ESTATE AGENTS (Hansard, 16 October 1968)

§ Mr. John Fraser (Norwood)
I beg to move, That leave be given to bring in a Bill to amend the law relating to estate agents; to make provision for the Estate Agents Council and to confer certain powers thereon; to provide for the bonding of estate agents; and for the safeguarding of clients' money and deposits; and for purposes connected therewith. The purpose of my proposed Bill is to deal with a situation and a state of the law in which a small minority of unscrupulous sharks can work heartless and monstrous frauds upon innocent home seekers—a situation which the House should not tolerate any longer than is necessary, even more so because the House has been debating this issue for the last 54 years.
As the law stands anybody, no matter what may be his lack of qualifications, can set up business as an estate agent and can receive deposits from the public—

§ Mr. Speaker
Order. It is difficult for an hon. Member to speak against the background of conversation.

§ Mr. Fraser
He can receive deposits from the public on house sales and similar transactions and there can pass on to a totally unqualified person the precious savings of people seeking to buy a house.
There appears to be nothing in the law as it stands to prevent a man devoid of qualifications, training, experience or integrity, or even a man who has been convicted of crimes of dishonesty, from describing himself not only as an estate agent but as a business transfer specialist, a valuer, a surveyor, a management expert and by other titles for which his antecedents provide no justification. There is nothing in the law which protects the public which does business with an estate agent which requires that agent to keep reasonable accounts or any earnest of his honesty or which requires him to observe any code of conduct.
Because of this situation, defalcations have taken place. It would be wrong to go into any detail on this point but it is within my personal knowledge that in London, during the last few years, there have been at least three major 395 scandals involving the losses of deposits up to £20,000 in each case. Not only has there been a loss of deposits; there have been other results. Unfair profits have been gained by agents where they have had business interests in property; people have been asked to sign binding contracts without first obtaining advice, and there has been incompetence in the handling of accounts—and incompetence and muddle often lead to misappropriation.
This state of affairs is fair neither to the public nor to the vast majority of estate agents who, I emphasise, are fair, reputable and well qualified. Therefore, in the interests of the public and of the reputation of the estate agents profession, I am asking leave to introduce the Bill.
The Bill would provide certain minimum safeguards. First, it will contain proposals to define an estate agent and to ensure that no agent carries on business with the public at large unless he holds certain minimum qualifications and is registered with a central body which can recognise him as being competent and having the right antecedents. I suggest that that body should be the Estate Agents Council as at present constituted.
The second purpose of the Bill would be to establish, by Statute, the authority of the Council and to give it power to lay down standards of competence for estate agents, as well as a code of behaviour; to approve or set examinations for them; to call for honesty bonds for estate agents; and to carry on with statutory authority many functions which are now voluntarily undertaken by it.
In addition to these powers the Bill would provide the Council with powers to make rules, and also with powers of inspection, inquiry, enforcement, and discipline, similar to those powers which are at present possessed by Statute by such bodies as the Law Society. The Council was founded with the expectation that legislation would be forthcoming, and it is ready to perform these functions. It has the support of most professional bodies—10 in all—ranging from the Royal Institution of Chartered Surveyors and the Valuers Institution to the National Association of Estate Agents Limited, and many others.
396 At present, it has the function of looking at the affairs of estate agents, providing training facilities, setting up a disciplinary committee, and powers at present which it would seem to have reinforced by statute, to provide a compensation fund for those members of the public who might suffer from the dishonesty or incompetence of an estate agent. The Bill will further contain provisions to give the public the same degree of protection when they deposit money with an agent as they at present enjoy when depositing money with a solicitor or stockbroker. This would be by means of providing for honesty bonds to indemnify the public against any losses.
Already the Council has issued over 2,000 such bonds. It is important to protect people depositing money if there is a possibility that they will lose it, because if they lose their money they are robbed not only of cash but often of any hope they may have of obtaining the house which they badly need.
Finally, the Bill will contain provisions making it obligatory for estate agents to maintain a separate client's account in which the client's money must be placed. Already the vast majority of estate agents, like other professional men, maintain separate clients' accounts, but in my submission this should be made a statutory obligation, to be supervised by a professional body, which I suggest should be the Council. Previous attempts at legislation in this House which have been many since 1914, in most cases have not been passed by the end of the Session, but have, nevertheless, been supported by the overwhelming majority of Members.
That fact, the fact that reputable estate agents have already pointed out the need for legislation, and the self-evident anxiety of the public to protect themselves against a minority of unscrupulous persons, indicate that leave should be given to introduce a Bill of this nature.