§ Order for Second Reading read.
§ 11.20 a.m.
§ Mr. Arthur Jones (Northants, South)
I beg to move, That the Bill be now read a Second time.
It was on 22nd March, 1963, that a Bill carrying this identical Title came up for its Second Reading. It was sponsored by my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke). On that occasion he put fully and with great clarity the considerations which led to the preparation of his Bill, and we may unavoidably be passing over some of the ground which he then covered. However, repetition is inescapable, as the House will properly expect the full circumstances of the matter to be presented.
I was very fortunate to obtain the first place in the Private Member's Ballot, and, immediately, I was in no doubt of the Measure which I hoped to bring before the House. I was present at the Second Reading of the earlier Bill and aware of the continuing discussion which had gone on among the various professional bodies in subsequent years. Practising as an estate agent in Bedford as a Fellow of the Valuers' Institution, I have become increasingly aware of the difficulties facing the profession and have shared the concern of many hon. and right hon. Gentlemen at the mounting losses suffered by the public and the continuing evidence of malpractices.
My hon. Friend the Member for the Isle of Ely detailed in his Second Reading speech the multiplicity of professional bodies of varying importance and status and said that the most accurate assessment he had been able to make gave a figure of approximately 7,000 estate agency businesses in England and Wales, of whom three-quarters accepted the rules of conduct of one or another of the professional bodies. This figure is thought to have increased in the past few years and, as regards individuals in Great Britain, a total of some 30,000 persons is probably engaged in one section or another of the professional and commercial activity known generally as the estate business. 559 It is these persons engaged in the selling and letting of land and buildings for payment who are the subject of this Bill.
The Bill does not include the sale of livestock or deadstock—agricultural terms familiar to many hon. Members—nor, for example, in the sale of businesses, stock, fittings and goodwill, and I have so informed the bodies representing those agents primarily engaged in business transfer. Neither does it apply to persons selling their properties but not engaging the services of an estate agent, and in this category developers offering houses which they have constructed would not lie within the terms of this Bill.
The purpose of the Bill is to ensure that the competence and conduct of practising estate agents are of a standard sufficiently high for the protection of the public. This is the main concern, and it is considered that this can best be achieved by setting up an Estate Agents Council charged with registration and regulation, subject to appropriate safeguards.
Registration has for a very long time been the aim of responsible members of the profession and I want to sketch the history of the matter as briefly as I can. The senior professional body, the Royal Institution of Chartered Surveyors, was founded in 1868, then known as the Surveyors' Institution. Its purpose was primarily for the benefit of those concerned in the management of landed estates and settling compensation for land acquired under the Land Clauses Act. Early members of this Institution were not often concerned with the selling of houses or other property for a commission. In view of this two other institutes were founded, the Institute of Estate and House Agents in 1872 and the Institute of Auctioneers in 1886, which were amalgamated in 1912 to become known as the Auctioneers and Estate Agents Institute. It is relevant to observe that one of the objects of this amalgamation was to promote legislation to control estate agents, and in 1913 a Private Bill was promoted which might have become law but for the outbreak of the 1914–18 war. In 1923 the two established bodies which had amalgamated were joined by the 560 Lands Agents Society which had been founded in 1902 and jointly a further Bill was promoted entitled the Landed Property Practitioners (Registration) Bill. It is now that we find circumstances arising similar to those which occurred in 1963. The Incorporated Society of Auctioneers and Landed Property Agents, formed in the early nineteen-twenties recorded an early success in blocking the 1923 Bill because its members feared a closed shop from which they would be excluded, though a few years later this society itself sought to introduce a registration Bill. This came to nought. Between 1955 and 1961 there was continuing discussion on the question of registration and in the latter year the Valuers' Institution and two other bodies also joined in the discussions.
It was in 1962 that my hon. Friend promoted his Bill, and history repeats itself. The National Association of Estate Agents had been established in that year—and we can look back to 1923 for the parallel—with the object of resisting statutory control in the form proposed. These conflicting interests which have been evident down the years between the various professional bodies represented differing aspects of the widespread business of estate agency. It was in March, 1963, as hon. Members will recall, that my hon. Friend's Bill failed to set a Second Reading. There were fundamental differences of view at that time, and I hope to show, when I come to explain the Clauses of the Bill, how those have been met.
I am indebted for this historical sequence to Mr. Henry Wells, the President of the Royal Institution of Chartered Surveyors, whose father, the late Sir William Wells, had as early as 1911 been the advocate of a policy of registration and other requirements which he believed would lead to the necessary regulation of estate agency. It was his further initiative which led to the founding of the College of Estate Management nearly 50 years ago and the degree in estate management in London University at about the same time. I think that hon. and right hon. Gentlemen would wish the contribution of Mr. Wells and his father over the period of the last half century to be recognised, and it is an honour for me to take this opportunity to do so. Mr. Wells has served on the steering 561 group, to whose work I shall refer later and whose membership was drawn from the following bodies, and I am delighted to say, they have reached unanimity on the terms of the Bill now before the House, the situation salutary in itself evidence of a will on all sides, I would suggest, to make progress. This is the first time that this House and the Government have been able to welcome a Bill on which all shades of opinion throughout the profession are represented and reconciled.
The names of the bodies represented on the steering committee were as follows: The Royal Institution of Chartered Surveyors, the Chartered Land Agents Society, the Chartered Auctioneers and Estate Agent's Institute, the Incorporated Society of Auctioneers and Landed Property Agents, the Incorporated Association of Architects and Surveyors, the Rating and Valuation Association, the Valuers' Institution, the Faculty of Architects and Surveyors, the Institution of Business Agents and the National Association of Estate Agents.
That long list indicates the amount of unanimity there is among the multitude of interests which have come to the House with this Bill with their recommendations. The recently formed Federation of Local Associations of Estate Agents has also given its support, and I understand that this represents some 30 associations.
A further indication of support comes from a recent reply to a question put to the Chairman of the General Purposes Committee of the Greater London Council on Tuesday last. In reply he said this, referring to the Bill:The Committee yesterday considered a report on this Measure and resolved to recommend the Council to announce its support for the Bill in principle. I am sure that the Council will endorse this.I am also pleased to record that the Committee was supported by a Scottish body, namely, the Institute of Auctioneers and Appraisers in Scotland. It is only in recent days that I have had a letter from the Secretary of the National Federation of Property Owners and Factors in Scotland with regard to the proper protection of Scottish interests. I am informed by the Secretary that generally speaking his Federation agrees with the principles 562 in the Bill, but feels that the position of the Scottish property factor, or agent, has not been fully appreciated. I question whether this is in fact the case, but the Secretary goes on to say this:I am instructed to represent in the strongest possible terms that there should be inserted in the Bill provisions for a separate sub-council for Scotland"—a strong Scottish lobby.Indeed, a separate Scottish Act would be preferable.I myself am confident that proper representations of Scottish interests will be secured and, undoubtedly, the Scottish Office will be consulted.
My hon. Friend the Member for Ely gave details of a series of defaults by agents since 1940. The House will be aware that the public continue to be harmed by the dishonesty, sharp practice and incompetence of a small minority of unscrupulous agents. Over the last 20 years the Press has reported some 350 convictions for fraud by estate agents and nearly 400 bankruptcies. Last year the reported cases covered losses amounting to £114,000 and possibly double this amount might be involved if account is taken of those cases where no conviction was reported or where people were reluctant to incur the publicity of a prosecution. Thus a quarter of a million pounds might be nearer the correct figure for the losses in 1965.
The Sheffield Morning Telegraph has taken a particular interest in this question and, in a report of a recent case, a man charged with fraudulent conversion was said to be semi-illiterate and to have no knowledge of estate agency. When sentencing this man the Assistant Recorder said that he found it incredible that such a person could not be stopped from setting himself up as an estate agent.
I have a leaflet here circulated in December in the London area inviting the publicto select a good and fair agent".The leaflet goes on to say:What about yourself? Should in case you die sudden, is your life insured to provide for your wife and children whom you love so much? Or will they be left to charity?This leaflet was associated with attempts to extract large fees from both a vendor and purchaser who had come to an agreement over the private sale of a house.
563 A recent case brought to my notice concerns two estate offices in London controlled by a limited company. The details come to me from the liquidator. The circumstances are quite tragic. A large number of depositors, many of whom come from overseas territories, have lost their life savings, and I am told that the prospect of any return to them in the liquidation is negligible. No fewer than 68 persons are now unsecured creditors for amounts totalling nearly £20,000. The latest Press cutting from The Guardian of 22nd January reports a case in which a man aged 29 was sentenced to six years imprisonment for estate agency frauds involving a total of £14,353. Hon. Members will agree that there is sufficient evidence there to demand a Bill of this character.
Other unprincipled practices to be prevented by registration arise from so-called agents inducing people to sign forms of instruction carrying excessive commission terms. I have the following examples. On the sale of a house for £1,300 the commission was £300. The scale of charges authorised by the professional societies would have been £45. Another case carried commission of 7½ per cent., with a minimum fee of £200, compared with the 5 per cent. or less charge of the societies, with a minimum fee of £7 10s. In Lancashire a vendor was bound to pay 10 per cent. on the selling price, with a minimum of £100, for the sale of a house built before 1918 which sold for less than £500. In this case the contract also bound the client to pay over to the agent any amount realised for the property above a certain figure. An agent in Paignton used a slightly different method. His form of instruction guaranteed him a minimum fee of £90, whatever the selling price.
Until there is adequate control of estate agents, these practices will continue and the criminal and unscrupulous will persist in their frauds to the detriment of the public. They may be encouraged by the following irresponsible and misleading advertisement which appeared on 18th November, 1965, in a publication which has a countrywide circulation:House and estate agency, start your own; full instructions plus free advisory service, £1 1s. 0d. inclusive.564 I have seen the literature which followed the payment of this subscription and the letter enclosing it reads as follows:Here is your copy of our booklet on operating an estate and house agency from your own home. After your second reading you should be ready to start. So now Good Luck.I think I share the final sentiment.
A not infrequent cause of complaint by house purchasers is that after they have paid a deposit on a house, and even perhaps signed their part of the contract, they are told by the vendor's agent that the house has been sold to someone else who offered a higher figure. I cannot undertake that my Bill would end this practice, and I would like to explain why. It is a principle of law and is nothing to do with the position of estate agents that the parties to the sale of a house or other property are not bound until contracts have been exchanged. This applies whether or not estate agents are employed and is no doubt thought to be for the protection of both parties. Plainly it would be unfair for one party to be bound if the other was not, and thus to hold the vendor bound merely because the purchaser had paid a deposit would lead to obvious anomalies. For example, the purchaser might himself find a better bargain and cry off; or the vendor might find that he had bound himself to a man who could not raise the necessary funds to complete the purchase. However this may be, it is a problem of the law of property generally and to deal with it comprehensively would, I am advised, be beyond the scope of the Bill.
Sometimes the sort of case I have mentioned arises in a less straightforward way, as for example where the estate agent is directly or indirectly himself the owner of the property in question. Where features of this kind exist, that could not be dealt with under my Bill. It might well be a matter for disciplinary proceedings if a purchaser is misled in this way.
I turn now to the Clauses of the Bill. Afterwards I shall be dealing with issues some of which have arisen since the Bill was presented. Therefore, I may not under a particular Clause deal with an issue in the minds of hon. Members present, but there is every likelihood 565 that I shall come to it later. I hope that the House will find that this is the case.
Clause 1 provides for the establishment of an Estate Agents Council and its proposed general functions. Above all else, the council is required to secureadequate standards of competence and conduct among persons carrying on business as estate agents".The issue fundamental to the whole purpose of the Bill is the protection of the public interest. The suggested constitution of the council is set out in Part I of Schedule 1. Four persons are to be nominated by the Secretary of State, being persons who are not on the register. From among those eligible for registration representation comes from the representative bodies on the basis of their membership. In addition, there would he three nominations by the Privy Council, or the appropriate Department, from those in the business but not represented by a professional body.
Clause 2 refers to the required investigating and disciplinary committees.
§ Mr. Alfred Morris (Manchester, Wythenshawe)
As the hon. Gentleman will know, there is much sympathy for his Bill on both sides of the House. Organisations like the Consumer Council have referred to the composition of the council and in particular its imbalance. I wonder if the hon. Gentleman, in order to facilitate the passage of the Bill, would say what consideration he has given to this viewpoint.
§ Mr. W. T. Williams (Warrington)
The position appears to be that, as the composition of the council stands, it is overwhelmingly weighted in favour of estate agents running their own business. This is a matter about which there is some complaint. Would the hon. Gentleman be prepared to consider dropping the large number of professional representatives in favour of non-professional lay representatives?
§ Mr. Jones
Mr. Speaker, I crave, and I am glad to have, your indulgence.
Clause 2 refers to the required investigating and disciplinary committees, and Clause 3 deals with the recognition of representative bodies and matters to be taken into account in determining recognition. Clause 4 refers to the maintenance of a register, and Clause 5, an important one, deals with those persons who shall be qualified for registration. Hon. Members will see that the person concerned has to be a member of one of the recognised representative bodies to which I have already referred, or, if not a member of such a body, he is required to satisfy the council as to his good character and competence to enable him to engage in proper practice as an estate agent.
Subsection (3) makes provision for registration on a practice qualification. A person will be eligible for registration if he was in business on the date of the introduction of the Bill, 8th December last, or during the preceding 12 months. The question of delay in registration was raised by hon. Members during the last debate, and I do not see how, for administrative reasons, the question can be more properly dealt with other than as the Bill proposes. The period of two years from the appointed day is, I submit, reasonable.
Clauses 6 to 9 deal with such matters as the determination of questions as to qualification, issue of certificates, rights of appeal against refusal of admittance by the council, and other administrative questions. The rules to be drawn up would, as provided in the Bill, be subject to the approval of the Privy Council.
Clauses 10 to 15 deal with questions involved in the regulation of conduct, and are particularly relative to the protection of the public interest. Clause 10 requires that as soon as may be after the appointed day a statement shall be prepared and submitted specifying conduct which is considered to be contrary 567 to the public interest and disgraceful in the practice of an estate agent. It is this code, the terms of which will be available to the public so that they will know what to complain about, which is intended to cover some of the undesirable practices which have become evident in the estate agent world in recent years.
I have referred to some of these, and I am sure that hon. Members will recognise the desirability of appointing to the council those with experience and knowledge of the circumstances. I suggest that a considerable professional "know-how" on ways and means is involved in the proper fulfilment of this requirement.
The terms of Clause 11 are an important departure, advisedly so. Protection of the public interest must extend to the question of charges, the level to be approved by the Government. A maximum scale of charges is proposed. I know it has been suggested that this will become a minimum, but under the competitive conditions in the estate business, this I think will not prove to be so.
§ Mr. Norman Cole (Bedfordshire, South)
With regard to the previous Clause about the disciplinary action to be taken by the requisite committee of the Estate Agents' Council, I am sure that my hon. Friend will wish to make it clear that it will not always be the case that the matter will be amenable to the law. There may be something which is disgraceful from the point of view of the estate agent, but which is not contrary to the law.
§ Mr. Jones
The questions involved here are not within the competence of the law in many cases. They are questions of conduct and competence. These are the issues which will have weight in the statement that needs to be prepared.
Clauses 12 and 13 refer to keeping a separate account for clients' moneys and interest thereon in certain circumstances. Clause 14 requires the deposit of a guarantee bond to ensure the proper conduct by agents with regard to money and other property entrusted to them. I have been able to satisfy myself that such facilities will be available for those who have a record of competence and proper conduct at premiums will have no financial significance. It is here that the 568 provisions of the Bill may bite, as indeed they should, on those whose record will be looked at with suspicion.
Clause 15 authorises the creation of a compensation fund as a subsequent alternative to bonding. Clauses 16 and 17 relate to grounds for disciplinary proceedings and the duties of the investigating committee. Clause 16(4) raises an important point of principle and emphasises the differing approach under the terms of this Bill and that of my hon. and gallant Friend. Clause 13(1,a) of my hon. and gallant Friend's Bill referred to disgraceful conduct in a professional respect and did not, I think, pay proper regard to the fact that the greater part of the estate business is operated under commercial rules.
In the selling of property a vendor is understandably concerned to get the best possible price, and questions of the date of sale may also be important. The professional content may relate to some of the conditions of sale, but a knowledge of property values and selling techniques are a necessary contribution, and sometimes of greater significance. Salesmanship is involved, and the proposed rules of conduct need not be such as to deny the public an efficient service provided it is properly conducted. The go-getter must have his chance.
It is this aspect of conduct within the commercial part of the estate business which has concerned the National Association of Estate Agents, and was an important factor in its activities against the earlier Bill. I am confident that the wording now set down meets the association's objectives to the full, and the issues have been fully discussed between us.
