Consumer Rights Bill

Debate between Andy McDonald and Jenny Willott

Monday 16th June 2014 Commons Chamber

[Jenny Willott]

May I add my congratulations to you, Madam Deputy Speaker? You will get bored with it soon, but at the moment I am sure it is probably still quite a novel surprise.

I share the concerns of the hon. Member for Walthamstow (Stella Creasy) about the practice of double charging by estate agents. That issue has been raised in the House a number of times and in Committee. Under existing legislation—in particular consumer protection regulations and the unfair contract terms law—as well as their own industry codes, estate agents must already make fees and charges clear for consumers. I believe that there are risks in rushing into further legislative measures and applying them prematurely, which is why a better way of addressing the issue is through estate agent redress schemes.

As the hon. Member for Walthamstow mentioned, on 7 May I met the property ombudsman and ombudsman services: property, to draw their attention to my concerns on this issue, and those raised by hon. Members in Committee and the House. Both redress schemes have agreed to monitor any complaints they receive, and more is being done. The property ombudsman has committed to producing new guidance that will put in place strict controls on the practice of charging the buyer a fee, or charges being placed on both buyer and seller, and the potential for conflicts of interest. That guidance will ensure that agents recognise their obligations under the ombudsman’s code of practice for transparency, disclosure and avoidance of conflicts of interest. If the guidance is not complied with, agents will be in breach of that code.

Estate agents must belong to an ombudsman service, and ombudsmen have strong powers to tackle bad behaviour by estate agents. For example, they can give a financial award to the complainant or enforce obligations on the estate agent. As a last resort, estate agents can be struck off a redress scheme. Because it is a requirement on estate agents to belong to a redress scheme, if they have been struck off, they are effectively out of business and cannot continue to operate. If they continue to operate under those circumstances, it is a criminal offence.

[Andy McDonald]

Does the Minister accept that instead of codes of practice and all that paraphernalia going round the houses, it is fundamentally a breach of the fiduciary duty that an estate agent owes to one client if they are in discussions with another and charging a fee for the same transaction? The interests are not united; they are completely and utterly divergent. Would it not be better to say simply, “You cannot charge two contracting parties a fee for the same service”?

[Jenny Willott]

As I said, I met both ombudsmen in May and discussed the best way forward. As a result, they are looking at the conflict of interest, which I think is key to this issue, and at how guidance can be tightened so that the responsibility estate agents have to the buyer and seller is made clear.