Consumers, Estate Agents and Redress Bill [Lords]

I hope that a multiple scheme system would operate like that, but I am concerned. Because the schemes will make their money from the number of customers they attract, when so much is a matter of interpretation and so many issues are subjective there will be a great temptation to weaken schemes, rather than to strengthen them. The Minister has spoken about one of our most fundamental concerns—the fact that the Bill does not cover the lettings industry, which is worth £12 billion. Although he implied that that would be dealt with in a sort of phase 2, I ask that some work be done now so that at least the principle of including lettings is added to the Bill. Delay in such an area would be unfair to consumers. The hon. Member for Rutland and Melton (Alan Duncan) made the point that people who rent are more likely than those who buy to be vulnerable and to have difficulties in taking on the system; that underscores the importance of getting action on lettings. Shelter conducted an interesting case study that showed that some people were charged as much as £300 in fees for the simplest lettings processes, which is completely out of kilter with the amount of work involved. The Bill would give no opportunity for redress in such circumstances. I do not understand, either, why the definition of what is an estate agent or what is estate agency work cannot be adapted to include developers who sell their own properties, whether they sell them off-plan or after they have been built. That is a huge loophole. As was mentioned often by those who spoke on behalf of my party in the other place, it is completely unacceptable to have a maximum penalty of only £1,000 for operating outside the scheme. We recognise that that has been increased from £500, but we will continue to seek an upward adjustment. The average estate agency commission on a single sale is more than £3,000; that should be the minimum fine for a first offence, rising to a far higher sum if there are future offences. We have suggested the sum of £10,000, which, interestingly, I also heard being suggested today. The redress scheme does not include any capacity to monitor what is going on in the industry. That will continue to be the responsibility of consumers at large, Which? or the BBC. That raises in my mind questions about the Government’s approach to having negative licensing, rather than positive as well as negative licensing. The fact that almost anyone can set up as an estate agent without a single qualification for the job is to me, and I believe, to most consumers—both purchasers and sellers—completely unacceptable. Consumer dissatisfaction with estate agents is high. The Office of Fair Trading report, having first said that nine out of 10 people buying or selling a home used an estate agent, goes on to say that around a quarter of them were dissatisfied—a high level of dissatisfaction. However, few of those people made a formal complaint to the OFT. That is a difficult and challenging process and people do not have the time to do it. They want to get the business over and done with. The industry does not have many fans. It has done its own research and found that only one person in 10 thought that one could usually trust an estate agent. In 2005 the voluntary ombudsman scheme, to which only two thirds of agents belong, received a whopping 6,000 complaints. Anyone who saw BBC1’s ““Whistleblower”” programme in March 2006 will have heard about a whole culture of dirty tricks. For most people a house purchase is the largest investment they will ever make. For many it is their retirement nest egg, and a purchase that they will make very few times in their lives. Many people make a purchase in a new part of the country, in an area that they do not know and where they have few points of reference. In such circumstances no one would dream of using an unqualified solicitor and expecting them to provide the necessary paperwork for a house purchase. However, we do expect people to employ a possibly unqualified estate agent, and that seems unacceptable to me. A redress scheme is all well and good, but surely it would be better to prevent the problem with proper training and qualifications for estate agents. Indeed, the National Association of Estate Agents and Which?—two different sides of the coin—both support that approach. We would not need to invent the qualifications as there is an NVQ level 3, introduced three years ago, which would be an adequate qualification. I mentioned the Earl of Caithness at the beginning of my speech, but his small attempt to amend section 22 of the Estate Agents Act 1979, which sets out standards of competence for estate agents, was defeated. I lived for many years in the US, where every estate agent has to be licensed. It is not a barrier to competition, but having bought and sold houses in both countries, I can say that the level of service available in the US, where I had a qualified and licensed agent, was a world away from the quality of service in the UK. I hear similar reports from almost everybody to whom I talk. Therefore, I ask the Government to reconsider that issue. I hope that, as they have suggested, the Government have an open mind on many of the potential improvements that could be made to the Bill. We all want quality protection for consumers. None of us wants to waste money, but bad practice is costly to the consumer, the economy and the taxpayer. Let us not make a false economy. I hope that in the next phases of the Bill’s passage we can add many provisions that will strengthen consumer protection and make it more effective.