Clause 17 requires the disciplinary committee to determine on any case referred to it by the investigating committee. Various penalties are available, the most severe being the deletion of the person's name from the register. I hope that the House will consider that the provision of appeal to the High Court, or Court of Session, are adequate.
Clause 18 refers to persons prohibited from carrying on business as estate agents, the position of corporate bodies, and the requirement that there shall be a registered person in charge of every branch office where estate agency is carried on. I understand that the London Co-operative Society offers a service within the 569 definition of the Bill. The matter came to my notice only yesterday, and of course I recognise that some provision may well be necessary.
Clause 19 provides for circumstances in which an authorised practitioner dies or becomes bankrupt, and Clause 20 deals with the use of the title, "Registered Estate Agent".
The miscellaneous Clauses 20 to 28 deal with the necessary approval of the Government Department concerned and the exercise of its powers. Clause 24 describes those persons who shall be treated as practising or carrying on as estate agents, and the exemptions are set out—those who display advertisements, the associated profession of a solicitor, accountant and architect. Some of these are involved in one degree or another with estate agency, and it also deals with local authorities as far as registers are concerned.
Special circumstances arise where a local authority is concerned in a property transaction on behalf of another, where reimbursement of expenses is involved. The Bill does not apply here, but, to cover circumstances in which fees are involved, an Amendment providing a further exemption may be required. I think that hon. Members will have experience of one authority negotiating on behalf another, and it is the allocation of their disbursements and fees which might be involved under the terms of the Bill.
Clause 27 deals with the Bill's application to Northern Ireland. I have already referred to Schedule 1. Schedule 2 covers the constitution of the Disciplinary Committee and its proceedings—
§ Mr. John Rankin (Glasgow, Govan)
The hon. Member has passed over Clause 26 without comment. Did he mean to do so?
§ Sir Harry Legge-Bourke (Isle of Ely)
I notice that one definition which was in my Bill is omitted from my hon. Friend's, namely, the definition of a "professional member". I think that he will find that 570 if we are to talk about the members of chartered bodies we will find that they are professional members of those bodies. I wonder whether that definition ought to be reconsidered.
§ Mr. Jones
Schedule 2 covers the constitution of the Disciplinary Committee and its proceedings. Schedule 3 deals with tribunal appeal proceedings, and Schedule 4 makes the necessary modifications which are consequential if the Act is extended to Northern Ireland.
The debate in 1963 provided invaluable material for the subsequent consideration of the terms of this Bill. I now want to refer to some issues of current importance. Here I will deal with some of the points that have been raised this morning. In the earlier debate the right hon. and learned Member for Newport (Sir F. Soskice) dealt at length in his customary way, in a careful and finely considered speech, with the issues which seemed to him to divide the estate business into its commercial and professional parts. In this Bill, which follows long and urgent talks, union—if there was ever such a division—is achieved, and our task made easier today as a result.
Following an intervention by the hon. Member for Oldham, West (Mr. Hale), who raised the question of training and entry into the profession, and the securing of professional status, the right hon. and learned Member expressed the view that a standard might be set by professional bodies so as to precludea great many young men who, for one reason or another, are not in a position to obtain professional qualifications."—[OFFICIAL REPORT, 22nd March, 1963; Vol, 674, c. 855.]A similar difficulty might present itself in the case of those planning to come into the business late in life. The Bill gives powers to the council for the provision of training facilities and the making of contributions towards expenses incurred by other bodies in providing such facilities.
Those wishing to enter the estate business will, in the usual way, get themselves a job with the best firm they can in order to gain experience and, if they are wise, they will take the examinations of one or other of the professional bodies. On the other hand, they may 571 wish, as many do—and as I did myself—to rely upon their general education, adding to it the experience which life and activity in the work of their choice brings. I hope that the Estate Agents Council will draw up rules which recognise that a standard of competence for registration can be achieved in this way, and that the Government will concur.
§ Mr. Eric Lubbock (Orpington)
I am most grateful to the hon. Gentleman for giving way. He will recall that a Press release issued by the Royal Institute of Chartered Surveyors on 19th November last year saidThe test of competence for future admissions to the register shall be related to the functions to be controlled without creating artificially high academic barriers.Has the hon. Member considered this point? Will there perhaps be an Amendment to Clause 5(2) to make it clear that high academic barriers should not be created?
§ Mr. Speaker
Again we are drifting into Committee points. We are debating the Second Reading of the Bill.
§ Mr. Lubbock
With great respect, Mr. Speaker, the hon. Member was dealing with this point, which is of great concern to some people in the estate agents' profession. I should be grateful if he can be allowed to answer. It is a matter of principle, and not a Committee point.
§ Mr. Jones
With your permission, Mr. Speaker, I will answer the point.
Under the Bill the standard is to be established by the Estate Agents Council. That is the body which will determine the standards of requirement. It is difficult to elaborate the matter further and say just what it should take into account. It is clear that it is not to rely entirely upon professional qualifications, but that competence and a sufficiently high educational standard will meet the point. But this is a substantially Committee point and not a matter of principle.
§ Mr. Ron Ledger (Romford)
It is not a Committee point if we have to judge whether we should support the Bill today on the basis whether or not the test of competence is set too high and is too greatly influenced by a council which consists mainly of professional persons. 572 If there were to be any bias because of that many of us would take the view that it would defeat the purpose and principle of the Bill.
§ Mr. Jones
I thought that I had dealt adequately and clearly with the point. I can only put forward my opinion as to what the council may do. I am saying that if a person goes into the business and gets some experience, and has a reasonable academic standard—such as two or three O levels, or a good general standard of education—it might be acceptable to the council, added to a certain period in the business and experience in the office of a registered estate agent. I am not setting the standard high in anything that I say. I am competent only to give my opinion. I agree that the standard ought not to be set too high. That is why I picked this reference out of the earlier debate, and elaborated on it. I hope that that is acceptable.
In the 1963 debate the hon. and learned Member for Cardigan (Mr. Bowen) dealt at some length with those bodies of accountants to be recognised in the earlier Bill. This matter has been raised recently with me by a number of sources, and in this connection I refer to Clause 26 which, in subsection (1) sets out a definition of "recognised body of accountants", linked to bodies recognised by the Board of Trade under Section 161 of the Companies Act, 1948, as qualified to conduct public audits.
§ Mr. Rankin rose—
§ Mr. Jones
I am coming to the names of the associations, if the hon. Member for Glasgow, Govan (Mr. Rankin) will bear with me.
I understand that the accountants so listed are the only bodies which have been recognised, apart from some Scottish exceptions. I have been approached by the Faculty of Auditors Limited, the British Association of Accountants and Auditors Ltd., and the Association of International Accountants Ltd. I am informed that about 1,700 practising accountants hold individual authorisation from the Board of Trade under Section 161(1,b) of the Companies Act, 1948. I hope that right hon. and hon. Members will agree that this is a matter which should be dealt with in Committee.
573 My hon. Friend the Member for Oxford (Mr. Woodhouse) spoke in the 1963 debate. He was then Joint Under-Secretary of State for the Home Department. I am most grateful to him and to other hon. Members from both sides of the House who have joined me in the sponsorship of this Bill. Speaking for the Government of the day my hon. Friend said that they had decided thatit would be desirable for assistance to be given to the professional bodies with a view to enabling them to clarify and improve the details of the Bill so that if and when it came before the House an undue or unnecessary amount of time would not be taken in amending it in Committee."—[OFFICIAL REPORT, 22nd March 19133; Vol. 674, c. 878.]I am pleased to be able to tell the House that the present Government have taken the same line and have made available similar facilities. I wish to pay tribute to the Joint Under-Secretary of State, who has been helpful and encouraging in talks that I have had with him concerning the Bill. I understand that the Minister without Portfolio is speaking for the Government in this debate, and I have every hope that he will generally welcome my proposals. I shall not take it amiss if his welcome is qualified with his customary caution.
§ Mr. Walter Monslow (Barrow-in-Furness)
Do I understand that in relation to auditing and accountancy the hon. Member is disposed to allow the amendment of the Bill in Committee? I have had some representations on the matter.
§ Mr. Jones
I am bound to rest my case on the requirements of the Companies Act. It would be imprudent for me to take any other position.
§ Mr. S. C. Silkin (Dulwich)
By that, does the hon. Member mean including subsections (1, a) and (1, b)?
§ Mr. Jones
Yes, that is part of the Act.
I now turn to an important question of principle raised in the 1963 debate by my hon. Friend the Member for Cheadle (Mr. Shepherd). He rightly emphasised the question of the professional integrity of an agent, adding:It is this feature of the matter which, in my opinion, makes it necessary to have some effective form of registration.I am sire that he was on far less firm ground when he continued: 574If the agent deals in property he is, in my opinion, unsuitable for registration as a professional agent, because if a person goes to an agent with a property that person must be satisfied that the agent will obtain for him the best possible customer, irrespective of other considerations.In discussing this question with my hon. Friend, I have pointed out that to deny registered agents the right to own property or to serve as directors of property-owning companies of whatever nature would be to deny to the agent himself and to others his skill, experience and knowledge. Chartered accountants commonly become directors so that they may give advice on finance and tax matters, as do solicitors, because of their general knowledge of the law and affairs.
Some time ago I accepted an invitation to join the board of a small multiple grocer's business, to deal, in my capacity as an estate agent, with the large number of freehold properties which, as an old family business, it had acquired over the years. In any negotiations which I conduct on the company's behalf, my responsibility is clear. If some small grocer wishing to sell his business approaches me and the company to which I refer is likely to be interested, he is so informed at once and I make it clear that my interest as a director precludes me from acting for him in the sale. There need be no question of conflicting loyalties. I am confident that those in general practice are daily confronted with such circumstances, which are honourably resolved.
A person suffering loss because an agent persuaded him to sell his property so as to enable the agent, either directly or through a nominee, to make a secret profit, would have at present the right of redress, or even of criminal proceedings in certain circumstances. Not only would this rule continue, but the Bill provides the additional safeguard that the proposed council should draw up a code of conduct under Clause 10 to ensure that, so far as lies within their power, the public are adequately protected and offending agents suitably dealt with.
I come now to the final point of detail with which I propose to deal. It arises from comments on the Bill by the Consumer Council. which takes the view that… when the right to engage in a particular form of business activity is to be controlled 575 under statutory powers, representatives of those engaged in the business should not predominate on the controlling body.I discussed this with the director of the Consumer Council and some of her colleagues. So far as I can see, this question has not been raised before and could only be satisfactorily answered if we look at the principles which lie behind the composition of the proposed Estate Agents Council.
When dealing with Clause 10, I stressed that, in my view, considerable professional "know-how" would be required in the drawing up of a satisfactory code of conduct. These remarks apply equally to its successful application. Members of the council must be experienced in the day to day conduct of all aspects of estate agency, and the representation of the recognised corporate bodies, be they large or small, will ensure this. Added to this are the nominations by the Privy Council.
It is unrealistic to suggest that the issues coming before the council can be adequately dealt with by lay members without some specialised knowledge of the duties and problems on which they would be required to give decisions. The public interest is secured by the very terms of the Bill itself, by the duties laid upon the Council and by the over-riding authority which rests with the Government Department.
It would, however, be unreasonable of me to resist the advice that the number of professional and non-professional members should be looked at and reconsidered. Indeed, the hon. and learned Gentleman may have come to the same conclusion on this point. I should like to consider all the issues involved before reaching a conclusion other than that set out in the Bill.
During the 1963 debate, my hon. Friend the Member for the Isle of Ely said:… it is really a departmental Bill. …He was echoed by my hon. Friend the Member for Cheadle:…this is not a suitable Measure for a private Member."—[OFFICIAL REPORT. 22nd March, 1963; Vol. 674, c. 845, 845–6, 834, 841.]On the other hand, Bromhead, in his book, "Private Member's Bills in the 576 British Parliament", puts, under Regulation of Professions, chapter 6, subjects which appear to be suitable. On page 147 and at the head of the following page, he says:These can be disposed of very briefly.I am sure that he must be referring there to the criteria of suitability, rather than to such a Bill itself. I speak with some feeling on that point.
The document which we are considering is the product of much thought and consideration by a large number of people over a long period. I am sure that the House will wish me to pay tribute to all those who have contributed to its content and terms and allow me to refer to the members of the steering group formed by the 10 professional bodies and, in particular, to its secretary, Mr. F. A. R. Bennion, who has shown great skill and competence.
The estate business is one of our great professions, engaging the skill of a large number of men and women. Its enterprise is responsible for a great deal of development and this has been particularly evident in the post-war period. The result of its labours is evident both in this country and throughout the world and the services of those in the estate business are in great demand. Large sums of capital are put at risk on their advice. Land use and values, building costs and subsequent rent levels, demand for shops and offices—all these assessments lie in the knowledge of its members. The rapidly expanding demand for home ownership could not have been met without their services. Our housing and planning progress in the public sector relies for its success on members of the profession serving in the Government Departments and with local authorities.
The Bill, drawn in terms accepted by all the professional bodies, is an attempt to devise a procedure which will ensure that the public are protected from the incompetent and dishonest. The initiative for this has come from the profession itself and I am honoured to be its instrument. It now puts itself without reservation in the hands of Parliament.
§ Mr. Speaker
Before I call the first speaker in the general debate, I would observe that almost every hon. Member present wishes to take part in the debate. 577 We can have a fairer and better debate if hon. Members will make their points concisely.
§ 12.9 p.m.
§ Mr. R. E. Winterbottom (Sheffield, Brightside)
I will make my position clear as a sponsor of the Bill. I propose to support the Bill's Second Reading and I do so on one principle only—that I believe that it is necessary to register estate agents. Purely from that point of view, I give support to the Bill, but I want to make it quite clear that in almost every other particular of the Bill I disagree with the hon. Member for Northants, South (Mr. Arthur Jones). However, I am in the uphappy situation that I believe that it is so necessary to register estate agents that we should use the opportunity of this Private Members' Bill and, when we reach it, the Committee stage, in such a way as to make the Bill beneficial to the community.
I noticed that the hon. Member for Northants, South, seemed in his speech to pay regard to the work which had been done by the professional organisations. Everybody has played a part in the production of the Bill—everybody bar the consumer. The hon. Member did not mention one consumers' organisation as having played a part in the formulation of the Bill. I do not consider it my duty as an hon. Member to ensure that the legislation we pass results in making the businesses of estate agents safer at the expense of the consumer.
§ Mr. Lubbock
Is the hon. Gentleman aware that the Consumer Council has accepted the principles contained in the Bill, with the exception that it does not agree with the composition of the proposed council?
§ Mr. Winterbottom
I am explaining my point of view and I am not responsible for the thinking of the Consumer Council. Indeed, not only am I not responsible for the thoughts of the Consumer Council—remembering that that organisation is not the only representative of consumers in Britain—but I am jealous of the fact that I am probably in closer touch with consumers than even the Consumer Council.
In 1964, I promoted a Private Member's Bill because of difficulties that had arisen in Sheffield. Because several bogus agents were fleecing the public of their 578 hard-earned savings, the local newspaper, the Sheffield Telegraph, to its everlasting credit and at considerable risk to itself, unmasked these bogus operators. Then I introduced my Bill. Unfortunately, time was not on my side and I was obliged to base my proposals on the Measure previously introduced by the hon. Member for the Isle of Ely (Sir H. Legge-Bourke), although I made it clear at the time that the Measure, hurriedly evolved, would need to be greatly amended to meet the requirements of consumers.
While I support the idea of registering estate agents, there are certain aspects of the Bill before us which are unsatisfactory. I particularly criticise the composition of the proposed council. It will be comprised of 21 estate agents and four representatives of the Government. If that is not disproportionate, I do not know what is. Such an unbalanced council will not possibly be able to decide matters which will be acceptable to either the consumers or the Privy Council. And with great respect to Privy Councils, I fear that it is often a matter of them merely signing documents, crossing the t's and dotting the i's. I suggest, therefore, that one of the first considerations which the Government must give to this matter is handing this responsibility to a Government Department, say the Board of Trade, instead of the Privy Council.
Even so, I do not see how the public will possibly get the protection it needs with such an unbalanced council. The proposed council's composition will have to be altered and, while this may not seem a Second Reading matter, I assure hon. Members that, from the conversations I have had in this building, the Measure is in for severe amendation in Committee to ensure that justice is not only done for the consumer, but that it is apparent that it is being done.
§ Mr. C. M. Woodhouse (Oxford)
What kind of proportion would the hon. Gentleman regard as acceptable? Is he calling for a majority of consumer representatives on the council and, if so, can he quote any precedents for such a composition from any other comparable organisation?
§ Mr. Winterbottom
I want a majority of Government supporters in charge of the council. [HON. MEMBERS: "Oh."] I do not mean Government supporters 579 from this House, but Government nominees.
§ Mr. Winterbottom
Let us get the position clear. The Government will select certain people to sit on the council. Presumably they will be selected by the Board of Trade. They will sit on the council, just as the Government select people to sit on various other committees to represent the Government. I take it that the Government will ensure that those representatives will have regard to the interests of the consumers and not merely the interests of estate agents.
