Consumers, Estate Agents and Redress Bill [HL]

The amendments in my name in this group fall into two categories. I shall address Amendment No. 128 first, which would ensure that an order made to establish an estate agent redress scheme under new Section 23A, to be added to the 1979 Act, would be subject to the affirmative procedure. I have listened with interest to my noble friend the Earl of Caithness on his amendment, and I will listen with equal interest to the rationale behind the amendments tabled by the noble Lord, Lord Dubs, on penalty notices. An order made under new Section 23A provides for exemptions from the redress scheme to be made. It allows for specified descriptions of work to be exempted from the scheme and for the duty not to apply to complaints of any specified description, which may also include reference to a description of a person making a complaint. The order may also exclude certain service providers from joining the scheme. I imagine that could include property developers under the provisions of subsection (2)(a). Buying a house is for most people the greatest financial transaction they make in their lifetime; it is certainly one of the greatest transactions in an emotional and logistical sense. Just because an individual has purchased a property through a developer, there is no reason why he or she should not enjoy the same protection as if they had gone elsewhere. The statutory recognition of redress in estate agency is one of the most important measures the Bill will introduce. Yet, as with so much legislation before your Lordships, this central function has been relegated to secondary legislation. The crux of this matter is that the redress scheme should not only be independent, but be seen to be independent. Surveys in Which? have shown that 72 per cent of people believe that estate agents invent offers, while 74 per cent think that estate agents and property developers work together in a dishonest way for their own benefit. Those figures come from an online survey and are a useful insight into the general perception of the way the industry functions. I am confident that there is already verygood practice within the estate agency market. Unfortunately, though, there is also a good deal of uncertainty over where to go to receive a good service. Without the positive and public approval of a redress scheme, it will be difficult to instil public confidence in the new provisions. What is more, if many of these schemes do not adhere to one set of standards, there will be very little faith in the redress schemes being set up. That brings me to Amendments Nos. 134, 135 and 136. Amendment No. 135 seeks to ensure that there will be one code of practice behind the redress schemes. Amendment No. 134 seeks to ensure that a code of practice has to be approved by the Office of Fair Trading in accordance with the categories prescribed in sub-paragraphs (2) to (8) of the new Schedule. With regard to those categories, I believe that there may be some scope for improvement. It is essential to achieve transparency within the scheme, ensuring that clear reasons are given for decisions and that there is monitoring of consumer satisfaction—for example, the analysis of complaints—as well as good communication of information on how the scheme works. I would also be grateful to the Minister if he could shed light on the issue of option contracts. These contain terms not normally found in traditional estate agency contracts. Based on complaints from the OFT, it is clear that consumers are sometimes unaware of the potential implications of such contracts. They allow a property developer to offer the seller a certain guaranteed price for a property, thereby making a profit from the margin they secure when the market fluctuates. In a recent report, the OFT called for consumers to be given the same protection in law for those who employ businesses using option contracts as those who employ traditional estate agents. I should be interested if the Minister could inform noble Lords whether that area will be included as of necessity in the redress schemes. The new Schedule currently allows for the scheme to have voluntary jurisdiction over other areas of the property industry, which could allow complaints about lettings and surveyors to be dealt with under the scheme. I would be grateful to the Minister if he could inform noble Lords whether he expects schemes to extend to the areas I have outlined and what accountability the OFT will have in enforcing the provisions of the redress scheme. Does the Minister expect there to be a majority of consumer representation on governing bodies of redress schemes? Amendment No. 136 simply replaces the duty for the OFT to consider, "““generally accepted principles of good practice””" in relation to consumer redress schemes with considering best practice when deciding which scheme to adopt. It is a probing amendment, following on from Amendment No. 134, with a view to ensuring high standards in the forthcoming schemes. I await the Minister’s views on these points with great interest. In the light of the evidence collated by Which?, and with the interests of consumers at stake, I remain convinced that the order to establish a redress scheme should be subject to proper scrutiny and promoted to an order subject to positive resolution. I say again that this is a lot of amendments grouped together. I am quite sure, given the speed at which the people behind him are moving, that he will receive a few notes, but if there are some that he cannot get in time, I hope he will write to me. I beg to move.