Yesterday’s announcement that four estate agents in Berkshire breached UK competition law by price-fixing is to be followed by publication of the decision “in due course”.
The Competition and Markets Authority imposed fines totalling £605,519 on three of the agents but let the fourth off.
The fines were imposed on Michael Hardy; Prospect; and Richard Worth (in administration) and Richard Worth Holdings, together Richard Worth.
The CMA did not fine the fourth agent Romans, as it was the first to confess its participation in the arrangement, under the CMA’s leniency programme and co-operated with the investigation.
Yesterday, Romans did not issue a new statement but referred us to an earlier one this year.
At that time CEO Peter Kavanagh said that in June 2017, senior directors of Romans became aware that some years ago a small number of sales executives across a few branches “had acted in a manner totally contrary to the standards and values of the company”.
Romans had alerted the CMA.
Kavanagh said: “We also undertook our own investigation and, based on our findings, have taken the appropriate disciplinary action against those individuals involved.
“We also reviewed and strengthened our training, management and compliance procedures to ensure that all our staff act with integrity at all times and adhere to the company’s high ethical standards.
“We are truly sorry that the judgement and behaviour of these individuals did not meet the standards of behaviour expected by our people, our customers and our colleagues in the industry.”
Yesterday, Adelfas Property Group trading as Richard Worth Estate and Land Agents emphasised that it was not one of the companies subject to the CMA decision.
The statement said that Adelfas purchased the name and assets of Richard Worth in 2018, some four years after the alleged offences.
It said: “The Adelfas Property Group would never enter into such trading practices and assure clients that our delivery policy, internal checks and procedures ensure this.”
Richard Worth has been fined £193,911 and it is understood that the fine is payable by the companies named by the CMA.
Michael Hardy and Prospect issued their own, separate statements, which both accepted the CMA’s findings.
Michael Hardy said it had put “robust procedures” into place and Prospect said it had “been able to learn from our past mistakes”.
Michael Hardy was fined £142,843 and Prospect £268,765.
The fines both include a 10% discount because they admitted to the breaches and, in Prospect’s case, a 50% reduction under the CMA’s leniency programme.
The CMA says that a “non-confidential” version of its decision will be published in due course.
The Berkshire case is the third brought against estate agents in recent years. Four agents in Burnham-on-Sea, Somerset, were fined over £370,000 and three members of the Three Counties Estate Association on the Hampshire/Surrey borders were fined £735,000.
Mark Hayward, chief executive of the National Association of Estate Agents, said: “We are very aware of the implications of forming an estate agents’ cartel and have been vigorous in our promotion of the CMA’s Stop Cartels campaign to educate agents about price-fixing, market sharing and bid rigging.
“We continue to urge all our members to adhere to current legislation to ensure best practice to avoid falling foul of the law.”
Comments (16)
Putting aside the fee issue, what is more interesting to me, having recently been in a room with Baron Best and other members of RoPA is the repeated mantra that – only qualified property professionals should be allowed to trade. That only new and thorough regulation of the sector will get rid of (and this is their quote) the ‘w—- sock brigade.’ For me if people are honest then they will go about their work in an honest way, if they are not, then no amount of regulation will get rid of it.
The other thing that confuses me, is that when large brands get things wrong, as was recently the case with one of the largest corporate agents, who were fined by RICS, why were their branches are not closed down? and why was the CEO not personally held to account. Instead the ship sales happily along. This to me seems at odds with the senior guardians of the industry wanting to make the general public respect and admire estate agents.
Maybe if Lord Best and his acolytes do get the necessary consent through government in the next two years and regulation comes in, there will also be a proper code of conduct for all agencies, whatever their size, and there will be no favouritism for people in the c-suite who should fall on their sword, when they fail to keep their company compliant.
I dont understand how Romans were *let off*.
I know the agent who made the original complaint, so unsure how Romans *confessed* …
because you are first to admit to guilt, it does not mean you should not be punished
Long established practice. It’s a crude ‘Plea Bargain’. You tell us everything and we go easy on you. In this case, very easy on you.