§ Mr. Ledger
Can we really be sure that these Government nominees will, in fact, represent the interests of consumers? I agree with my hon. Friend's basic argument that it will be an unbalanced council, but to suggest that Government nominees will act more in the interests of consumers has not necessarily been my experience.
§ Mr. Winterbottom
If the body we are discussing is under the direction of the Board of Trade its affairs will be subject to Parliamentary Question and Answer. That will give a double protection from the point of view of consumers and hon. Members.
The time has come when this business of people handing deposits to estate agents should be brought to an end. After all, these deposits do not in any way bind estate agents in respect of the future sale of houses. At present, prospective purchasers must take their money to solicitors, who do the necessary paperwork, but in the meantime estate agents hold a great deal of money before completion takes place. An estate agent may take one, two or more deposits on the sale of a house. In one case in Nottingham five deposits worth a total of £3,000, were taken by an estate agent on one house.
§ Mr. Winterbottom
I am quite willing to introduce a simple provision to say that the purchaser shall immediately take his deposit to a solicitor and receive from the solicitor a document giving him the right to the premises on which the deposit has been paid. If that were done the whole of the Bill would be unnecessary. We do not need estate agents for the business of buying and selling property or land. They may be needed for valuation but for the simple business of buying and selling land and property apart from valuation and surveying they are not needed.
Most estate agents started their businesses with no experience of house or land valuation. Most of them came from other occupations. In the place I came from a co-operative society of which I was a member had a house purchase scheme to cover the entire district and at one time I did the examination of those houses. The estate agents, many of whom started while I was there, knew nothing at all about houses and they came to us for advice. There is no special requirement with the exception of a few weeks' experience in the business of buying or selling land or houses. Valuation and surveying comprise a different problem. If we had a law which said that the purchaser should take the deposit immediately to a solicitor most of the estate agents could go out of business except for the collection of rents and several other little things that they do.
§ Mr. Anthony Grant (Harrow, Central)
The hon. Member is hopelessly misguided. What he is seeking to do is to create a binding contract immediately the person goes to an estate agent or solicitor. That is a practice which is completely condemned. It is particularly iniquitous because the person who goes to buy a house often has himself to sell another house.
§ Mr. Winterbottom
If the hon. Member for Northants, South will give an assurance that for the council to be set up there would be a regulation that the deposit paid to the estate agent would be legal and binding it would be all 581 right, but the hon. Member cannot do that. This business of the deposit has to be dealt with in such a way that those who pay a deposit shall have the assurance that they have bought the house.
I use the term advisedly and have used it before—I am not using it with reference to any particular person, but in regard to the method adopted and the practice used—there are jiggery-pokery methods of getting a deposit for a house and using that argument to get an even greater purchase price. In many cases reputable estate agents have even gone to the length of using a threat to record a purchase and increase the price.
I hope that if Government approval is given to the Bill this problem of deposits will be examined from the point of view of the consumer and that the Government will not hurriedly agree to what has been said already by estate agents about countenancing practices of many years which have been a temptation for many to enter the occupation of estate agent on lines of get-rich-quick.
§ Mr. Monslow
This is an important point. I have had information by correspondence that the original purchaser of a house had a higher price offered and when he sought to recover it he was unable to do so because he was told by the estate agent that it had been exhausted in expenses.
§ Mr. Winterbottom
That is true.
I come to the question of commissions. When I introduced my Bill I thought I should be very greedy in regard to the commission agent by suggesting that the amount should be 2½ per cent. Time has proved that to be wrong. I think that 2½ per cent. was an inflated commission. Since that time I have had the opportunity of examining this problem. I would not trust the proposed Estate Agents' Council to produce a rate of commission even as a maximum for recommendation to the Board of Trade or the Privy Council which would be fair. The work is done mainly by solicitors. An agent who charges more than a solicitor is getting excessive commission. Generally estate agents get far more than solicitors.
§ Mr. Ledger
We are not getting this quite straight. Would it not be more 582 correct to say that where there is a transaction going through all the stages perhaps the solicitor will do all this work, but what about the many more cases which never reach that stage and in which the estate agent is engaged in all sorts of work in giving information for which he has to be paid but it does not reach the stage of a transaction?
§ Mr. Winterbottom
I am distinguishing between the business of buying and selling land and houses and of valuing and surveying. I agree that in valuation and surveying there should be special provision in terms of commission, but I am dealing with the business of advertising and selling property. The booklet on the economic consequences to the profession which was published yesterday indicates what I mean, that estate agents get far more than solicitors despite the fact that all the work for the transfer has to be done by the professional solicitor.
I know that there are difficulties about valuation and landed estates. Those could be met by special considerations provided it was made clear that in buying and selling land and property the charge for an estate agent should not exceed that for the same property charged by the solicitor who is responsible.
I have some reservations about the insurance problem. I have not finally made up my mind about this. If we are to have an Estate Agents' Council for which all the agents pay it would be simple to receive from the agent a contribution to a fund held by the council to meet defalcations without having to deal with an insurance bond. This is something which should be examined. I do not think that a Bill of this kind should also provide work for insurance companies. We ought to be able to manage the financing of the matter within the business and the council in such a way as to meet defalcations without paying to insurance companies. That is a matter which should be examined in committee.
I want to see estate agents registered. I want to see rules of conduct evolved to guide them in the job they do. I do not want to make them professionals doing non-professional work. I want professional work to be remunerated at professional prices. This can be done only with the co-operation of the Government, estate agents and consumers. 583 Consumers must play their part in finalising whatever plans are made to register and effectively to control estate agents.
In the Bill I had the honour to introduce two years ago I suggested that municipalities should have the right of buying and selling houses for citizens without being part of an estate agents' council. There are other bodies like municipalities which have an interest in buying and selling houses. There are co-operative country associations and societies. If I am a member of a co-operative society it should have the right to act for me in the buying or selling of a house in which I am interested. It should be able to do so without having to conform with some of the regulations proposed in this Bill.
When my Bill was introduced the idea that municipalities should have the right of buying and selling houses for citizens was challenged. It was said that they had no experience of this matter but in the municipalities there are people who know more about land valuation and the value of houses than most of the estate agents throughout the country.
Indeed, most estate agents are indebted to such people for the information they need in promoting some of their sales. If my hon. Friends agree with me on this point, in Committee we shall have to introduce suitable Amendments to make it possible to ensure that we are not evolving a monopoly position for estate agents, but that competition will be possible from municipalities and bodies corporate and co-operative societies connected with building ventures, and I hope that the hon. Gentleman will be able to accept such Amendments.
If we can deal with this problem of commission and deposits, if we can cut out the imbalance there may be on the council and provide for municipalities and co-operative societies to make provision for their own people, we shall be able to evolve something like a respectable estate agents charter which the public can accept.
§ Mr. Eric Ogden (Liverpool, West Derby)
On a point of order, Mr. Speaker. With all respect to my hon. Friend the Member for Sheffield, Bright- 584 side (Mr. Winterbottom), may I point out that there are less than four hours available for this debate and 30 hon. Members wish to speak. It may be that some hon. Members who have come in since did not hear your suggestion that hon. Members should be brief and interventions kept to the minimum. If I am called myself, I will take at least two minutes off my own time.
§ 12.36 p.m.
§ Mr. William Shepherd (Cheadle)
I am sure that my hon. Friend the Member for Northants, South (Mr. Arthur Jones) is delighted that the hon. Member for Sheffield, Brightside (Mr. Winterbottom) is a supporter of the Bill, for had he been an opponent it would have been a disaster. I also congratulate my hon. Friend in doing in one year what I have not done in 20 years, securing a place in the Ballot for a Bill, and on presenting it in so remarkably able a fashion. He made even this somewhat uninteresting business sound vital and alive, and I compliment him on the manner in which he has conducted the Bill so far.
I should begin by declaring my interest. I am President of the Manchester branch of the Institution to which my hon. Friend belongs, and I am also engaged in the—as some would have it—not so respectable business of property development. I have one or two things to say about the Bill which I could not say without declaring my interest. However, I have no interest in the business of estate agency.
I am sorry that the Bill indicates a certain amount of disrespect for the estate agent. It is somewhat curious how the British behave. They have an unjustifiable respect for some occupations and a curious distaste for others. For instance, doctors have been held, at any rate until recently, in the most incredible esteem. They could make no mistakes and do no wrong and their word was law. I suppose that this is part of the class deference which has animated our society in past years. But estate agents are among people who are regarded with some suspicion by the public, perhaps even by some hon. Members of this House.
This is not altogether fair or reasonable and it is contrary to my experience. On the whole, estate agents are men of sincere and genuine interest in their activity who desire to do a decent job 585 for their customers or clients, who have generally played the game and, what is more, have been very competent.
The standard of estate agency in this country—and I do business in other countries—is in my view higher than that of any other country, with the conceivable exception of the United States. It is certainly at a very high level. British estate agents are making a reputation for ability and integrity not only here but on the Continent as well.
Nor is it true, as the hon. Member for Brightside would have us believe, that our estate agents are drawing unreasonably high commissions from buyers. When I sell property in France, as I do, the estate agent gets altogether 7½ per cent. commission for the sale. This is immeasurably higher than estate agents obtain in this country. In most Continental countries the rates of commission that estate agents draw for the sale of property are two, three and sometimes four times higher than those obtained in this country. I doubt whether, if there were not in the estate agency business the practice to which I object—that of agents being dealers—it would be possible to support the large number of estate agents on the basis of the existing commission.
I come now to registration. There is a nice balance of argument on whether or not agents should be registered. The concept of registration, if it cuts across the concept of competition, will be harmful to the community. What we want is more competition and not less. We must realise that it is proposed here to legislate for the first time, as far as I know, for the registration of a business. Let us be clear about it. We are not registering surveyors, men who have a trained professional capacity. We are registering a business of buying and selling land and property. That is essentially a business. I believe it is true that it will be the first time that the House, if it passes the Bill, will have registered a business. It is true that we have registered the business of cutting hair which is, perhaps, not quite such a business, but, nevertheless, one can continue to be a non-registered practising hairdresser. There is nothing obligatory about that form of registration.
586 The House should carefully consider whether it is, in the broad sense, desirable to register a business and therefore tend to eliminate some element of competition. Having regard to all the circumstances, I think that the balance of advantage lies in registering the business, providing that we can make certain that the element of advantage to the community outweighs the element of advantage to the business. It is quite conceivable that we can do this within the ambit of the Bill, which is a tremendous improvement on the previous Bill, which, as I had to point out in 1963, was designed to confer upon the business the maximum advantage and upon the public the least possible protection.
The hon. Member for Brightside said that we should do something about deposits. Of course this is a matter of considerable interest. It is true, I think, that a deposit is only requested for the protection of the agent. I know that some agents will not say that, but I think that it is true. It is asked for because the agent is then sure of his commission. There may be some crooks among estate agents, but there are also crooks among members of the general public and the estate agent is entitled to some protection.
There are some people who will get an agent to sell a house for them and then cheerfully cheat him of his commission if they can. When talking of an estate agent's remuneration one must remember that he may try to sell the house to 20, 30 or 40 different people and, therefore, there might easily be four, five or six deposits. However, the sale might still fall through in the end. Generally, one must allow a deposit to be taken, although it will be for the Committee to consider whether it should only be placed against contract and not against initial intention to purchase.
I come now to my reservations about the Bill. The first has already been dealt with. It is the very small number of persons who would represent the public interest under the Bill. The number is wholly inadequate to serve the purpose. We must be satisfied that the public interest is being safeguarded if we are to confer monopoly rights upon any business. There must be a substantial alteration in the number of independent representatives on the proposed council. 587 Indeed, I would probably favour the idea of the chairman of the council being one of the independents. However, my hon. Friend having taken the sense of the House, we can leave that point to the Committee stage.
Another point of substantial importance and one, indeed, determining whether the Bill should become law or not, is a matter with which I thought my hon. Friend dealt with incredible lightness. I hope that the moral sense of this activity has not been blurred by long periods of disregard of the standards which have obtained. When he said that I was on least sure ground in the view that a person wishing to sell should be satisfied that he is not going to a dealer who will give him less than the maximum price that the property is worth, I think that he was going a little far. I want to take a few minutes to deal with this issue of whether it is tolerable for us to allow those who are engaged in buying and selling property themselves to engage in the activity of dealing and developing.
I want, first, to deal with the practice since the end of the war. I am not guilty of exaggeration in what I say because anyone in the property business knows that it is true. The senior partners of a large number of the great, well-known estate agencies in London, and to a lesser extent, perhaps, elsewhere, have made large fortunes out of dealing in property since the war. Some of these activities have been on what I consider to be an absolutely unscrupulous scale.
I know a young man who went into the office of one of these agencies—with a very well-known name—and left the business in disgust because each morning the properties that came in were gone through and if something seemed to be particularly valuable or a very good offer it was transferred to the property company of one of the senior partners, emerging later for general sale or as part of an investment portfolio. This young man left the office in disgust at the nature of this practice. If my hon. Friend thinks this practice a light matter, I do not.
§ Mr. Arthur Jones
I have no hesitation in condemning that practice. I surely made that clear by saying that it was essential, and would be a requirement under the terms of the council's dis- 588 ciplinary proceedings, that in such cases the person should declare his interest.
§ Mr. Shepherd
I do not think that it is possible to do the two things. The job of a registered estate agent seeking to maintain, or appearing to maintain, a strictly professional attitude is to get for the client the highest possible price in selling, or to give to those who come to buy from him the greatest possible selection of properties from which to buy. If he is himself engaged in dealing in property and development he cannot properly serve the interests of the client.
§ Mr. Winterbottom
Would the hon. Gentleman say how he would deal with this problem? It would be difficult to embrace within a charter for estate agents a declaration that an agent should not deal with development on his own account. This is a difficult problem.
§ Mr. Shepherd
I want, first, to say a little about the practice, because I think that, in general, its enormity is not appreciated. This is the worst practice in the estate agency business and I regard it as much more disreputable than that of the man who goes to an estate agency without experience or knowledge and who gets into trouble and who in the end, as a result of mismanagement, defaults on deposits. This business of dealing in and hiving off the best things which come to the office to some personal channel is much less reputable than the unfortunate man who takes deposits and who, because he is incompetent or manages the business badly, defaults on deposits. This is a very fine essay in comparative moral standards into which I do not intend to go at any length.
If we register estate agents, we must be sure that they have the highest standards of professional conduct and that means that the agent must at all times represent the best interests of his client and get the best for his client and offer the best value and the best selection to those who seek to buy from him.
It is true that agents indulge in all kinds of practices which tend to restrict the market for development. For example, an agent will say, "I will sell you a development or a plot of land provided that you agree to cut me in on the equity". This is a kind of restriction in trade. It is dishonourable in the professional sense and in many cases it 589 obviously prevents the vendor from getting the highest possible price, because if the agent has a liaison with the developer he will sell the property at, at any rate, a little less than the maximum price.
I hope that I have said enough to make it clear that it is immoral for a man who will be a registered estate agent himself to engage in the business of dealing in estate development either directly or indirectly. Until now the professional societies have been remiss in not dealing with this problem. Despite the contempt with which chartered surveyors talk about non-professional agents, it is men with the letters F.R.I.C.S. against their names who have made these large fortunes since the war in West End offices in dealing in property. I hope that if the Bill goes to Committee we shall endeavour to make certain that the highest standards of professional conduct are enforced upon those who are registered and that if they do not meet those very high standards they will be dismissed from the right to practise this form of business activity.
The hon. Member for Brightside asked how we could enforce these standards. It is perfectly true that many of the things which have gone on in the West End and elsewhere are criminal. I have no doubt that if the evidence could be produced, these men could be sent to gaol for what they have done. The problem in these matters, as in all forms of corruption or near-corruption, is getting the evidence, and it is not very easy. We shall have to study this matter very carefully.
Another matter which will require attention is that it is not unreasonable that a man engaged in the profession of estate agency should himself buy property so as to provide a pension for himself or his family when he retires, because, being self-employed, he does not have a pension. Therefore, the right to buy property to some extent and to deal in it on one's own account in a limited way cannot be denied to these men. However, it may be necessary to require that registered estate agents who wish to buy or sell property should notify the council when they wish to do so, in the same way as a Cabinet Minister informs the Cabinet Secretary when he is buying 590 or selling shares. Various mechanisms could be employed to raise the standard.
I support the Bill. What the professional bodies have allowed to go on in this business since the end of the war has been highly disreputable and discreditable to them. We must use the Bill as a means of eliminating a blot on this profession, bearing in mind that the great majority of men in estate agencies are genuine men who do a good job for the community and who deserve the registration which I hope we are to give to them.
§ 12.58 p.m.
