Consumers, Estate Agents and Redress Bill [Lords]

I will come back to that point, but the hon. Gentleman may rest assured that for the first time ever each of the sectors in the Bill will have comprehensive redress schemes, which will be consistent with each other. That is the whole purpose of the Bill, as I was trying to get across, and I hope that that reassures the hon. Gentleman. Estate agents play a crucial role in the home buying and selling process. For most consumers, buying a home is the most critical and the most expensive purchase that they ever make. I speak from personal experience when I say that it can be shattering to the nerves on occasion. It is vital that the estate agency market works well and that consumers are protected against unfair practices. Consumers need to be confident that estate agents will deal honestly with them; and many estate agents are rightly angry that their reputation is tarnished by a small and unscrupulous minority. The Office of Fair Trading recognised those issues in its study of the estate agency market published in March 2004. The OFT found that the market was generally competitive. However, it also found that a significant number of consumers were not happy with the service that they received. Some consumers simply received poor service with estate agents turning up late for appointments, for example, or not returning keys on time. But other complaints were more serious, such as failure to pass on offers to sellers or failure to declare a personal interest in a property. The OFT therefore made a number of recommendations to put that right. The Government accepted the OFT’s recommendations in July 2004. In fact, in the area of redress, the Government went even further than the OFT and promised to make membership of a redress scheme mandatory for all UK estate agents. We fulfilled that promise in part by amending the Housing Act 2004. As a result, complaints against estate agents relating to home information packs in England and Wales will now be addressed through redress schemes. The order requiring estate agents to belong to a redress scheme for the purposes of HIPs was laid on 1 March, and estate agents have until 1 June to sign up to an approved scheme. But this Bill goes further. It will fulfil our promise that a private individual with a complaint against an estate agent should have access to redress. Estate agents could face costly pay-outs and possible loss of livelihood if they do not abide by the law and generally accepted voluntary codes of conduct in the industry. I am confident that we will see higher standards as a result. Our intention is that this should come into force in April 2008. At the same time as providing redress for consumers the Bill also tightens the current negative licensing regime. First, the Bill will improve the audit trail for transactions by requiring estate agents to make and keep records, including records of offer letters, for six years. Secondly, it will give the OFT and local authority trading standards officers powers to go into premises and inspect records in a wide range of circumstances. That will enable them to investigate not just criminal offences but all breaches of the law and of undertakings given to enforcers. Finally, the Bill will expand the circumstances in which the OFT can consider the fitness of an estate agent to practise, and if necessary it can take regulatory action against them. At present the OFT can ban an estate agent only when they have been convicted of specified criminal offences. The Bill will allow the OFT to ban an estate agent when there is sufficient evidence that an offence has been committed, even if there is no conviction. That will ensure that the OFT can consider the fitness of estate agents, for example, where another regulator has taken enforcement action against them but they have not been taken to court. Furthermore, the OFT will also be able to ban an estate agent when an enforcement order or a statutory undertaking under the Enterprise Act 2002 has been breached. Those changes are needed to bring the Estate Agents Act 1979 into line with modern enforcement practice. The Government wholeheartedly support the efforts of the National Association of Estate Agents and the Royal Institution of Chartered Surveyors to raise standards through training. Any good estate agent should have knowledge of the legislation governing estate agents, just as any professional should be aware of the legal obligations relevant to their industry. However, the OFT found that in the majority of cases where it took action against an estate agent the root cause was lack of integrity or honesty—not lack of knowledge of the law. What the Bill does is more sophisticated than positive licensing: the estate agents provisions will mean that a consumer dealing with an estate agent anywhere in the UK knows that there is somewhere they can go to seek redress. Any estate agent who does not belong to a redress scheme will now face being fined and banned as a result. More evidence and audit trails will make it easier for enforcers to deal with rogue agents and remove them from the marketplace. At the same time, other measures strengthen the current regime and give enforcers the powers they need to take action against rogue agents. Ultimately, that approach will serve consumers better. Finally on this issue, I shall comment on the concerns raised about the fact that letting agents and others are not included in the Bill. Lettings and new build are important sectors of the property market, and the Government are committed to ensuring that consumers are not disadvantaged in those areas. However, the Bill implements the recommendations made in the OFT report on the estate agency market. The report did not look at lettings agents, property developers or any other property professionals, so we do not yet have a clear evidence base for extending the redress provisions to those sectors. Secondly, the Bill amends the Estate Agents Act 1979, which has a specific definition of estate agency work. Changing the definition would require a lengthy and careful examination of the consequences for the whole Act. However, the Government are committed to looking at the whole property market and, on the basis of proper research and evidence, to consider what more needs to be done. At my prompting, as Minister with responsibilities for consumers, the Government will conduct a review of the property sector, including looking at redress for lettings and new build. Ministers will consider carefully the conclusions of that work and decide the next steps that should be taken. I hope that is seen as a positive response to the comments made in another place. Part 4 contains provisions relating to doorstep selling that will give consumers the right to change their mind, whether they asked for the sales visit or not. This part of the Bill has a long history, going back to 2002 when Citizens Advice submitted its report, ““Door to Door””, to the OFT as a super-complaint. The OFT subsequently made a number of recommendations for improving consumer protection in that area. As part of the Government’s response to the OFT report, published last September, we decided to introduce primary legislation to enable us to make regulations, so that consumers who ask salespeople into their home will also have cooling-off rights for doorstep sales; at present, they apply only when a salesperson turns up uninvited. Breaking down the distinction between solicited and unsolicited visits will make the law simpler and clearer for the consumer, business and enforcement agencies alike. Businesses will be able to work with one contract for both solicited and unsolicited visits, reducing ongoing costs in the production of contracts and training of sales staff. The simpler rules will ensure that businesses will not generally need to spend time establishing whether their visit is solicited or unsolicited. The provisions are particularly important for vulnerable consumers who—having invited a salesperson into their home—can feel pressured into buying something they do not want or need. Together with the unfair commercial practices directive, the measure sends a clear message that businesses that lack integrity and feed on fear will not be tolerated. The Government are committed to a robust and effective consumer and competition regime—one that is fair to consumers as well as to business. First, the Bill creates a new National Consumer Council—a powerful advocate for consumers. Secondly, it gives consumers the rights to redress that they deserve. Thirdly, it demonstrates our commitment to getting rid of rogue estate agents. Fourthly, for the first time, it tackles effectively rogue doorstep sales persons. I look forward to hearing the contributions of right hon. and hon. Members to the debate on this important Bill. I commend it to the House.