The Ombudsman for Estate Agents has called on the National Association of Estate Agents (NAEA) and the Royal Institution of Chartered Surveyors (RICS) to make membership of the Ombudsman Scheme mandatory for all their members, following the Office of Fair Trading’s Report into Estate Agency published last month.

The OFT Report

The Ombudsman welcomed the Office of Fair Trading Report into estate agency – but he would have liked it to have gone further.

The report called for better and more widespread self-regulation through codes of practice that raise standards within the estate agency industry, and said it was particularly important to establish low-cost procedures for handling complaints and securing redress for consumers. However, the report stopped short of requiring that estate agents should belong to the Ombudsman for Estate Agents Scheme – despite the fact that it acknowledged the OEA has the only code of practice that the OFT recognizes where estate agency is concerned.

Stephen Carr-Smith, the Ombudsman, said: “As Ombudsman, I welcome the call for higher standards in estate agency contained in the OFT report, but it missed a golden opportunity to compel estate agents to belong to the OEA scheme. I would have liked the report to have given stronger support to the OEA Code of Practice - and increased the pressure on agents to adopt it. I believe that the OEA scheme that is already in place provides precisely the framework that is necessary to achieve the OFT’s aims.

I call on both the RICS and the NAEA to adopt the code of practice that is part of the OEA scheme and which the OFT has already recognised. In my view, both organisations should make compliance with the OEA Code of Practice and membership of the OEA compulsory.”

Complaints

The number of complaints made to the Ombudsman fell during 2003 for the first time in the Scheme’s 14-year history. The total number of initial enquiries concerning complaints fell by 17%, from 6,462 in 2002 to 5,356 in 2003. However, the number of full cases investigated by the Ombudsman remained the same in 2003 as in 2002, at 583 – because of the backlog carried forward from 2002.

The decisions made in the 583 cases fully investigated in 2003 broke down as follows:

2003 2002

In favour of Complainant and Award made: 214 182

Negotiated Solution(also in favour of Complainant): 146 158

In favour of Agent: 211 239

Outside terms of reference: 2 4

Complaint withdrawn/negotiated settlement: 10 0

The three largest categories of complaints from sellers involved disputes about the commission fee, dissatisfaction with an agent’s financial evaluation of a buyer’s ability to purchase the property, and doubts about the initial valuation of the property. The two largest categories of complaints from buyers involved disputes concerning sales particulars inaccurately describing the property, and whether their offers had been fairly handled by the agent. Other complaints involved marketing, conflict of interest, and favouring the other party.

Highest Award

The highest award made during the year was of £7,461 as a result of a fee dispute with two agents, both claiming the commission fee in full. Through conciliation by the Ombudsman’s Office, the two agents were persuaded to share the fee.

Stephen Carr-Smith said: “If the reduction in new complaints coming to my office is as a result of increased standards being shown by member agents, then that is really good news – and reflects the focus that was put into bringing in our new code of practice. I will look with interest to see if this trend continues during this year.

Despite the reduced number of complaints, it is still important to have an Ombudsman Scheme. I believe the house buying and selling public deserves to have an independent and impartial body that can listen to their complaints and provide financial compensation if appropriate. There is now a new and improved code of practice, which gives even better consumer protection. I would urge sellers to find out whether an agent belongs to the scheme before they decide to do business with them. Any agent that is in the scheme can truly be said to be a “good trader” – who has undertaken, not only to abide by a higher level code, but also to be judged by an independent third party if a complaint is made and to abide by what ever that judgement is.”

New Code of Practice

In co-operation with the OFT, the OEA produced a new code of practice which came into effect on 1 April 2003. It is hoped the new code will be fully approved by the OFT in the near future, which means that member agents will be able to display a nationally-recognised, OFT-approved logo as the sign of the ‘good trader’.

Bill McClintock, Chairman of the OEA Board, said: “Our new code of practice, which is fully compliant with the core principles laid down by the Office of Fair Trading, has now been launched and should receive full OFT Stage 2 approval in the near future. This will bring major benefits to OEA members and should encourage all estate agents to seek membership of the Ombudsman Scheme: consumers will be exhorted to use traders who demonstrate their commitment to approved codes which incorporate redress schemes.

The NAEA and RICS used to share the same Code of Practice as us – thus making it a standard Code throughout the Industry. I hope we can achieve that position again – and very soon.”