§ Mr. Will Owen (Morpeth)
First, I congratuate the hon. Member for Northants, South (Mr. Arthur Jones) especially on the thought and homework which were evident in his presentation of the Bill. I hope that the House will not be overwhelmed by the recital of anomalies and difficulties which have emerged over the years in estate agencies. There is no doubt from the evidence which we have heard this morning and which could be considerably augmented that a Bill of this character is urgently needed. Over the last four years efforts efforts have been made to direct Parliament's attention to the problem of consumer protection in this connection and to invite Parliament to accept measures which would ensure some degree of control in the public interest. But until now we have not been able to persuade Parliament of the urgency of the matter, quite apart from the need to deal with it.
I welcome the observations of the hon. Member for Northants, South about that sector of the trade which deals with business transfer specialists. This body of agency practice in general principle gives its wholehearted support to the Bill. In anticipation that, during the committee stage, opportunity will be provided to strengthen the promoters' initial recommendation in legislation so that these specialists, in an area which is singularly limited, can be assured of security and progress in the service which they undertake, not locally in particular but nationally in general, I welcome the general principles of the Bill.
Equally, I welcome the assurance which emerged from the promoter in respect of the position of the London Cooperative Society. The Co-operative 591 movement is registered under the Industrial and Provident Societies Acts. Its boards of management are individuals elected and not appointed. They are, in the main, lay members to whom is delegated the responsibility of managing a massive commercial organisation. Within its commercial activities, the movement particularly the London Co-operative Society, is engaged in the estate agency business.
The London Society is managed by a qualified and competent servant who is a member of one of the professional bodies. But as the Bill now stands the London Co-operative Society may be precluded from the continuation of this service unless the necessary assurance is given by the promoter, and is subsequently qualified in an Amendment to the Bill. I hope that my hon. Friend on the Front Bench will be able to give some endorsement of the Government's attitude, and will be prepared to give us confirmation on this point so that we may be assured of equity of treatment in an area of activity in which the Co-operative movement has rendered considerable public service.
There is bound to be some discord and concern about the nature of the registration and the competency and the standard laid down for registration. There is also bound to be some concern about the composition of the council which will control the functions and operations of the Bill.
I hope that the hon. Member for Northants, South will not have closed his mind to the needful amendment and qualification of some of these vital points. One has to ensure three basic principles in a Bill of this character. There is, first, the protection of the consumer, secondly, a willing recognition of adequate payment to those engaged in the service and, thirdly, one must be prepared to avoid the monopoly of control which might emerge by a power of registration in the hands of vested interests. I say that with some reserve, believing, first, that registration will be necessary and, secondly, that the question of maximum charges can become one of minimum charges. I hope that our friends at the Board of Trade will be willing to re-examine this.
Thirdly, we should be willing to recognise that in the estate agency business, 592 particularly the business transfer section, there is a body of servants running an effective public service. We ought not to be closing our mind to the contribution which they are making because of anomalies which have arisen in their ranks. Upon the assurances about the Co-operative movement and the business transfer specialists, I give my commendation to the progress of the Bill.
§ 1.4 p.m.
§ Mr. Anthony Grant (Harrow, Central)
Like the hon. Gentleman the Member for Morpeth (Mr. Owen), I rise to support this Bill. I will not follow him into the tricky waters of the Co-operative movement, but I will say something about the business transfer agent later. I should declare an indirect interest in that I am a practising solicitor and, therefore, I frequently have dealings with estate agents and business transfer agents.
I support the Bill because I believe that it is in the very best interests of my clients and the public at large. It is against the background of the public interest and not just the interest of clients that the debate should flow. In the long run, in spite of what has been said by other Members, I believe that what is basically good for the public will be proved to be good for the profession. My own profession has been through this business a very long time ago and the Law Society supports this Bill in principle.
There are all too many tragic cases of people who have suffered at the hands of a minority of dishonest and irresponsible agents. In my own professional experience I have known many clients who have suffered greatly as a result of the actions of such a minority. It is fair to say that the vast majority of transactions have gone through with complete smoothness, and that the client and myself have had nothing but praise and gratitude for the agent who has eon-ducted the transaction.
When a dishonest agent emerges it is not only the client or the members of the public who suffer. The professional estate agency business as a whole suffers —the vast majority of honest and reputable businessmen. Their image is tarnished. The image, which ought to be that of a responsible business or profession, is tarnished by the irresponsible action of a dishonest minority.
593 The fundamental purpose behind the Bill is to ensure that the public is protected. Nothing is more heart-rending than to read of humble people, who are desperately seeking a home, being mulcted of their hard-earned savings by the dishonest agent who absconds with the deposit, or the irresponsible agent who rushes them into a binding contract without legal advice. The hon. Gentleman the Member for Sheffield, Brightside (Mr. Winter-bottom) was completely misguided in what he was saying. When this dishonest, slick, practice occurs, no one is more incensed than the majority of estate agents, who are represented by the 10 societies supporting the Bill. The hon. Member for Brightside made a stirring case on behalf of my own profession. It is very gratifying to find someone on the opposite side of the House complaining of the small remuneration received by solicitors. We are grateful to him for that.
Unfortunately, the hon. Member showed a considerable ignorance of the subject, because the nature of our tasks is entirely different. The estate agent runs a number of risks and has many more abortive transactions which have to be subsidised by the ones which go through. I do not support the hon. Member's view that the deposits should, by law, be paid automatically to the solicitor. It is a sensible procedure to pay a deposit to one's solicitor, but the agent comes into the transaction at a much earlier stage and it is the only assurance, not only of his commission, but often that the purchaser is a responsible person, of some substance.
It is a token of good faith that he intends to proceed with the transaction and not just float off to the many hundreds of agents in an irresponsible fashion. The hon. Member was on a poor wicket on that argument. The provisions of the Bill providing for the honesty bond and the insurance bond, and the provision for separate accounts, are perfectly adequate to deal with this most pernicious aspect of the whole problem.
There are other objections which we hear about the Bill. Some of them concern freedom and the actions of monopolies and the question of having a much freer market in property dealing. It is very gratifying to hear people supporting free 594 trade and freedom in competition when often it is said that that is the law of the jungle and is very wicked. The Times, in one of its leading articles today, accepts this argument to some extent, but I think that basically it is wrong, because we are thinking in terms of the consumer.
During recent years the trend has been to consider more and more the interests of the public and to endeavour to protect them. The Bill is entirely in line with the legislation on the abolition of resale price maintenance, the sale of goods, misrepresentation, trade marks and the other legislation which we have passed in recent years designed particularly to protect consumers.
I am second to none in my belief in freedom and free enterprise and freedom of trade, but I believe, without being too rhetorical on a Bill of this nature, that we should heed the words of Pitt the Younger when he said that we must not let the cry of liberty for the many become the stalking horse to provide licence for the few.
The other matter about which there is controversy is maximum charges. To hear some people who object to this one would think that provision was being made only for minimum charges. But here we have a profession voluntarily seeking to prevent overcharging to the public by its members. This is wholly commendable. I do not think that it will become a precedent to provide minimum charges, because in my experience —I have been particularly concerned with the urban and city areas; I cannot speak for the country areas—the competition is very considerable. I know of many cases in which, because of particularly difficult circumstances members of professional bodies have agreed to take a lower scale of commission than was recommended. This is a very sensible provision on which the proposer of the Bill and those who support it should be complimented.
It is significant that the main opponents of this aspect of the Bill are some business transfer agents who, I regret to say, often, quite notoriously, overcharge for their commission compared with ordinary agents. Their charges, mainly, are very much higher than those of the vast majority of estate agents. They say, I know, that this is because of their more expensive advertising and that they are specialists. I agree with that; but 595 some of the advertising by business transfer agents compared with that of estate agents generally is sometimes, perhaps, more for personal aggrandisement than for the interests of their clients.
In any case, under the Bill, when property is involved in a business transaction, they will be able to charge and claim bona fide expenses, including advertising expenses, incurred with the approval and on behalf of the client. Business sales frequently involve the sale of a house as well. Therefore, it behoves business transfer agents to co-operate with estate agents in the Bill to secure decent standards. I am glad that the hon. Member for Morpeth, who has been doing a lot of work on their behalf, supports the Second Reading of the Bill.
The statement of conduct is a very important aspect of the Bill. I was persuaded by some of the arguments raised by my hon. Friend the Member for Cheadle (Mr. Shepherd) about the difficulties experienced when an agent has a conflict of interests and is perhaps dealing in property himself. This is one thing which I hope will be dealt with by the council in considering the statement of conduct. If one is to be a professional person one of the most important factors to understand is the absolute fiduciary relationship which exists between the agent or the professional man and his client. I am sure that this matter will be satisfactory dealt with by the council in setting standards. Some of the anxieties of my hon. Friend the Member for Cheadle will be allayed and some of the practices which he has condemned which have grown up since the war will be stamped out by the statement of conduct.
Another feature which I hope will be considered very carefully by the council is what is commonly known as touting. It might appear on the face of it as though this was confined solely to the profession and was not something with which the public should be concerned. It is a pernicious practice which should be condemned and is not in the interests of the public. From my experience of these matters, it always pays a prospective house owner to give instructions to one agent and to allow that agent to sub-contract to other agents rather than 596 to give instructions to 20 or 30 agents. If the practice of touting is stopped, it will ultimately be of great service to the house-owning community.
The point which is of so much concern to us lawyers is the wretched habit of agents who get their clients to sign a binding contract immediately they go into the agent's office. This is a practice which all lawyers, and, indeed, all members of the public, should condemn.
§ Mr. Winterbottom
I agree with what the hon. Gentleman says about touting. My information is that there is disagreement among agents and every type of organisation on the question of soliciting for business.
§ Mr. Grant
I understand that there is no agreement within the profession about touting, but those agents with whom I have come into contact are, in the main, opposed to it. There may be other people who take a different view about soliciting. I have expressed one view only.
I was referring to the practice of some agents who get a person to sign a binding contract immediately he goes into the office. In my experience, and I am sure in the experience of most members of my profession, this has caused hardship, and great loss of money and suffering to the client. I know that it is condemned by almost all the responsible bodies which support the Bill. I hope that the statement of conduct will show that this practice is wholly reprehensible.
A good agent does much more than merely bring two parties together. Again, I join issue, to some extent, with the hon. Member for Brightside. An agent is not only a medium by which two people are brought together. Very often he has to give advice on most complicated matters. Members of the public look to him for advice. They like to be friendly with him and they like him to advise them. Advice on such matters of building techniques, planning, mortgages, finance and insurance must be given by the agent. In my experience, which is contrary to that of the hon. Member for Brightside, the advice which members of the public get from the agent is often very much more pertinent, relevant and helpful than that which they obtain from the local authorities.
597 It should be emphasised, as my hon. Friend the Member for Cheadle emphasised, that if the agent is doing his job properly he is acting for one party only. He is not acting for two parties. There is a clear conflict of interest. In most cases, he acts for the vendor and, therefore, his duty is to get the best possible price. His duty is to the vendor. If a person feels that he cannot deal with a vendor he can retain an agent to purchase a property for him, in which case the duty is the other way round. It is important to realise that the agent acts for one person only. This is all too often forgotten. People imagine that an estate agent will act for both purchaser and vendor in the one transaction.
I turn to the question of representation on the council. The hon. Member for Brightside was so ferocious in his support of Government nominees on the council that it was rather kind of him to allow for any estate agent to be on it at all. The more I hear on this point from people who are not members of the profession and the amount of ignorance which exists makes me realise that the Bill is fairly sound in giving the overall balance to estate agents and a minority representation only to the public or Government.
It is very generous of the mover of the Bill to bring in outside representatives at all, because this is not the case in every profession. As far as I am aware, the councils of the lawyers, the doctors, the dentists, the accountants, and so on, are composed entirely of their own professional members. This is, therefore, a step forward, and shows a liberal approach.
As my hon. Friend has said, home ownership has grown dramatically since the war—and looks like continuing to do so in the foreseeable future. The purchase of a house is probably the largest and most important transaction in most people's lives, not only financially but socially, because the provision of a home of one's own is the foundation of happy family life. If people are to achieve this very desirable end they must have the best possible service and advice, which can only be given by a profession in which the highest standards prevail and to which, in future, the right sort of recruit will be attracted only if it is dedicated to the service of the community.
598 Because I think that this Bill is a major step in that direction, I ask the House to give it a Second Reading.
§ 1.21 p.m.
§ Mr. Ron Ledger (Romford)
I congratulate the sponsors on a Bill that is a tremendous improvement on the last Measure, which I opposed because I thought that it simply sought to get a closed shop for the professional people. If that were not the intention, it appeared to be so. I must qualify my congratulations, however, by saying that I should not like to feel that the sponsors were motivated purely by the need to do something about the scoundrels in the profession. One or two speeches have given that impression, with all this talk about the estate agent who clears off with the "dough", or goes bankrupt.
It is true that the only estate agent who gets any publicity at all is the bad one. His transactions will often take up a full page in the local newspaper, and be quite an item of news in the national Press, when the hundreds of thousands of honest transactions get no mention at all. The whole matter must be put into perspective, or the intention of the Bill to raise the status of estate agency business will be a little limited.
I put it to some hon. Members who are interested in this Measure that, surely, they are not suggesting that if there were no case of an estate agent running away with the money there would be no reason for this Bill. There certainly still would be. There are dozens of reasons for having it, even though every estate agent was good and honest. I would therefore like to feel that, in the main, the sponsors are putting forward the Bill in an effort to raise the general standards of service and to establish the integrity of the greater number of these estate agents.
I do not have any interest to declare. I am not an estate agent. I am not a member of any professional body. I have only once bought a house, and I bought that through a local authority scheme—and a very good bargain it was. Not even as a consumer am I interested to that degree. It am interested because, as a politician, I see that it is necessary that any service to the public should be of the highest type, and I believe that 599 this Bill will go some way to establishing the sort of standards we want.
When the previous Bill was introduced there was, without doubt, a conflict between the professional bodies and the National Association of Estate Agents. It was quite clear that the non-professional estate agents were very worried about the purpose of that Bill, and it is greatly to the credit of the professional bodies and the National Association that they should have got together to produce a Bill which, in the main, they can accept as being in their interests. They are to be congratulated on the efforts they must have made in terms of compromise in order to get a satisfactory Bill. The previous Measure appeared to very many people to be totally unsatisfactory.
I must now turn to one or two points that do not seem quite to clarify the position. The five main principles of the Bill were written out in a Press release. Here, perhaps, I might put the hon. Member for Orpington (Mr. Lubbock) right on what is a purely technical point; the Press release was issued on 9th November, not 19th November. However, the hon. Member's point is just as valid in any case. The five principles were approved by the 10 societies and by the National Association and seem to be those that have enabled the professional bodies and the National Association to get together. It is because they have got together that I feel that I can support this Bill.
The first principle dealt with the test of competence, but I do not think that Clause 5 makes this point clear enough. One is not convinced by the wording of the Bill that the test of competence will be such that a person who does not desire to become a professional can practise estate agency. The sponsor of the Bill said of someone starting in an estate agency that if he were wise he would take some professional examination, but I am not so sure of that. If that person felt incapable of passing such an examination or had no interest in such an examination, but was a first-class salesman of unquestioned integrity, I think that he could establish a standard of competence that would enable him to continue in business as an estate agent.
§ Mr. Arthur Jones
I quoted from a little leaflet that was obviously written by 600 someone who could not write the Queen's English.
§ Mr. Ledger
Few firms would employ a person in their offices who could not read or write the Queen's English, so we can exclude that as a rather extreme case. That is not what we are talking about. We are talking about a quite average applicant for a job in an estate office, who is then able to make a jolly good go of it, becomes a good salesman, is very competent, learns the terms of the trade generally and is of the highest integrity, but does not want to join a professional body.
§ Mr. Lubbock
I would like to make it quite clear that I was not suggesting in any way that illiterate people should be allowed to practise as estate agents, but that the minimum standard of competence should be, for example, along the lines produced in Commonwealth countries and found to work very satisfactorily there.
§ Mr. Ledger
I fully agree with the hon. Gentleman; our feelings on this matter are entirely the same. We can disregard the illiterate person. No one wants such a person to practise as an estate agent, and I hope that this Bill will prevent that happening, but we do not want to go so far the other way that the type of person I have been describing is prevented from practising as an estate agent.
Then there is the question of the people who can register. Members of certain professions will have the right to register under the council, but is not the Bill casting the net a little wide? For instance, would a quantity surveyor or a mining surveyor be allowed automatically to qualify under Clause 5(1)? I cannot see any sort of relationship, for instance, between the knowledge required by a mining surveyor and the estate agency business, and therefore I would like to have this point clarified.
§ Mr. Arthur Jones
I cannot say from experience and knowledge of the mining surveyor, but certainly a quantity surveyor has professional qualifications which would not extend to any degree at all to what one normally considers to be estate business. If a man with a particular professional qualification as a quantity surveyor were from time to time engaged and competent to work in the 601 estate business I think he would. I think it is unlikely that that type of professional man would wish to register.
