Our service is free to the consumer and paid for by the
participating companies under our jurisdiction by a combination of subscription
and case fee. However, our governance ensures that we are entirely
independent from the companies that fall under our jurisdiction.
Summary
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5.
Ombudsman Services welcomes the opportunity to comment on the Office of
Fair Trading’s Guidance for Estate Agents Compliance with the Consumer
Protection from Unfair Trading Regulations 2008 and the Business Protection
from Misleading Marketing Regulations 2008 consultation paper published in
September 2011.
General comments on the guidance
6.
Ombudsman Services’ view is that the guidance should recognise and make
reference to the complex relationships that exist between estate agent, the
vendor and the prospective purchaser. There is a clear contractual relationship
between the estate agent and the vendor which will be documented in writing.
However, it is important that the guidance acknowledges this alongside the fact
that estate agents also have a relationship with the prospective purchaser and
that these two relationships may impinge on one another.
7.
On the general point, it is our view is that the scope of the guidance should be
limited to cover estate agents and rather than designed to be applied more
widely in property. For example, the lettings industry given the added
complexity this would bring, therefore this guidance is probably best limited to
estate agents.
9.
Any revision of the content should consider that consumers will read the
guidance even though it may be intended primarily for estate agents. This is
particularly relevant in the context of a consumer seeking redress, as many
consumers will use the internet for research and make a complaint referring to
the content of any available guidance. In this regard, it would be helpful to
explain that there is no private right of action but there is a requirement to
belong to a redress scheme.
10.
Ombudsman Services also considers that, because the level of awareness
amongst individual consumers and small businesses is likely to be the same,
there needs only to be one guidance leaflet that covers both sectors. However,
any leaflet should contain the contact details of all the redress schemes that are
available to the consumer so that more consumers and small business know
about the requirement.
11. Further detailed comments on the guidance includes:
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Page 8, bullet point 3 – should have the words in brackets deleted.
Page 8, final bullet point – the example of the planned bypass should be
moved elsewhere as it is represents an omission rather than incorrect
information.
Page 9 bullet point 1 – it would be helpful to refer generically to the
property mis-description as it is a widely understood concept.
Page 11, bullet point 2 – the word ‘fitness’ has other legal uses and
should therefore be replaced with the word ‘condition’. Also if serious
defects are ‘hidden’, it is unclear how might an estate agent know about
them? On a more general point a surveyor for a potential purchaser
may find defects but may or may not disclose the detail to an estate
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agent and nor may the potential purchaser. The same applies to
conveyancing issues. This bullet point needs to be re-worded to reflect
that by adding more detail.
Page 11, bullet point 4 – the example given is not helpful as there is no
obvious additional benefit which arises in this situation.
Page 10 Section 3.5 – the earlier example (Page 11 bullet point 2)
relating to information about problems with the property also applies to
misleading omissions.
Page 13 Section 3.8, bullet point 1 paragraph 2 – the sentence should
be reworded to also include reference to Ombudsman Services:
Property which also has a logo for display. Alternatively there should be
no reference to either scheme.
Section 4.2 – we would suggest that more could be made of this section.
The standards of the professional trade associations and professional
bodies and the OFT Codes are relevant to good practice within estate
agency. In addition it would be helpful to recognise the relevance of
contractual relationships and the role that others such as conveyancers
and surveyors have in a property transaction.
Sections 4.7 and 4.8 –should include reference to both alternative
dispute resolution schemes.
Section 4.9 – the guidance should suggest that any information in
writing about terms and conditions should include information about
complaints and redress.
Page 22, bullet point 3 – although the example of planning permission
might be illustrative there are others such as Building Regulations and
legal requirements such as covenants are not mentioned. It may be
useful to include reference to these and to requirements of lease.
Page 22, bullet point 5, delete “Have a system … details” which implies
a formal system rather than keeping a record of changes advised by the
seller or found on a visit.
Section 4.17 – raises the issue of contractual responsibilities and those
of disclosure to a potential buyer. This also applies to paragraph 9. The
guidance should make it clear when this responsibility is considered to
arise.
Section 4.19 – The phrase serious interest should be amplified, for
example as expressing serious interest like making an offer.
Section 4.19 bullet point 1 – the word ‘condition’ should again be used
rather than ‘fitness’ which has specific meaning under other legislation.
The issues which arise from previous surveys is relevant here and it
would be helpful to be more specific by referring to the extent or ways in
which an agent might know of a problem.
Page 24 Section 4.22 – we would propose changing ‘establish’ as it
implies a high duty to confirm and may go beyond what an agent can
reasonably do by way of checking.
Sections 4.30 and 4.31 – in both sections reference should be made to
the availability of both the alternative dispute resolution schemes
Section 5.9 – the redress schemes should be named and contact details
given.
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Response to the consultations questions
Q.1 Overall, is the draft guidance sufficiently clear and helpful?
The guidance appears to be sufficiently clear and helpful. We welcome in
particular reference made in paragraph 3.11 to the need to abide by the final
decision of the ombudsman.
Q.3 Do any parts of the draft guidance need clarification and, if so, in what
respect?
Paragraph 3.8 should refer either to both Ombudsman schemes or none of
them. Both schemes have a logo for display and the Guidance should take an
even handed approach.
Paragraphs 4.7 and 4.8 should recommend including a reference to the
nominated alternative redress scheme in the terms and conditions.
The section titled ‘When you deal with complaints’ (paragraph 4.26 onwards)
referring complainants to the nominated alternative redress scheme.
Details of the OFT approved dispute resolution schemes should be included at
4.31 and 5.9.
Q.5 Are the illustrative examples useful? Are there better ones that we
should use instead? Are there important extra ones that we should add?
What changes would you advise?
Ombudsman Services has commented above on this question
Q.6 Are the steps to take reasonable? What changes would you suggest?
Ombudsman Services has commented above on this question
Q.7 Is the draft guidance in the right format and length for the intended
audience?
As above the draft guidance does need to bear in mind it will be read and used
by consumers, as well as agents.
Q.9 What suggestions do you have on ways to improve the draft
guidance?
Please see the comments above
Q10. What do you suggest will be the best ways to disseminate the final
guidance to those who need to see it?
The main dissemination of the guidance will be through the website but
otherwise it may be best be done through professional associations and trade
bodies. The use of electronic medium of email should also be considered.
Q.11 Are there any further comments you wish to make?
No further comments
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12. Ombudsman Services has considerable experience in the field of dispute
resolution. We would be happy to provide clarification on any point in this
evidence or if there is any other way we can assist, please contact me.
Lewis Shand Smith
9 December 2011
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