The head of the Property Redress Scheme, Sean Hooker, has hit out at the ‘self-interested’ protectionism of the two property ombudsman schemes.
He said that both wanted to be the single ombudsman but questioned whether this would improve things for consumers.
At midnight last night, Ombudsman Services: Property pulled out of the sector.
It has called for a simplification of the “baffling patchwork” of consumer redress.
Hooker said: “Not surprisingly they offer themselves as the solution with ambitions to be the all-embracing super ombudsman.
“They have been joined in the chorus by the Property Ombudsman who with their relationship with Propertymark are looking to carve out their territory.”
Ombudsman Services: Property has called for a single ombudsman for the entire property industry, including sales, lettings, social housing and new homes.
TPO has said that there should be a single ombudsman in the private residential sector, overseen by Propertymark.
Hooker said that these calls feel “quite monopolistic”.
He says that when the PRS launched four years ago, it reduced the price of redress and offered healthy competition.
In fact, when it launched it was because the Government was concerned that when redress became a mandatory requirement for letting agents, there should be more than two redress schemes to offer that competition, and it opened a tendering process.
It seems to have since changed its mind – but anyway, the residential property industry is now back to two redress schemes.
As a direct result, as of yesterday morning, TPO has signed up an additional 576 members to date, and is still working on the applications received last week and over the weekend.
It was expecting more yesterday. It takes TPO five days to process firms because of the compliance checks involved.
The Property Redress Scheme said that since March 1, after Ombudsman Services: Property said it was withdrawing from the scheme, it has added a further 750 branches to its membership. As of yesterday, it has now over 9,000 offices.
Any firm transferring from Ombudsman Services: Property and applying before the deadline of midnight is covered for redress in accordance with the mandatory requirement.
Comments (8)
I am not so concerned at the number of property redress providers as I am at the apparent independence of the schemes and the possible lack of regulatory oversight of the schemes.
Currently, a business entity can be liable to a financial penalty of up to £5k for each breach of failing to be registered on an approved scheme. It is my experience that there occasions when enforcement action fails due to factors related to a scheme’s interpretation of what constitutes membership. Without going into detail, I would argue that large organisations with many branches may be advantaged over small businesses.
It is not my intent to throw rocks at the schemes but to argue for greater clarity, transparency and regulatory oversight regardless of who or how many schemes there happen to be. The purpose of property redress regulations is to drive up standards in the private rented sector and to have a punitive approach to bad practice and rogue operators. I would encourage greater regulatory or Government support and direction to existing and/or future scheme providers to ensure that the objectives of property redress regulations are fully met.
OSP charged per business, rather like one’s PI cover i.e. based on business size by turnover and therefore their fees had a reasonably accurate relationship between varying sizes of agencies and their exposure to consumers in need of redress.
Compare this to TPO or PRS who charge membership on a per branch basis. So an agent with 8 local branches and 40 staff might pay 4 times the amount that a 2 branch agent with the same number of staff. Makes sense ? It means that those agencies whose business model is to provide smaller branches in villages and smaller towns are penalised, having to subsidise larger centralised agencies with fewer branches.
Seems suspiciously like our friends at Rightmove who, having realised early on that a one-size-fits all approach can be readily applied while it has a near monopoly position.
This was not the intent of the redress legislation, which was to protect consumers. Yet our leaders at NAEA, ARLA and NTSEAT seem surprisingly dis-interested in addressing the manner in which agencies are charged for membership.
“TPO has said that there should be a single ombudsman in the private residential sector, overseen by Propertymark.”
This was mentioned in a previous article on July 18th. At least one poster(realitycheck97) pointed out that Propertymark is a trade body and not a regulator.
My thoughts were/are :-
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Interesting – perhaps the thinking is to have a statutory Ombudsman as per the Financial Ombudsman Service, which is accountable to the FCA.
That would suggest Propertymark would also have to become a regulatory body for property, to take over the role of NTSEAT, as TSI don’t have the budget/resources to police the industry.
All that lobbying for licencing of estate agents may be about to bear fruit?
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Does anyone know if this is likely? or have PIE got it wrong?
One redress scheme makes perfect sense (whoever loses pays the fee)
Sorry – what??
Property Mark?
The one that runs ARLA? The same ARLA which still plasters their branding and seal of ‘professionalism’ on organisations regularly convicted of housing offences whether it’s failing to prove their properties are safe or managing unlicensed HMOs…
Why should an organisation who supports, frankly, criminal organisations oversee the redress scheme? If anything, by having competition in the redress landscape, it stops organisation going rogue and monopolising their position.
Not to mention ARLAs position on increasing costs of compliance for agents by backing CMP as if their members are going to misappropriated their client’s funds… Why let them be ARLA members if ARLA suspects they’ll run off with or otherwise misappropriate client money?
Of course, ARLA also believes it should be a legal requirement of agents to be a member… Allowing them to inflate their membership fee as much as they like, like Rightmove (after all, ARLA are a for profit company as far as I’m aware) and, like TPOS want to monopolise their position should they succeed in becoming the onky redress, ARLA will be able to do the same.
Ombudsman services:property really ought to be encouraged back into the sector if only to provide a tick in the box that says; Has redress?
For competitive agents it’s commercial naivety to run a business that has any call on a redress scheme, its double daft to allow a marginal indiscretion escalate to need redress, so the way OS:P charged was ideal for most agents: Pay heavily for the case not a hefty subscription to subsidise resolving your competitor’s wrongdoing. Obviously having a bunch of staff on standby to resolve disputes that aren’t happening is the business contradiction/ dilemma for the redress provider. How do you pay staff that are sat doing nothing so they’re there when you need them?
Competing agents are far more regulation savvy than the public, perhaps a scheme that allows agents to raise complaints against their competitors rather than dismissing them out of hand is a more effective way of providing consumer protection.
We have a series of supposed regulators but there doesn’t seem to be an awful lot of enforcement going on
“Compliance checks”. Amazing that they managed to miss/ turn a blind eye to hundreds of LPEs without redress, no AML registration or ICO registration in 2016 when the prospect of a Summer bonus of hundreds of registration fees at the time.