§ Mr. Ledger
Whether we think he might wish to register or not, the point is, would the Bill allow such a person to register? In my opinion it should not, and we have got to be clear where exactly we are trying to go.
One part of the Bill which pleases me no end is Clause 14 on the question of compensation. This is one of the major advances and improvements on the old Bill, because the old Bill did not allow for immediate compensation. This will allow 'or immediate compensation. Under the insurance proposals which have been made, I think that here, too, the National Association is entitled to a bit of the credit, because this is one of the points which it has pushed as hard as any, because it is very anxious about the fact that there has been publicity with regard to the bad estate agent, the man who runs away with the money, and, therefore, the Association has pressed for this provision to be included in the Bill.
My last point is on the question of representation on the council. This is to be on the basis, partly, of membership of the professional bodies, as I understand it. I also understand that there are many people who are members of two professional bodies. I should like to have a clear undertaking that if this is the case they are not classed as one of each of the professional bodies but only half of one of each.
§ Mr. Arthur Jones
That is true. If they are members of two societies they would count as half in each. If of three societies, then one only.
§ Mr. Ledger
I am very glad indeed to have that assurance. I am sure that that will remove some of the objections to the composition of the council, though I have the feeling that this is rather over-weighted. I think it is over-weighted in two ways, and one is that it is weighted in favour of the professional bodies.
I think an estate agency business is mainly a commercial undertaking. Indeed, the hon. Member for Cheadle (Mr. Shepherd) said that this Bill 602 registers the business of buying and selling houses. It does. Indeed it does do that, and, therefore, the Bill should reflect this point in every aspect; but it does register the buying and selling of houses: it is a commercial Bill in that sense. Therefore, I hope that the sponsors of the Bill will look kindly at the suggestions which are made to them on this question of the composition of the council.
My final point is on the code of conduct in Clause 10. I think the wording here is inadequate. It is not enough, in my opinion, just to talk about the "public interest" and "disgraceful conduct", and, indeed, it is not enough to leave the wording as it is, and for this reason.
Let us take the case of a chartered surveyor who advertises cut commissions in order to get business. I have no doubt that in his profession action would be taken, on the ground that this would be against the rules and regulations of his profession, but it is not necessarily against the interests of persons who are wanting to buy and sell houses. As estate agents, this would not necessarily be bad. Therefore, I should like to have it cleared up that when talking in terms of discipline and disciplinary action we are concerned with actions solely related to the business of estate agency, and that a man who was debarred from carrying on his profession as a surveyor, for instance, would necessarily, as a result of this particular disciplinary action, be debarred from carrying on as an estate agent.
§ Mr. Arthur Jones
I think the point is met under Clause 16(4) which says:In determining any question of whether any conduct is disgraceful, account shall be taken of the fact that estate agency has both professional and commercial attributes, and of the desirability of not preventing estate agents from making proper use of new techniques and providing an efficient service to the public.
§ Mr. Deputy Speaker (Sir Samuel Storey)
I hope that hon. Members will refrain from going into too great detail on what are really Committee points.
§ Mr. Ledger
I accept that, Mr. Deputy Speaker. I want to avoid too much detail, but we have to be sure at this stage that these things will be dealt with in Committee. Very often it is 603 found that if we leave things to Committee they have been left till too late. At least we can give warning to the sponsors of the Bill that our support for the Bill at Second Reading is on the basis that a number of points will be seriously considered in Committee.
I have made a number of criticisms of the Bill, I hope helpfully, to try to improve the Bill. If I declare an interest at all in this matter it is because I am a director of the London Co-operative Society. I hope that the sponsors of the Bill will look carefully at this problem with which we are faced. Perhaps if I explain it they will understand. As a director of the London co-operative society I have nothing at all to do with the day-to-day running of the affairs of any of the departments, no matter what they are. My job, and the job of every other lay director of the co-operative society, is to work out the policy of the society, and we have persons, with all the qualifications necessary, appointed to run the departments. Therefore, it would be totally unfair if there were a Clause in this Bill insisting that a director of the co-operative society should have to be a person qualified to practise as an estate agent. We are democratically elected by the members every three years in order to decide upon policy. I hope, therefore, that an Amendment can be found to the Bill to enable my co-operative society, and, indeed, any other co-operative society, to engage in the work of estate agency.
§ Mr. Ledger
Yes. I am interested in the co-operative society, but it is important that these things are considered and answered, and that they will be discussed in Committee, but I am quite sure that we shall all do everything we can to see that this Bill becomes law.
§ 1.39 p.m.
§ Sir Harry Legge-Bourke (Isle of Ely)
Let me begin by congratulating my hon. Friend for Northants, South (Mr. Arthur Jones) on the way he introduced this Bill. I should like to thank him very much for all the work which, I know, he has done beforehand to make sure I avoid, so far as possible, making again one of the longest speeches I have ever 604 had to make, either in this Chamber or anywhere else, when I introduced my own Bill in 1963.
I would say that this Bill, as the hon. Member for Romford (Mr. Ledger) quite rightly said, represents a very considerable achievement as a result of the readiness to compromise on the part of those who were very severely at loggerheads with one another at the time when I sought to introduce a similar Bill. I certainly welcome enormously the support which has now been forthcoming, so that my hon. Friend, in introducing his Bill, has enabled the House to feel, I think, that we can now get down to the real philosophy of this and what really is desirable, and so that we can cast out of our minds all those things which were all too prevalent in our minds in 1963, and the disagreeable relationship which had been building up between the independents and members of the chartered bodies.
I hope that those differences are now settled, because I am certain not only that the public were going to suffer so long as they continued, but also that the standing and reputation and, indeed, the internal happiness of the chartered bodies, and of the professional people within them, would be suffering grievously as well.
I want to say a few words about how I approach the whole of this matter. Perhaps because of my difficulties last time, I was not able to say very much about this aspect. I should like to put the record right now. I believe that, when we are dealing with a professional body, we ought to be able to expect from the members of that profession the operation of the doctrine which I understand the lawyers call credat emptor; in other words, the client can rely on the good faith of the person with whom he is dealing. When we are dealing with commercial and non-professional matters, the doctrine which operates is that of caveat emptor—let the buyer beware. This ought to be the clear distinction which we should keep always in mind when we talk about setting up or reinforcing professional bodies.
When Mr. Speaker was in the Chair, he quite rightly brought me to order when I interrupted my hon. Friend the Member for Northants, South and rebuked me for perhaps getting on to a 605 Committee point. I hope that the House recognises that one of the prices of the Bill, one of the prices for getting everybody together in the way we have, is that we have had to drop out of the Bill altogether what was previously in my Bill, namely, the definition of a professional member of a body.
In other words, the price of bringing in those who were not professional men, such as chartered surveyors, and so on, and the price of broadening the basis, has been to some extent to blur legislatively the definition of the professional man as it applies to the Bill. We must ensure that the Bill will not result in a lowering of the standard of the professional men who remain, many of whom happen to be associated with estate agency.
I see the hon. Member for Sheffield, Brightside (Mr. Winterbottom) trying to interrupt me. I have promised to be brief. The hon. Gentleman had a good cut. He knows I am ready to give way as a rue. I ask him not to interrupt me now, because I do not want to take up more than my fair share of time.
That is the basis of the philosophy with which I approach this. Let us uphold the excellence of professionalism. Let us find a way of bringing the professional and the non-professional together in the interests of the public, but let us try in every way we can to prevent that bringing together leading to a diminution in the standard of the professional man.
One man to whom more tribute should be paid than he has received so far in this context is Mr. W. Bull, a former President of the Royal Institution of Chartered Surveyors, who tried to guide the chartered bodies in the days of my Bill and who has been of material assistance in what has happened since then. We should thank him for this, because all along I have recognised that one of the greatest anxieties which I believe he had, and which I know many professional men had, was that the price of having an Estate Agents Bill would be to damage the professional reputation of the professional man rather than to help him. The fact that Mr. Bull was able nevertheless to be big-hearted and broad-minded enough to bring everybody together is to his lasting credit.
606 I turn now to discuss the major differences between this Bill and my own. The hon. Member for Romford was not quite correct when he said that there was nothing about a compensation fund in my Bill. There was. I agree with the hon. Gentleman absolutely that the Clauses in the present Bill dealing with this matter are very much better and rectify what was an important omission from my own Bill.
§ Mr. Ledger
I said that the hon. Gentleman's Bill in 1963 did not cover the immediate payment of compensation.
§ Sir H. Legge-Bourke
I am glad to have that matter cleared up. There is not much difference between us on it. I hope that I made it clear three years ago that originally there was no compensation fund at all in this matter, even in my Bill. I am absolutely convinced that there must be some legislation for compensation contained in a Bill such as this. I am certain that in the longer term and in the comparatively short term it is better to have a compensation fund than to rely on the fiduciary bond. I tried to explain three years ago why I take that view. The reason is that every one of these transactions involves three parties. Each one has to be tailor-made. It may be found that the fiduciary system may hurt the smaller men more than it will hurt the big men, for the very reason that it is a rather more complicated matter to work out what sort of bond there should be and in what amount it should be. We should beware of this. Therefore, I hope that as soon as possible this fund will be established and that that will be the basis of compensation in the years ahead.
Another matter which is a very substantial innovation in the Bill as compared with my Bill is Clause 11. This concerns the regulation of charges. I know that strong feeling has been expressed about this matter, in the House and elsewhere, but it is of some significance that the body which has been quoted in the debate as representing consumer interests, namely, the Consumer Council, should itself have come out against having a maximum charge Clause in the Bill. It is worth considering why this has happened. The Council feels that there is a real risk of the maximum becoming the recognised standard in 607 other words, it would be both a minimum and a maximum simultaneously. I think that it is a question of a nicely calculated less or more, whichever way it is looked at.
It is by no means certain that putting the Clause into the Bill will benefit clients. It may in some cases, but I am certain that there will be some cases where it will be a disadvantage. In Committee we shall have to get down to this issue and decide whether whatever benefit there is in this would not at least be assured by enabling bodies such as the Monopolies Commission and the Restrictive Practices Court to enter the picture. I feel very lukewarm towards this Clause. It was not in my Bill. I do not think that I would have cared to put it in. If I had been made to put it in by the Standing Committee, that would have been another matter. I say now on Second Reading that I am not wedded to the Clause.
If hon. Members want good reasons why I am not, I commend two documents to them, one of which has already been published and the other of which will be published in a few days, and I am very grateful for having been given an advance copy of it. The first document is "Essays & Enquiries, 1; Estate Agents, a consumers' assessment", published by the Research Institute for Consumer Affairs. On page 22 these words appear:If the present near-uniformity of charges were extended, by, for example, imposing the same scales on all agents, professional or independent, in all parts of the country, this might only mean that the consumer had to pay the skilled agent the same as the maladroit.That is a telling argument. In this latest document, which is shortly coming out, published by the Institute of Economic Affairs, under the title "Economic Consequences of the Profession", by Professor D. S. Lees, these words occur, also on page 22, funnily enough:There are profound objections to the regulation of prices by the state, not least that prices may be set wide of the competitive mark and that regulation may continue after it has outlived its usefulness. But where legislation has made the creation of substitutes inordinately difficult, these are risks that may have to be run.Those are thought-provoking observations, and in the context of Clause 11 very important, and I hope that we will all give some thought to these matters before the Bill gets to Committee.
608 My final observation concerns this question of representation on the council. Are four members appointed by the Secretary of State enough? When my Bill was before the House, I think I am right in saying that the Secretary of State was going to come into this, and we were going to ensure Scottish representation among the independent members of the council.
I can see the force of the argument that where there is a body representing chartered bodies, non-chartered bodies, independents, and so on, the consumer interest is important—of course it is—but I think that we again come back to the philosophical point that I put at the beginning, namely, do we regard this matter as a professional one, or not?
When my hon. Friend interrupted the hon. Member for Romford, he said that there was emphasis in one Clause of a Bill that there was both a professional and a commercial interest involved here, and I am sure there is. If that be the case, how are we best going to ensure the consumer interest? I discussed this matter with the Consumer Council, and perhaps I might here clear up a possible misunderstanding which may be in the minds of some hon. Members. I understand that the Consumer Council does not wish to be represented on the council, and I think that this is very important. The Council is visualising a greater representation of the consumer interest, or client's interest.
I believe that the numbers one has matter less than the quality of the people who are there. I took this view at the time of my own Bill. How do we foresee the consumer interest being safeguarded? If the right people are appointed, be it by the Privy Council or by someone else, to represent consumer interest on the council, it will be up to bodies such as the Consumer Council—and there are other consumer bodies, such as the promoters of Which?, and so on—to make their voice heard loud and clear if they are not satisfied with what is done by the council.
If those who are appointed by the Privy Council, or by the Secretary of State, or by whoever it may be, to represent the independent people are the men they ought to be, the council will not be allowed to ride roughshod over what the Consumer Council or other consumer 609 bodies say outside. But, having said that, I must confess that I think the number is too low as it stands in the Schedule, and I should like to see it increased. If that were done, I think that it would pacify a lot of anxiety. I should like to see an increase, but I do not want to see the increase made so big that the council itself becomes an unwieldy, and in consequence an ineffective, body.
If hon. Members accept that part of my proposition, there is a clear choice. Do they wish to enlarge the size of the council, or do they wish to dilute the representation of the professional bodies and the estate agents on that council? Written into the Schedule at the moment is the basis of so many per thousand members of the bodies concerned. That is a pretty dilute start. If it is diluted still further, I think there is a severe risk that there may not be a sufficient closeness between the rank and file of the various bodies represented on the council and those who are on it, and the work of the council.
Rather than have any diminution in the democratic representation of the bodies themselves on the council, I would sooner see the total number of independents put up. I visualise this ending up with a council;somewhere of the size of 36 to possibly 40. I think that 40 is getting dangerously big, but I do not think that there is a strong enough representation now. I am talking about building up to 40 members over the years, but if there is a danger of it getting bigger than that, perhaps one would have to start diluting the professional representation. I think that that is an important point.
The final issue is the question of who should preside over the disciplinary committee and who should approve the code of conduct. It has always been the case that with professional bodies one has thought in terms of the Privy Council, but the point made by my hon. Friend in answer to the hon. Member for Rom-ford, namely, that there is a professional and a commercial activity here, does, I think, make a difference. I am certain that the Privy Council could provide the men to do it, but, at the same time, because there is a commercial aspect in this, I see that there is perhaps a case for having the Board of Trade.
What we have to bear in mind is the general philosophy behind our thinking. Do we, or do we not, consider that if we 610 are going to make it the Board of Trade, we are going to damage the really professional men involved here and the reputation of their professions? I should not like to see it done if that is the price to be paid. Therefore, I hope that when the Government express their view on the Bill, they will recognise that those who, before, during, and since my Bill have done their best to try to bring all the parties together in this on this matter, have done so in the belief that the honourable men vastly outnumber the dishonourable in this profession, and in this business, as in most in this country.
We must make sure that what we do in Parliament does not damage the quality of the professionalism of the men concerned, and at the same time recognises that it is not a good thing usually to give the sort of protection and the sort of machinery necessary to uphold professionalism in its highest order, to these matters which are mainly commercial. This is our difficulty in the Bill. It is a difficulty which is not easy to resolve, and I congratulate my hon. Friend on the way in which he has sought to do it.
§ 1.58 p.m.
§ Mr. Ernest G. Perry (Battersea, South)
I welcome the Bill, with a certain number of reservations. I am glad that mention has been made of compromise and of alteration with regard to the membership of the Council. As I see it, the Bill is designed for the preservation and protection of reputable estate agents. Unfortunately, in the London conurbation there are dozens of estate agents who do not come into that category. I must in fairness say straight away that I have no pecuniary interest in the estate agency business.
I know estate agents in London whose integrity and honour cannot be questioned Unfortunately, they have become victims of the propaganda and activities of a number of unscrupulous estate agents. That is why I welcome the Bill, although it will need many alterations. In any of my remarks which are derogatory to estate agents I do not wish to include the people that I have mentioned. At this stage, however, certain facts must be brought to light as to the activities and conduct of certain unscrupulous agents in London.
People are moving into London all the time. London is a jam pot for estate 611 agents. Every parasite and every person who wants to make a quick £100 can open a shop in London and call himself an estate agent. Many people who have been estate agents all their working lives, and who have conducted their businesses in a thoroughly respectable manner, have found themselves competing against people who have more recently come into London and who are adopting all sorts of unscrupulous methods in order to get business.
The buying and selling of houses in London—especially houses in the £4,000£8,000 bracket—is big business, and many charlatans are operating in and entering this business because of the amount of money to be made out of it. Many London tenants want to become owner-occupiers. To ordinary people the buying of a house represents the greatest financial transaction in their lives. These are the people whom we wish to protect by the Bill.
