Consumers, Estate Agents and Redress Bill [HL]

My Lords, this amendment seeks to increase the maximum amount of a penalty charge notice from £500 to £3,000. As noble Lords will remember, we discussed penalty charges in Grand Committee. As I said then, there needs to be a balance between the fine being a significant sum and our recognising that this is a fine that can be imposed on the spot with very little due process involved. We think that £3,000 goes far beyond what is reasonable for an on-the-spot fine and that a fine of that level would be appropriate to impose only after proceedings before a magistrates’ court. In addition, in a magistrates’ court, the magistrate can exercise judicial discretion on the level of the fine, taking into account the circumstances of the case, whereas under a fixed penalty scheme there is no scope for the exercise of discretion, and it would be unfair in principle to set a fixed penalty at such a high figure. That is not to say that estate agents should go unpunished. The ultimate penalty for not being a member of a redress scheme is, of course, loss of livelihood as a result of being banned. The maximum for a penalty charge notice under the Housing Act 2004 is £500. It seems sensible for the penalty charge regime under this Bill to be consistent with the regime under the Housing Act, which is why we believe that £500 would be reasonable here, too. Of course, an estate agent could be subject to more than one notice, each up to a maximum of £500. Another important point is that, although £500 may not appear at first glance to be a significant sum for estate agents, that does not ring true when we consider that a 2005 Key Note market report on estate agents found that 25 per cent of estate agency businesses did not make a profit in 2003-04. Also, many estate agency businesses are small and medium-sized enterprises. The OFT report quotes the Council of Mortgage Lenders research that found that 60 per cent of estate agents in England and Wales are small independent firms which tend to operate one office or a handful of offices in a local area. We may be willing to consider raising the penalty charge in an amendment perhaps along the lines suggested by my noble friend Lord Dubs in Committee. I hope that, in the light of that suggestion, the noble Lord, Lord Lee of Trafford, will feel inclined to beg leave to withdraw the amendment.