Meanwhile, PB has spent around £200 million of other people’s money to buy market share and have increased their ‘ fixed’ fees year on year whilst paying considerably less per listing to RM than the small independent agent thereby helping to drive 100s of them out of the marketplace.
How many 10,000s of call-center customers have had to pay two estate agency fees?
Come on CMA this surely breaches your own guidelines?
Offering a fixed fee, that increases with rising business cost/ value to the customer, is not done in an effort to manipulate a local/national market.
These people deliberately and knowingly exploited their customers for financial gain. It isn’t comparable to just offering a rubbish service.
“These people deliberately and knowingly exploited their customers for financial gain.”
No.
They quoted a Fee that they felt they were worth and would not work for less.
For the record there is absolutely nothing wrong with that at all – until you start to agree to doing it collectively with others at which point it is legally defined as being “anti-competitive”.
The fact however is that the customer has a choice. Either accept and pay the fee or don’t. There are always other alternatives.
Gangsters!!
Mark Hayward, chief executive of the National Association of Estate Agents, said: “We are very aware of the implications of forming an estate agents’ cartel…………….”
So, will the NAEA be expelling any members found guilty in these cases ?
Not a chance. They would not want to lose the membership subs…
If you were running a multi branch, multi area agency and one very small group of offices was consistently obtaining higher fee % than all the rest, you would a) question how they achieved it, and b) seek to extend their method to other branches so as to increase profitability. What happened here?
a) They didn’t spot that the branches were getting higher % fees. Unlikely, but possible
b) They did spot it but didn’t ask the right questions. Possible.
c) They did spot it, found out how it was happening and then reported it in order to minimise the fallout. Apparently what happened.
I suspect (and in order not to breach posting rules [following a comment I made yesterday, which was removed!]) in my opinion, Senior Management could reasonably be assumed to have been fully aware of the dubious goings-on amongst its branches…Lest we forget, this cartel set-up was allegedly ongoing for 7 years!
AgencyInsider
“If you were running a multi branch, multi area agency and one very small group of offices was consistently obtaining higher fee % than all the rest…”
Point me in the right direction if I’m wrong here – but this was a case of ‘fixing’ minimum Fee levels, not necessarily increasing Fee percentages. I haven’t seen anything regarding whether the ‘minimum Fee level’ agreed between the branches was a percentage or a monetary figure.
The branches in question may not have been achieving a higher fee % than others in the group whilst this agreement was in operation and therefore may not have ‘stood out’ in the way you suggest.
The Agency may have had their own rule for minimum Fee level – which, if coincidentally the same as the Fee in the agreement, would not have raised any eyebrows at a higher level.
This case leaves many questions unanswered. Unfortunately as seen on yesterday’s article, it allows those who revel in bad news to fluff up their feathers and claim they were right all along about an industry that we all know is far more straight than crooked.
Funny how they all seem to overlook – or even jump to the defense of – the real ones doing the damage, though…
That’s an entirely reasonable summation PeeBee and may well be correct. I guess we shall never know what really went on.
Thank you. And you are right – we will never know the full story.
Lessons are here to be learned. This is the third such case in pretty much as many years.
I don’t think an Estate Agent is in any way wrong to protect its’ future and/or profitability, by setting a Fee level that it will not work for less than. That is simply good business practice.
But sitting in a room with others and shaking hands on a figure/percentage is against the Law – even if that Law potentially threatens their livelihoods by driving down income in the name of “competition”.
Being the cheapest is a competition that no-one should want to win – yet there are those who seem happy to shout it from the rooftops. If this is their differentiator them bl00dy good luck to them – as they will need all the luck in the world to stay open!
Certainly in the Reading offices, five agents (two of which are named in the article above) agreed that, should they go up against one another, they would quote a standard fee of 1.5% plus VAT. However while some kept to this agreement the remaining ones quoted whatever they wanted.
‘At that time CEO Peter Kavanagh said that in June 2017, senior directors of Romans became aware that some years ago a small number of sales executives across a few branches “had acted in a manner totally contrary to the standards and values of the company”.’
…and if you believe that, you’ll believe anything! Unscrupulous b*ggers