Not only the purchaser requires the protection; in many cases the vendor also needs it. Unscrupulous estate agents, in co-operation with finance companies of whom they themselves are directors, often mislead vendors. These estate agents sell houses to property companies in which they have an interest. This policy is adopted by many disreputable London estate agents.
I want to give an example of a transaction of this kind that was carried out in my locality. A widow wanted to sell her house and live on the coast with her relatives. She went to what she thought was a good estate agent. A person who knows anything about the business can quickly sum up a prospective vendor or purchaser, and when the lady went to the estate agent, knowing nothing of the value of her property, the estate agent sensed this. The lady gave him full rights to sell the house. The estate agent said, "You do not want a board outside your house, do you?" The widow said, "No." The estate agent then sent representatives from the finance company in which he was interested to look over the house.
Representing themselves as potential buyers they said, "The house is too dear," or, "The house is not suitable", or, "The house has something wrong 612 with it." This went on for some months. In desperation the widow asked the estate agent, "What can I do about my house? I want to move away." The estate agent then said to her, "Luckily I think that I have a buyer for you." He said that there was somebody from Wales or from Scotland, or from the North, who wanted to buy a house quickly and who was prepared to pay cash.
The widow was overjoyed. The purchaser inspected the house and said that he was prepared to offer only so much; the old lady thereupon accepted the offer of the stooge of the finance company, which really belonged to the estate agent, and the house was sold for half its value. The estate agent then spent a few hundred pounds in decorating the house, putting wallpaper over wallpaper and paint over dirt—this sort of thing was exposed only last week in a national newspaper—and sold the house for twice what he had paid for it.
I was interested to hear the hon. Member for Cheadle (Mr. Shepherd) raise the question of the undesirability of estate agents being allowed to be dealers in property. A person who acts as an agent between a vendor and a purchaser should be of certain repute, and ought not to engage in the buying and selling of property himself. In my opinion it should be considered a malpractice.
It is most unfair that those estate agents who conduct their businesses properly should be subject to abuse simply because of the activities of unscrupulous members of their profession. I support the Bill, providing Amendments can be made to protect vendors and purchasers of houses. I do not wish to make party political capital out of the situation, but since 1957 and decontrol under the Rent Act a fillip has been given to many disreputable estate agents who want to force tenants out so that houses can be sold.
I hope that the Bill will he given a Second Reading and that in Committee the necessary alterations can be made to ensure that the council has a proper representation, with more lay members on it who, although not registered estate agents, know the operations and workings of the unscrupulous members of their profession.
§ 2.8 p.m.
§ Mr. Norman Cole (Bedfordshire, South)
I congratulate my hon. Friend the Member for Northants, South (Mr. Arthur Jones) on introducing the Bill. I do so not only because of the way he introduced it, and because of the terms of the Bill itself, but because this could be an historic occasion. I cannot recollect any Private Member's Bill of this length and comprehensive character about registration having got through the House during the last 15 years. I very much hope that today, 27th January, 1966, we shall set a precedent by giving the Bill a Second Reading. Private Member's Bills of this size for this purpose seem to fall by the wayside, or become so emaciated that they do not mean anything when they become law.
Before the debate ends, we should get our views on this subject and this profession into proportion. There has been so much talk of "crooks" that one would have thought that the Bill has been designed to correct some sort of awful public menace from which the vast majority of the people who buy and sell houses have been suffering for years. If that were so, it would be a Government function and not that of a private Member to deal with it. It would be crime on a large scale.
The same situation is seen in regard to teen-agers. Those who break the law make news, but if dog bites man it is not news. I hope that I have done something to restore a sense of proportion to our discussions. We are not dealing primarily with defaulters. There are defaulters in every profession, not just that of estate agents and the newspapers give them due prominence. We are trying to do two things—to elevate this profession, by general co-ordination, to a standing which it has deserved for many years, and to make a large measure of protection available to the public.
It seems logical and inevitable that, on a large professional body including Government nominees, ipso facto the result will be better service for the public than was given previously by an amorphous group composed of a large number of societies and many people who belonged to no society. The desirable result of much more consideration for the consumers would follow inevi- 614 tably if the main basis of the Bill becomes law, as I hope it will.
I should like to refer to the speech of the hon. Member for Sheffield, Bright-side (Mr. Winterbottom) who, unfortunately, is not here. I have great respect for him and have known him for many years, but I must say that he used some extreme expressions. I will not declare an interest, as I have not a direct interest, although I have been dealing with property for many years.
If the hon. Members thinks, as he seemed to do—perhaps other hon. Members feel this as well—that solicitors who negotiate a family's business in a transaction over a piece of property will, in 1966, be ready to take over the functions of estate agents, with all the resultant advertising and more than occasional visits on behalf of a client to examine property, he must be aware that that will leave no time for the solicitor's ordinary business. If he does not think that there is a place in our society for the estate agent and the job he does, the hon. Member needs to inform himself of the position.
The very fact that there are "mushroom" firms springing up to the detriment of the public is proof of my point of the need for estate agents. Estate agents provide a service to the public which could not be fully provided by solicitors or any other professional body. I know that the last thing which solicitors and other professional men want in their offices is a register of properties which clients coming to consult a solicitor about a will can examine and subsequently approach him about. Of course, they deal with such business occasionally, but I am certain that they do not want to become estate agents. That was, however, one of the suggestions made by the hon. Member for Brightside.
Another point which has been made to me and possibly to other hon. Members is that, once the central body is established after the two years' interim from the date of the Bill's passage into law, there would then be a closed shop and no one would be able to set up as an estate agent unless he were registered with the Estate Agents Council. That does not worry me at all. Surely it is the whole purpose of the Bill that no one wishing in the future to set up 615 as an estate agent will be able to establish a "mushroom" firm to make "a quick pound" while the sun shines. Surely this is just what we want to prevent. An excellent provision is that which will make it obligatory for such people to pass certain examination standards and to have certain standards of knowledge.
In support of this point, I would quote the best possible authority, the actions of Governments in the past. One example of this was the Professions Supplementary to Medicine Act, 1960, under which the Government, quite properly, laid down that professions ancillary to medicine like physiotherapy and chiropody should be registered. Anyone not registered within the time period—I know this because I know of such cases—was not thereafter allowed to set up as a practitioner in that branch of medicine in regard to certain functions. The Government laid down certain prohibitions. If this principle is good enough for Government actions in regard to medicine, why should we be warned that the Bill will mean an awful closed shop in this profession? I make this point without contrition and I hope that we shall keep our sense of proportion in this way.
I hope that there is no intention in the mind of the Government to make the majority of people on the council nonprofessional men—in the sense of being Government nominees—with the professional men in a minority. This would defeat the whole object of the Bill and might well make the profession think again. It would be wrong, and unnecessary to the best interests of the public.
A very fine standard can be achieved if the operation is conducted correctly. Nominees of the Board of Trade or some other Government Department should sit on the council. I have no objection to their number being increased. This would satisfy the needs of consumers. It would be an extraordinary position if the nominees of the Government, in a majority on the council, set up a disciplinary committee to deal with members of a profession with which they were not familiar. Yet this is what is denoted by that suggestion, which I hope will come to nothing.
Were there only one nominee of the Government, he would always have the 616 right to report back to the nominating Department if he were dissatisfied with proceedings in any of the Council's committees. The hon. Member for Brightside made the point that it was perfectly in order that the affairs of the Estate Agents Council should be subject to Questions in the House through the Government Department concerned. This would be possible because Government Departments are involved, in the same way as with the Resale Prices Act. The safeguards are there. If a proper proportion of nominees is required to enable them to stand up to the estate agents on the council, I would not object to there being seven or eight nominees. But the profession must be proprietor in its own house and not subject to the will of other people simply because of Government action.
There is one Committee point which is worrying me, but no doubt my hon. Friend the Member for Northants, South has it in mind. I do not understand what happens to a firm which wishes to set up in business if it joins one of the existing authorised societies between the date when the Bill was introduced and the renting date when the registration period commences. The Explanatory Memorandum states:During the two years beginning with a day to be appointed a person may alternatively register on a practice qualification if on the date of introduction of the Bill or the preceding twelve months he was carrying on busines as an estate agent …As I say, I am not sure about the position of a firm which starts up in the meantime before vesting day. I am sure that the provision will work in practice, although we will need to consider this matter further in Committee.
I give my blessing to the Bill. It is an absolute tour de force that someone should have done all the work that must have gone into preparing the Measure, by many members of the profession, to which I pay tribute, and Government Departments. I only wish that a Bill of this kind had been introduced 10 years ago.
§ 2.21 p.m.
§ Mr. David Weitzman (Stoke Newington and Hackney, North)
I will preface my remarks by commenting on some points raised by the hon. Member for Cheadle (Mr. Shepherd) in his excellent 617 speech. Many hon. Members have talked about the profession of estate agents and the necessity to see that the members of that profession maintain certain standards. We might bear in mind the apt words of the hon. Member for Cheadle, when he referred to it as a business and said that he believed this to be the first time that an effort had been made to bring in disciplinary measures for a business.
After referring to the element of competition involved in this profession or business, he pointed out that many people who practise as estate agents also deal in land and that, in many cases, they are making what can only be described as illicit profits. There are, unfortunately, many cases of this kind. The hon. Member for Cheadle thought that if the details were known and the evidence could be provided many of them might end up in the criminal courts, and I agree.
The very fact that the hon. Member for Cheadle dealt with that subject—the danger of estate agents engaging in deals concerned with land and property and making illicit profits—makes it all the more vital, whether one considers this a business or profession, for a Bill of this kind to be introduced. It is essential that we do something about this matter. The hon. Gentleman also pointed to the difficulty of tackling cases involving illicit or illegitimate profits and I hope that it will not be beyond the powers of the proposed disciplinary council to draw up rules which will safeguard the public against such activities.
Having said that, I wish immediately to make it clear that I strongly welcome the Bill. I do so for a variety of reasons. In my constituency and in and around north-east London a number of cases have arisen, many of which have been brought to my attention, of people having paid deposits, often of large sums of money, only to find that a so-called estate agent had disappeared with their hard-earned savings.
The hon. Member for Bedfordshire (Mr. Cole) said the primary object of the Bill was not to deal with this sort of abuse but to elevate the profession. That may be one reason for the Bill, but if anything justifies the Measure and makes it essential, it is the sort of cases which have been referred to by hon. Members.
§ Mr. Cole
The hon. and learned Gentleman wit, of course, understand that 618 the sort of cases he has in mind and the suggestion in a certain newspaper, to which reference has been made, would be the subject of the ordinary law of the land if they came to light in the deliberations of the disciplinary council.
§ Mr. Weitzman
I of course appreciate that—that is, if one can obtain the necessary evidence. Unfortunately, in too many cases the evidence cannot be obtained. I have an example of this in my constituency involving a number of coloured people. Advantage was taken of their ignorance when they went to an estate agent to place deposits on houses. In this case the estate agent absconded —I understand that he has gone to Turkey—and the police have the matter in hand. Hundreds of pounds of hard-earned savings have been lost in this way. If only for this reason—and there are many other cases of this type—the promoters of the Bill are entitled to our sincere congratulations.
I have just received a letter from the honorary secretary of the North-East London Law Society. I will quote one sentence from it:Mushroom firms of estate agents seem to be the bane of this district"—that is, north-east Londonand in recent weeks there have been a number who have disappeared, taking with them quite a large amount of the public's money, and the human suffering caused by this has assumed pitiful proportions".Everyone must welcome a Measure which will assist in remedying this situation.
The Bill is well drawn and covers practically every point. Criticisms have been expressed about the constitution of the proposed council. I will not comment on that, except to say that it will receive our attention in Committee. I welcome the setting up of a body which will be responsible for securing standards of competence and conduct among estate agents and I particularly welcome the power to provide training facilities. I have no doubt that the council's disciplinary powers for dealing with persons who offend against the standards which are set will be of great importance.
While I do not quarrel with the requisites for registration, I am wondering about the words in Clause 5 (3):During the period of two years beginning with the appointed day an individual who is not a member of a recognised representative 619 body shall also be qualified for registration in the estate agents register if on 8th December, 1965, or within the twelve months immediately preceding that date—(a) he was carrying on business as an estate agent in the United Kingdom, the Channel Islands or the Isle of Man. …I recognise that there must be a transitional period. Power to discipline is there, but as I have referred to the mushroom type of estate agents, which are particularly prevalent in my part of London, it should be remembered that some of these have practised during that period of two years and, in many cases, are still operating.
According to Clause 5(3) it would seem that they will be permitted to be registered. That means that they will continue to practise, possibly for a considerable period, before they are brought to book. It may be difficult to define precisely what will happen during that transitional period, but I suggest that there should be some prerequisite of character and competence before anyone can be on the register and can continue to act as an estate agent before the Bill reaches the Statute Book.
§ Mr. Arthur Jones
The hon. and learned Member should take account of the fact that any applicant for registration will need to be bonded for the amount of £10,000. This would need to accompany his application for registration.
§ Mr. Weitzman
I appreciate that there are provisions in the Bill, but there is still the loophole that when it becomes an Act of Parliament persons can go on to the register although they may be of doubtful character or competence. There will be a certain period before the question of guaranteed bond is settled. This point must be looked at carefully. The requirement for deposit of a guarantee bond, power to draw up a scheme to create a fund to relieve loss through dishonesty of an agent or employee, the keeping of proper accounts, particularly a separate banking account for clients' money and punishment of persons who carry on business although they are not registered or offend against other provisions—these matters are all vital.
I am not sure whether the proposed penalties are sufficient. The fine mentioned in Clause 18(4) is not to exceed 620 £100 and I take it that that applies not only to the first but to any subsequent offence. Nowhere, not even on indictment, is there a punishment by imprisonment. The leader in The Times takes a rather opposite view about punishments, but one can visualise a case—I speak from experience—of a hardened offender in which a court might think there ought to be the penalty of imprisonment. I hope this matter will be looked at carefully.
§ Sir Rolf Dudley-Williams (Exeter)
The hon. and learned Member will realise that the most serious punishment for an estate agent would be that he could be struck off the register. If he offends against the ordinary criminal law he can be prosecuted.
§ Mr. Weitzman
Of course the most serious penalty is to strike him off and prevent him practising his profession, but there may be cases where a person has offended in such a way that the opportunity for a court to inflict a sentence of imprisonment would be proper. This ought to be looked at to see whether power should be given to the court in that way.
I touch on a point referred to rather sympathetically by the promoter in his opening remarks. Like other hon. Members, I have received a memorandum from the Association of International Accountants which stated its claims in this matter. Clearly under Clause 12(1,c) on the face of it the Association is debarred. I know it has been suggested and that it might obtain a certificate from the Board of Trade, but the provision under the Companies Act deals only with the accounts of public companies and is restricted. If the claim of this body of accountants is right and it has members who practise as accountants, members of repute who have done so for many years and have as their clients a considerable number of estate agents, it seems quite wrong to debar them. The memorandum of the 10, the so-called steering body, states that the Bill is so drafted as to secure those bodies without creating a closed shop or imposing restrictive practices. If the claim of this body of accountants is right I hope the matter will be looked at closely so that if there is a genuine case of hardship it will be alleviated.
621 I wish to touch on the points in connection with the power of the council to make rules. In Clause 11 there is reference to rules prescribing maximum charges. I agree with what was said by the hon. Member for Isle of Ely (Sir H. Legge-Bourke)—who drafted the Bill which preceded this one—in his criticism of the use of the words "maximum charges". We all know that maximum charges will become minimum charges. That is inevitable. This provision has been put in a special Clause, so I assume that it is not merely a Committee point but one of importance. The rules ought to be drafted in such a way that they will give estate agents the right to charge a sum properly commensurate with the work actually done and no more. It will also help if the provision prescribed that the standard of work required justified the charge. It may be asking too much, but if we are to put something about charges, that should be related to work done. I am not one who says that estate agents do work which does not require charges. I recognise that they do excellent work in many ways and they ought to be rewarded properly for that work, but if we are to deal with charges, let the task be one of trying to relate the amount charged to the sort of work done and the standard required.
Here I rather join with the criticism which an hon. Friend made that the rules should make it clear that the agent must not so act that his client becomes bound to the contract without obtaining other advice. The purchase of property involves in many cases expenditure of money which may be the life savings of a person. It is of paramount importance that if he binds himself in law he should have the advice of a properly qualified legal practitioner. In the ordinary way in law an estate agent has no implied power to bind his client, but there are cases which show that words can be used on the form signed with the agent which would give the agent that power. The client may be asked to sign a document which binds him before he has had legal advice. It is most important that a clear warning of that danger should be given to the client. An estate agent should never attempt to do the work of a solicitor.
Another matter for careful attention in the rules is the form of words by which a client agrees to pay commis- 622 sion. Ambiguous phrases such as "finding a purchaser" or "selling a property" entitling an agent to commission should be avoided. Judgments in cases have recognised that the intention of the parties, unless the contrary is clearly shown, is that commission should be payable only if the actual sale is effected or if a ready and willing purchaser is introduced who is prevented from carryout the sale through the default of the vendor. Lord Justice Jenkins said in a fairly recent case that there may be a contract which has the effect that the agent's commission is payable although the sale in respect of which it is claimed for one reason or another turns out to be abortive. It is, therefore, important that the estate agent, in dealing with his client, should see that the client is aware of such consequences.
The agent to a very large extent is in a fiduciary capacity, a capacity of trust, to his client. I hope that rules will be made which will enable the client to see quite clearly that he does not bind himself to make an agent the sole agent with all the consequent legal results unless the client expressly puts forward that intention.
I recognise that I have mentioned a number of points which might be considered in Committee. I think the Bill is a valuable one. The promoter is to be heartily congratulated. I hope that the Bill will be gone into carefully to make it as good as it can be made and I wish it a rapid passage to the Statute Book.
§ 2.40 p.m.
Mr. Richard Sharpies (Sutton and Cheam)
I join with the hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) and others who have spoken in the debate in congratulating my hon. Friend the Member for Northants, South (Mr. Arthur Jones) on having brought in this Bill. I congratulate him also on having drawn first place in the Ballot. I have never achieved a place in the Ballot. I particularly congratulate him on the choice of Bill and the very clear presentation he gave the House in moving Second Reading.
Even though the Bill has the support and agreement of the 10 main professional bodies concerned and of the National Association of Estate Agents, it is a formidable business for a private Member to seek to get through the House a Bill 623 of such complexity. I am sure that the House will benefit greatly during the passage of the Bill from the very clear and detailed knowledge which my hon. Friend has of the whole subject. That is not to say that there are not some reservations and criticisms. They have been expressed by hon. Members on both sides of the House. Reservations have also been expressed by bodies such as the Consumer Council.
In particular, the Consumer Council referred to the composition of the council to be set up and also to the scale of the maximum charges. From what my hon. Friend said when introducing his Bill I am sure that it will be possible to reach a satisfactory compromise on the composition of the council in which the representation of consumers will be taken fully into account. Without going into detail, I think that the question of maximum charges is very difficult.
The argument on both sides is finely balanced. In some quarters there is objection to having maximum charges. As the Consumer Council has said, these will almost certainly become minimum charges. What is important is that the vendor who places his business in the hands of an estate agent when he wishes to sell his property should be quite clear what the charges are which he will have to pay at the time when he originally places the business.
Estate agents, in accepting business, should make it clear to the client the conditions under which they operate and the meaning of such terms as "sole agency" and what is involved for the client. We shall have further discussion in Standing Committee on the composition of the council and of the question of maximum charges, together with the large number of other important points that have been raised, all of which are better discussed in Committee.
The main principle, however—that there should be some form of registration —is generally accepted on both sides of the House and by outside bodies such as the Consumer Council. But it is accepted on certain understandings. The first is that there is no intention of setting up a closed shop; secondly, that anyone who is genuinely competent and able to practise, whether or not a member of one of the professional associations, will 624 be able to do so; and, thirdly, that the basis of the tests of competency should relate only to the standards required to ensure the minimum standards of proficiency in the estate agency business.
I reinforce what was said by my hon. Friend the Member for Cheadle (Mr. Shepherd). An estate agency is a business and we in this House recognise it as such. There should be no question of the tests of proficiency being used as a method of excluding people from taking up this business when they are otherwise competent to do so.
There is no need to rehearse the reasons which led my hon. Friend the Member for Northants, South to introduce the Bill. He gave them clearly and we are grateful to him. Both the purchaser and the vendor have the right to expect from an estate agent, first, a reasonable standard of competence, and, secondly, the feeling that they are dealing in its widest sense with an "honest broker". It is true that, except in the very large sales of property, the estate agent normally acts for the vendor of the property, but I think that it is also accepted that the purchaser of a property also has the right to expect fair treatment.
I place great importance not only upon the bond which people entering this business will have to provide, but also upon the code of conduct that will be drawn up by the council and approved either by the Privy Council or by a Government Department in due course. I am sure that the kind of code that will be drawn up will make impossible the kind of case which happened in my constituency and which formed the subject of a series of articles in the Sun last week. I am certain that that kind of conduct—the bringing in of bogus clients who do not exist—will be excluded by the code. I certainly hope so.
The vendor has the right to expect from the estate agent that he will obtain the best possible price for the property. If he is to get the best possible price, I do not see how it is possible for his obligations to the vendor to be fulfilled if conduct of the kind referred to by my hon. Friend the Member for Cheadle takes place. I am sure that this, too, will be covered by the code of conduct. The purchaser is entitled to expect the agent acting on his behalf to provide him with accurate particulars in so far as it lies 625 within his power and also to expect that any deposit he gives as a bond of his fidelity will be looked after satisfactorily and returned where the purchase is not made.
The position of the estate agent was summarised very well in a leading article in the Estates Gazette of 22nd January, which said:An estate agent must be a person in whom the ordinary member of the public can put his trust.It is fair to say that the vast majority of those who practise as estate agents measure up to this definition. It is with the small number of black sheep who achieve bad publicity and who do immense harm not only to the people with whom they deal, but to the business of estate agency that the Bill seeks rightly to deal.
In the debate, we have heard a number of references to the difficulties which arise in the period between the placing of a bid for a property and the actual signing of a contract and of completion. The Bill does not and could not seek to deal with the whole question of the law of property, but I am sure that the House recognises the difficulties which arise during this period of uncertainty, both for the purchaser and for the vendor.
I hope that the council will, together with the legal societies, look at the whole question of the law relating to the transfer of property and see whether we cannot devise a means of mitigating the difficulties caused by a long period of waiting—sometimes running into months—while the purchaser tries to find a mortgage, for instance, or sometimes because the purchaser is waiting for purchase of another property by local authorities and there are difficulties in obtaining loan consent. All these are difficulties for which very often the estate agent is unfairly blamed. It is very often the client, of course, who is putting pressure upon him. I hope that the whole matter will be looked at by the council. One advantage at least of setting up the council is that there will be a recognised body to investigate complaints and before which a consumer will be able to have a fair hearing of his complaints and the knowledge that they will be properly looked at.
626 From this Bench, I give my support to the Bill. I hope that my hon. Friend will be able to take it through all its stages in this House. I believe that it will be of benefit to all those who carry on or seek to carry on the business of estate agency. I believe that it will be of benefit to all those who buy or sell property and I wish my hon. Friend success.
§ 2.55 p.m.
§ The Minister Without Portfolio (Sir Eric Fletcher)
Perhaps it would be convenient for me to indicate now the Government's view. Since there are still a number of hon. Members who seek to catch your eye, Mr. Speaker, I will endeavour to observe your injunction to be brief and will confine myself to matters which are essential at the Second Reading stage. First, I add my congratulations to the hon. Member for Northants, South (Mr. Arthur Jones) for the skill and clarity with which he has presented the Bill and explained its details to the House.
Some doubt has been expressed as to whether this is an appropriate subject for a Private Member's Bill. It is certainly a formidable undertaking for a private Member to try to carry a Bill of this kind through the House and I certainly endorse the observation that was made by the hon. Member for Oxford (Mr. Woodhouse), who was at this Box when the hon. Member for the Isle of Ely (Sir H. Legge-Bourke) produced his own Bill two years ago.
The Government will be only too glad to give all possible facilities to the hon. Member for Northants, South in the drafting of Amendments to the Bill—particularly, of course, those which will be acceptable to the Government, but also other Amendments which may be more controversial and which hon. Members may have in mind. If Amendments are carefully drafted in the first place, whether or not they are acceptable, it obviously facilitates the work of the Standing Committee. I see that the hon. Gentleman and I will have considerable work to do in Committee.
The Government's attitude to the Bill is very much like that of most hon. Members who have spoken. We welcome the Bill and hope that it will have its Second Reading, subject to certain qualifications which I will indicate and subject to 627 examination in Standing Committee of various matters raised in the debate and on which it would not be right of me at this moment to express any final conclusion.
Although it is a Private Member's Bill, I think it is fair to say, in answer to the point made by the hon. Member for Bedfordshire, South (Mr. Cole), that this is a subject in which the Government recognise that we have a responsibility to legislate. Indeed, if the Government were not already committed to a very large legislative programme, we ourselves might have wished to introduce a Bill on the subject. However, in the circumstances, we are only too glad to have the opportunity of facilitating this Bill and getting it into a form which, we hope, will be generally acceptable to the House.
I start with the same proposition which has been expressed about estate agents generally in thinking that the large majority, particularly the chartered and professional bodies, are persons of integrity and character in whom the public can have confidence. On the other hand, we are all conscious, particularly those of us who come from North-East London, like my hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman) and others from Sheffield and the North, that in recent years there have been very grave scandals about a substantial number of discreditable persons carrying on business as estate agents who have besmirched the reputation of estate agents generally and produced serious public scandal and losses. This situation must be dealt with.
In the Government's view, there are two main objects. One is completely to eliminate those persons who have been practising discreditable and disgraceful conduct as estate agents. Secondly, we hope to reduce the costs of house purchase generally, not only by trying to make sensible reductions in estate agents' charges but also to reduce the cost of house purchase by reducing legal costs; for example, by extending the compulsory registration of land which in itself would produce considerable economies for those engaged in house purchase. Therefore, we have to examine whether the Bill in its present form, or as I hope it would be amended, 628 would achieve the objects which we have in mind.
I ought to confine myself merely to indicating the Government's reservations about the Bill, some of them already known to the hon. Member for Northants, South and explained to him and accepted. First, as it stands the Bill provides that the Privy Council should have general supervision of the maximum fees, the standard of conduct, conditions of registration and so on and that some of the independent members should be appointed by the Home Secretary. In the Government's view, the Privy Council is not the appropriate body to undertake those functions. This, of course, is a matter of the machinery of government which, the House will realise, must be left to the Government of the day and in the view of the present Government the appropriate Ministry to discharge the Governmental functions envisaged by the Bill is the Board of Trade.
The hon. Member for the Isle of Ely drew attention to the fact that the way in which the Bill differed from his was that his Bill was concerned with professions while in Clause 16(4) this Bill expressly recognises that estate agency has both professional and commercial attributes. While the Privy Council might be the appropriate body to deal with some of the recognised professions for which it has accepted limited responsibility in the past, it is the Board of Trade which should be responsible in this case. It is basic to the conception of the Bill that there should be effective departmental control. It is intended that departmental control should not be, as an article in The Guardian suggested recently, a mere formality and it could not be expected to be more than a mere formality if these functions were entrusted to the Privy Council.
I share the view of the hon. Member for Northants, South—and I was glad to hear him say it, because this is the proposition from which we should all start—that, as he said in his pamphlet, the paramount concern in the promotion of the Bill is the protection of the public. It is from that point of view that I want to examine two or three matters which have been raised today, and I want first to deal with the composition of the council.
629 The view has been expressed that if one is going to have only four independent members and a minimum of 21 professional members, then one will have an unbalanced body and the public will not be adequately protested. The Consumer Council, my hon. Friend the Member for Sheffield, Brightside (Mr. Winterbottom) and others have suggested that the number of independent members ought to be in the majority. I do not share that view. I think it would defeat the objects of the Bill if they were. It is essential that the Estate Agents Council should be so constituted that there is a large preponderance of estate agents upon it and an adequate number of independent members.
In my view, the public will be protected not by the mathematical constitution of the Estate Agents Council but by the fact that all the rules, the code of conduct, the scale of charges and particulars of registration will be subject to the approval of the President of the Board of Trade and capable of amendment by him. It is in that way that the public interest will be secured, not by any precise number of independent members on the council. Having said that, my own view is that the Estate Agents Council would be a better balanced body if the proportions were not 21 to four. I would have hoped that the number of independent members, by agreement between all of us, could be increased to at least seven. My personal preference would be so to change the figures in the Schedule that the total number of estate agents would certainly not exceed 21 in any circumstances and could, I hope, be reduced.
I hope that the Estate Agents Council would never reach a figure of anything approaching 40 but that it will always be under 30. A reasonable composition would be about seven independent members and perhaps 18 to 19 estate agents. I realise that there is a necessity for various groups to be represented and these are matters which I hope can be examined more carefully in Committee and agreement reached about them.
There is one other matter of interest to the Government which has been mentioned by the hon. Member for the Isle of Ely and by my hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman) and the hon. Member for Sutton and 630 Cheam (Mr. Sharples). This has been the thought given by the promoter to Clause 11 providing for a scale of maximum charges. This is a novelty in this Bill as compared with the Bill of the hon. Member for the Isle of Ely, and it has been introduced largely to meet the wishes of the Government indicated in some of the preliminary stages.
The fear has been expressed that if one has a fixed scale of maximum charges it would tend to become a scale of minimum charges. I do not share that fear and I am anxious that steps should be taken to ensure that there is no danger of that arising. I hope that when the council comes to consider a scale of fees it will be able to introduce much more flexibility than exists now. I like the idea that the charge should be related to the work done rather than that there should be some automatic fee resulting, sometimes, in estate agents being able to charge very large fees for very little work. There may be other cases in which they are underpaid. But, realising the danger that maximum charges sometimes tend to become minimum charges, I must utter this warning.
The House will know that under the Monopolies and Mergers Act, 1965, the President of the Board of Trade is able to refer services as well as goods to the Monopolies Commission. Consequently, if at any time there is any reason to think that a group of estate agents, acting nationally or in any locality, agree among themselves not to charge less than the prescribed maximum fees, the Government would reserve the right to refer any such complaint to the Monopolies Commission for investigation.
The Government are also sensitive to the criticism which has been expressed in The Times and other journals and in the House that by giving the estate agents this charter of registration and power to exclude people who do not come up to a certain standard—all of which is very desirable—we might be creating a near monopoly. The Government are, of course, in favour of competition and they are anxious that nothing we do in the Bill should restrict competition among estate agents. I hope that in Committee sympathetic consideration will be given by the promoters and by hon. Members to the possibility of extending the exemptions contained in Clause 24. It seems to me 631 sensible that local authorities and the co-operative society which has been referred to and others should be recognised as bodies to which other provisions of the Bill have no application. I leave that thought for consideration in Committee.
I wish to mention only one other point of detail, which, again, will have to be carefully considered in Committee. It has been suggested in a number of quarters, both in the House today and in the Press, that it would simplify matters very considerably if estate agents were forbidden to accept deposits. It is said that that would remove a great deal of the abuse which has grown up and would go a long way to remove any temptation to abuse. Personally, I feel a good deal of sympathy for the view expressed. However, it remains for consideration whether this is a matter which should be dealt with by provisions in the Bill or whether it should be left to the Estate Agents Council.
My hope is that when the council is set up it will be such a respectable body and will consist of people of such integrity that it will recognise that it has not only a duty to protect the interests of estate agents but duties of paramount concern to protect the public, and it may well be that it will come to the conclusion that in the interests of its profession it would be better, except perhaps in some exceptional cases, if estate agents did not accept deposits. In that context, the whole question of contracts could he considered.
§ Mr. Speaker
Order. The hon. Gentleman has already made his speech, and others are waiting to be called.
§ Sir Eric Fletcher
This is a Committee point. I hope that it will emerge during the Committee debates that matters like this are matters that will be seriously considered by the Estate Agents Council.
However the Bill emerges from this House, the success of what we are here attempting to do will be determined very much by the code of conduct that is even- 632 tually produced by the Estate Agents Council and the President of the Board of Trade. I hope that the House will agree to give the Bill a Second Reading.
§ 3.15 p.m.
§ Mr. C. M. Woodhouse (Oxford)
I am very happy to support my hon. Friends in sponsoring the Bill, because I was the Government spokesman when its predecessor was produced in the House. I know that my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) then felt that I was slightly inclined to damn his Bill with faint praise. I am glad that on this occasion the Government spokesman has not exposed himself to that criticism at all, and I feel confident that this Measure will be given a Second Reading.
The only reason why, on the previous occasion, it was necessary to be much more cautious was a division of opinion among practitioners of the various professions with which that Bill was concerned. As that division seems almost entirely to have disappeared now, or, at any rate, to have resolved itself into points that are not points of principle but points that can be dealt with in Committee, I have no doubt that there will be a consensus of opinion among hon. Members in favour of the Bill.
I wish to comment only very briefly on the objections to the Bill raised, to my knowledge, by one or two organisations. I am glad that the objections of the business transfer agents, for whom the hon. Member for Morpeth (Mr. Owen) spoke very clearly earlier in the debate, are not being pressed. Without going into detail, I think that it should be possible to deal with their reservations in Committee.
I am also happy that the Minister has, in my judgment, disposed effectively, though sympathetically, with the two objections of the Consumer Council. As to the composition of the Estate Agents Council, my hon. Friend has already said that he is prepared to reconsider the numbers. On the point of maximum charges also turning into minimum charges, I am sure that everyone will have been impressed by what the Minister has just said, which seemed fully to dispose of that danger.
In these happy circumstances, there remains very little for me to say, so I 633 will confine myself merely to one observation. Speaking as a former Home Office Minister, I am much relieved—not that I ever expect to be a junior Minister in the Home Office again—[HON. MEMBERS: "Hear, hear."] I emphasise the word "junior"—and impressed by the Minister's argument in favour of transferring this responsibility from the Home Office to the Board of Trade. I am sure that all future junior Ministers at the Home Office, who have to spend quite enough Fridays in the House, in any case, will be much relieved to have that responsibility taken off their shoulders.
§ 3.20 p.m.
§ Mr. John Rankin (Glasgow, Govan)
I am sure that it must have comforted the hon. Member for Northants, South (Mr. Arthur Jones), the promoter of the Bill, to hear my hon. Friend the Minister without Portfolio tell him he would have Government support, provided, of course, that there were Amendments which met with Government approval. I am sure that the hon. Gentleman would support with me the approach of the Government to the Bill which they themselves, given time, might have produced, would have been governed by two principles, the first being that it would eliminate completely the nefarious practices which were so well illuminated earlier by the hon. Member for Cheadle (Mr. Shepherd).
I am sure that the hon. Gentleman caused a certain amount of consternation on this side of the House by some of the things which he revealed this afternoon. What he said was emphasised later by another speaker on the Opposition side who drew attention to the fact that the purchase of a house is, to many, a life's event. It is so regarded by the great mass of the people of this country. Purchasing a house is not an everyday occurrence, and if people got what I may call a pig in the poke, because they were victims of one of the types revealed by the hon. Member for Cheadle, they were suffering a wrong which perhaps could never be righted.
The hon. Gentleman's Bill is welcome if he will accept and translate into practice in his Bill the first condition to which the Minister without Portfolio referred. The second condition is that 634 it would reduce the cost of house purchase. Today this is becoming quite fantastic. I am sure that if the hon. Member does embrace these two principles then he will do something which the country is waiting for.
I am tempted at this stage to be diverted on to comments on the many interesting things which have been said today, but because of the lack of time I am not going to be lured along that road. I have a special mission to carry out and I am glad to have the opportunity to do it. Many years ago, although it seems just a few years ago, I was invited to become President of the British Association of Accountants and Auditors. I knew, of course, how to add and to subtract, and these basic processes are the whole secret of auditing; obviously, if one cannot add or subtract one can never audit anything. During the passage of a Bill through the House in 1948 I was able to strengthen the position of this worthy association and to secure it official recognition as public accountants, a position which it had not managed to achieve before. In return, the association offered me the courtesy of becoming their honorary president.
When the promoter of the Bill was speaking about Clause 26, I sought to intervene to put to him the point which troubles the association. They feel that it will be prejudiced by the Bill as it stands. I agree that the Bill contains the provisions which are customary in a Measure of this sort to safeguard the interests of members of the estate agency profession, both in regard to the recognition of all the professional bodies of good standing in that profession and also for the registration of individual estate agents on a practice qualification.
The Council of the British Association of Accountants and Auditors wholeheartedly supports all measures for the protection of the general public against the dishonest practitioners in estate agency or any other profession. Unfortunately, in its view the Bill in its present form would have gravely detrimental effects upon a large number of accountants in public practice. The British Association has about 500 members in public practice as accountants and auditors in this country. Many of these number among their clients estate agents 635 for whom they have acted professionally for many years.
Under Clause 26(1), to which I referred, of the Estate Agents Bill, "recognised body of accountants" is defined as meaning only the three Institutes of Chartered Accountants and the Association of Certified and Corporate Accountants. All other practising accountants will be debarred, in the view of the association, from giving the accountant's certificate of compliance to be required periodically of all estate agents under Clause 12(1,c) and thus will be compelled by this proposed new legislation to relinquish in favour of chartered or certified accountants the business of their0020estate agent clients for whom they have acted hitherto.
Accountants who will be deprived in this manner include 1,700 practising accountants who hold individual authorisation from the Board of Trade under Section 161(1,b) of the Companies Act, 1948. Although they are thus eligible to audit and certify accounts of all companies, including public companies, they will be debarred from certifying accounts of estate agents under the provisions of the Bill because they are not members of the senior bodies listed in the Bill.
I am sure that this is not the intention of the promoter, but, whereas the ruling bodies in the estate agency profession have been at pains not to inflict hardship upon their fellow practitioners in estate agency, many accountants will suffer by reason of this alteration in the law affecting the organisation of another profession, matters about which they have not been consulted and in which they have no voice. The permanent loss of valuable professional connections and contacts with estate agencies will be no less serious than the loss of the fees entailed. They will have no right of appeal, as they see it, and there will be no provision for compensation for the heavy losses which they will suffer.
The introduction of the expression "recognised body of accountants" in Section 161(1) of the Companies Act 1948, which relates wholly to auditors of public companies only, has, unfortunately, led to the implication that all other bodies of accountants are unrecog- 636 nised for all purposes, and their members unqualified. As I am sure the hon. Gentleman appreciates, this is not the case. For example, there are three other organised bodies of professional accountants representing public practitioners, numbering altogether about 3,000 members, with a large number of registered students. These bodies have all been in existence for well over 30 years, and have at all times required their members to conform to the accepted standards of professional ethics of the accountancy profession.
The provision in the Bill forany other body of accountants … for the time being recognised … by the Board of Tradeto which the hon. Gentleman referred earlier has little meaning in fact, because, according to my information, no accountancy bodies have been—
§ Mr. Shepherd
On a point of order. Mr. Deputy Speaker, I do not want to be unkind to the hon. Member for Glasgow, Govan (Mr. Rankin), but is it not the case that this detailed examination of the propriety of including a particular point about accountants is really a matter for the Committee stage and not for a Second Reading debate?
§ Mr. Deputy Speaker
I have asked hon. Members not to go into detail on Committee points. I do not think that the hon. Members has really gone too far, but I hope that he will not pursue that point for too long.
§ Mr. Rankin
I said at the beginning of my speech that I was trying to deal with the case which had been presented to me by a body of auditors and accountants in whom I had a special interest. I realise that I may appear to be making a Committee point, but it is, nevertheless, an important point in their view, because what I am leading up to is that in the view of the Council of the Association of Auditors and Accountants the basic principles of the Bill ought to be opposed on the ground that a Private Member's Bill should not be used as a method of depriving large numbers of practising accountants of valued professional connections and the right to practise, which they have freely enjoyed until now.
That is a point of substance, and I think that it is material to make it clear 637 now. Pending legislation for the proper organisation of the accountancy profession, there is another statutory definition of accountants, one of many years' standing, which would avoid at least part of the discrimination about which I am complaining, and which the hon. Member might take into account. He will find that it was re-enacted from the 1918 Income Tax Act, in Section 52(4) of the 1952 Act. It defines an accountant asany person who has been admitted a member of an incorporated society of accountants.If that were accepted the difficulty that presents itself to this organisation and its membership would be cleared up. Having raised this point on the Floor of the House I hope that it will receive in Committee the attention which it merits.
§ 3.35 p.m.
§ Mr. Forbes Hendry (Aberdeenshire, West)
I hope that the hon. Member for Glasgow, Govan (Mr. Rankin) will forgive me if I do not follow his argument. I want to be brief and make only one or two points. The Bill is a United Kingdom Bill, which includes Scotland. It has caused a great deal of alarm in Scotland, where conditions are quite different from those in England and Wales. In Scotland there is nothing which corresponds to the pernicious practices which appear to rule in England, including the taking of deposits by estate agents. We have no trouble about estate agents making contracts. Normally contracts in Scotland are made by offer and acceptance among solicitors, and the price is not paid until the date of entry to the premises.
Scottish estate agents welcome the Bill in principle, but have some doubt because of the possible non-representative character of the council. I congratulate my hon. Friend the Member for Northants, South (Mr. Arthur Jones), but I ask him to consider whether it will not be possible to include some sort of sub-council for Scotland. The law and practice, and the skill required in Scotland, are completely different from those in England and Wales, and some professional points may be quite different.
I accept the assurances of my hon. Friend that in his view certain members of the council would be appointed to represent Scottish interests, but that should be distinctly written into the Bill. I call my hon. Friend's attention to the 638 fact that there is no definition of the Secretary of State in the Schedule. I suggest that one member should be specifically appointed by the Secretary of State for Scotland and not by the Home Secretary. I am very disappointed that there is no Scottish Minister on the Front Bench. It is difficult to understand how Scottish Ministers could be so careless of Scottish interests in a Bill of this kind. No doubt the people of Scotland will take note of the fact.
§ Sir Eric Fletcher
The hon. Member will appreciate that the President of the Board of Trade has responsibilities for Scotland.
§ Mr. Hendry
That is true, but although the Bill provides that at least four members are to be appointed by the Secretary of State it does not specify which Secretary of State, and I suggest that at least one member should be specifically appointed by the Secretary of State for Scotland.
The other point which causes me a certain amount of trouble is the fact that the composition of the council definitely excludes local bodies. I ask my hon. Friend for an assurance that for this purpose Scotland shall not be regarded as local. Scotland is part of the United Kingdom, but stands on her own merits and must be treated as a separate country.
§ 3.39 p.m.
§ Mr. Oscar Murton (Poole)
It is my duty on behalf of my hon. Friend the Member for Northants, South (Mr. Arthur Jones) to thank the Minister for his kind assurance of Government support. The Minister made a number of very telling points. I know that it is the wish of my hon. Friend that he, as sponsor of the Bill, should take particular notice of the point that it is the Government's wish that the President of the Board of Trade and his Department should be the person and the body to exercise the necessary powers given under the Bill. As he says, this is because of the need for giving effective departmental control.
I should also like, on behalf of my hon. Friend, to give an assurance that, in the Committee stage, the question of the council's composition will be thoroughly investigated and that the necessity of increasing the number of independent members will be taken into account and agreed to. One hopes that 639 the Government will leave it to the Committee to decide the actual numbers in debate. However, I take his point that the present suggested proportion of 21 to 4 is probably unbalanced and that something like 18 or 19 to 7 would be better, as the Minister suggested.
The question of maximum charges was raised by a number of hon. Members. On this point, I believe that the council should take note of the warning which the Minister gave on behalf of the Government—that any suggestion of banding together with the idea of forming a monopoly might cause the reference of the matter to the Monopolies Commission. However, I am certain that the council—being a body of responsible people—will take this warning in good part. I am equally certain that, by proper conduct and practice, it is most unlikely that such a situation will arise.
My hon. Friend will note the Minister's observations on deposits. This is a very difficult problem—as I am sure the Minister will agree—and we hope that he will leave it to the Committee to consider the subject seriously in the light of what he has said.
I should like to comment on certain points raised during this most interesting debate. I am sorry that the hon. Member for Sheffield, Brightside (Mr. Winterbottom) is not present at the moment, but I should like to comment on his speech. He raised what is the vital point of public interest and, I suggest, the vital point of the whole Bill and the main point which has been brought out this afternoon—that the public interest must be protected. We give an assurance that the suggestion in this respect, which originated from the Consumer Council, will be looked at, as the Minister wished it to be.
Another question raised by the hon. Member for Brightside was the problem of deposits. There was, possibly, some confusion between hon. Members on this point. I speak with no interest at all. I am not a member of any of these professions: I am a layman, but I have had dealings with members of the estate agents' profession during my working life. The question of deposits has arisen in the past and it is, of course, the basis of all dealings in property.
640 A deposit is given by an intending purchaser as evidence of good faith, and I reiterate "good faith." It is needed as much by the agent as proof of good faith on the part of the client as by the client as proof of the good faith of the agent. Generally speaking, provided that a proper receipt for it is given the client has proof that the money has been handed to the agent.
The suggestion was made that estate agents have in many cases set up in practice without adequate training. Unhappily, as many hon. Gentlemen opposite have pointed out, many agents have in the past merely opened an office and started practising. The Bill will, after a given time, begin to correct this state of affairs and it will no longer be possible for someone who fancies himself as an estate agent merely to place a plate on his door or open a shop as an estate agent.
The hon. Member for Brightside queried the fairness of the rates of commission charged. We must remember that there must be a fair return for the work expended because much of it is abortive. Estate agents must work hard, and while in the past there has been a shortage of accommodation, and in some areas there still is, we hope that the time will come when there will be more accommodation than applicants for it, at which point estate agents will have to take off their coats and work in close competition because clients will not be queuing up for accommodation.
The hon. Member for Brightside also questioned the bond of insurance. Before any fund can be set up the council must be established and its members will have to put their hands in their pockets and produce the money to finance the fund. As an interim measure there must be a bond of security. The hon. Member also mentioned the question of municipal estate agencies and the London Co-operative Society. I believe the London Co-operative Society is the only one which might be involved in this way. It is obvious that there will have to be some form of special legislation or exclusion by amendment of Clause 4 to take care of that point.
§ Mr. W. T. Williams
This is the only opportunity I have had of putting this point. I wonder if for the sake of the 641 record the hon. Member would consider the possibility not of amending a later Clause but of amending Clause 18(2,b) to read "body incorporated under the Companies Acts" because the phrase "body corporate" is a loose and ambiguous term legally? This would release not only co-operative societies but all societies provided for under the Industrial and Provident Societies Act and not under the Companies Act. This is a point well worth consideration by the promoters when dealing with the Bill in Committee.
§ Mr. Murton
I bow before the knowledge of the hon. and learned Member. I am afraid I do not possess the requisite learning, but my hon. Friend the Member for Northants, South assures me that if we can we should be excused from getting into the legal technicalities.
§ Mr. Murton
We accept that.
My hon. Friend the Member for Cheadle (Mr. Shepherd) made a point about property dealing and the possibility of unscrupulous members of the profession cutting in on profits. He pressed that there should be a higher standard of professional conduct. The answer of my hon. Friend the Member for Northants, South is that people found guilty of malpractices would be struck off the register, as is the case with other professional bodies which have similar councils in existence.
The hon. Member for Morpeth (Mr. Owen) raised the question of business transfer specialists and he also mentioned the London Co-operative Society. We hope that assurances have already been given to meet those points. My hon. Friend the Member for Harrow, Central (Mr. Grant) raised a question of maximum charges, as did other hon. Members. I think we are able to give the assurance that a maximum charge as shown in the Bill will not be a precedent for a base below which charges will not fall. We have always to remember the constant and active spur of competition. As a body, estate agents are lively men who are not in the habit of sitting around in their offices. I am sure that the spur of competition will keep them very much on their toes.
The hon. Member for Romford Ledger) was concerned about the test 642 of competence and was worried in case the council should attempt to set too high a standard. It is always accepted that there must be a minimum standard, but my hon. Friend the Member for Northants, South has suggested that the hurdle over which agents must jump when entering the profession will be a low one. There must be a limited level of ability proved by practical work. He hopes that hon. Members will accept that this test of competence must reach a happy mein by being sufficiently high to exclude those who have a low level of education or intelligence but not too high to keep out a worthy hard working boy or girl who wishes to make this a lifelong profession.
§ Mr. Raphael Tuck (Watford)
The hon. Member has referred to this occupation as a profession. Does he accept that it is a profession and not a business or would he say, to borrow a phrase from Twenty Questions, that it was "Professional with commercial connections"?
§ Mr. Murton
The final comment is probably the best. It is termed a profession, but, as the Minister said, it has to come under the aegis of the Board of Trade, so I think it must be in many ways accepted that it is a commercial concern. One hopes that it will operate on the highest professional standards.
A very useful contribution was made by the hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman). He made a number of cogent points. He was worried about the two-year period of transition. I think it must be accepted that during that period there is a possibility that someone might enter the profession in an attempt to get in before the doors were closed. On the other hand, anyone attempting to enter it with anything but the best motives would have been frightened off by this Bill, which we hope will become law. Knowing that there will be stringent tests, he would take himself away to another place and find some other form of occupation. My hon. Friend agrees on the point about no contracts being entered into without a client having had an opportunity to seek competent legal advice. It is possible that something may be found to meet the difficulty of the Association of International Accountants. The hon. Member 643 for Glasgow, Govan (Mr. Rankin) recommended certain positive action which it is doubtful whether my hon. Friend would take because a Private Member's Bill cannot go outside the terms of the Companies Act in this respect. I think that it must be left on the basis that this matter should receive further consideration.
My hon. Friend the Member for Aberdeenshire, South (Mr. Hendry) has put the point for Scotland and it is hoped that hon. Members will not feel that Scotland has been forgotten in this Measure. Whatever means it is possible to find—whether by a separate sub-committee of the council or by amending the Bill—I give an assurance that the interests of Scotland will not be overlooked.
I think that it will be agreed that this has been a very constructive debate. It has been conducted on a high level and has been in all respects very useful. We hope that in due course the Bill will become law.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).