HC Deb 30 January 1979 vol 961 cc1385-93
Mr. John Fraser

I beg to move amendment No. 8, in page 18, leave out lines 39 to 46 and insert— '(f) prescribe any matter required to be prescribed for the purposes of subsection (2A) below. (2A) No person who carries on estate agency work may describe himself as an "estate agent" or so use any name or in any way hold himself out as to indicate or reasonably be understood to indicate that he is carrying on a business in the course of which he is prepared to act as a broker in the acquisition or disposal of interests in residential property unless, in such manner as may be prescribed,—

  1. (a) there is displayed at his place of business, and
  2. (b) there is included in any relevant document issued or displayed in connection with his business,
any prescribed information relating to arrangements authorised for the purposes of this section.'

Mr. Deputy Speaker (Mr. Oscar Murton)

With this we may take Government amendments Nos. 9, 10 and 11.

10.45 p.m.

Mr. Fraser

These amendments appear more frightening than they are. Both the professions and the Members of the Committee were concerned about the case of an agent who did not take deposits and who therefore had no insurance arrangements and no bonding arrangements. They felt that it might be difficult for the public to distinguish between those agents who did not take them and had no insurance arrangements and those who did. Some of the arguments put by members of the profession to the effect that there should be universal bonding were motivated by the worry that members of the public would not be able to distinguish between one and the other.

Originally we provided some protection, namely, that the agent would have to exhibit the certificate of insurance, or details of the bonding arrangement inside his office. I considered the comments made in Committee and felt that one of the best ways of dealing with this would be to ensure that the agent, on his notepaper or on the particulars of property, communicated to the public whether he was a bonded agent. When those statements were made or not made, the trading standards officer, his competitors, or his bankers and solicitors could check whether he had these arrangements.

This public statement of cover or no cover, coupled with the other powers we have for the display of certificates, will enable the public to distinguish. It will be an added protection, and I hope that the amendment will be welcomed.

Mr. Neubert

We look on this amendment with considerable interest because the Minister is quite correct in saying that there was anxiety in the Committee and outside the House about whether the public are likely to be sufficiently protected, and whether they will be able to know which agents are covered.

The Minister has suggested that the claim will be made that a man or woman is a bonded estate agent. I am more of the opinion that the clause defines the use of the term "estate agent". Is it a correct reading to say that only those who are bonded and provide this protection will be able to use the term "estate agent"? If so, what is accomplished here in one clause is what took a whole Bill to accomplish in the case of insurance brokers. I would welcome the Minister's economy and ingenuity in achieving that in such a small amendment. Certainly it has a lot to commend it. The profession itself must make known to the public where their best interest lies. It must lie with people of qualification, and if the amendment achieves that end it is to be welcomed.

To go on from stating the importance of insurance cover for clients' money as provided under clause 16 is to raise again the question why in clause 17 there should be exemptions from this all-important insurance cover. This, too, has caused anxiety. In what circumstances will it be considered appropriate that there should be exemptions granted from what would seem to be a vital element of protection in the Bill?

Mr. Fraser

The amendment does not go as far as the hon. Member thinks. It provides that someone who carries on estate agency work may not describe himself as an estate agent unless he displays certain prescribed information. It is really only a form of words to link the prescribed information to estate agency business. It does not go so far as to do what another Act of Parliament did for another profession.

The hon. Member for Romford (Mr. Neubert) asks about the exemptions in clause 17. In Committee I drew an analogy with third party insurance under the Road Traffic Acts. It may be that a bank, an insurance company or a building society incidentally carries on some estate agency business. But it may be that its deposit or financial reputation is so outstanding or so great as to make it unnecessary to require the deposit of a bond. I emphasise that the powers of exemption would be exercised sparingly in a commonsense fashion.

There is one further matter which I think I should draw to the attention of estate agents, even under the present law. It has come to our attention that many agents are not putting the names of all the partners on their notepaper. The law already requires them to do so under section 18 of the Registration of Business Names Act 1916. I understand that the Registrar of Business Names recently wrote to the main professional bodies reminding them of the obligation. The giving of names is a small but significant protection for the public in that they then know with whom they are dealing. This might be a convenient place to put on record the Government's feelings on the matter, even under the existing law.

Mr. Bendall

May I have one point about exemptions clarified? As I understand it, if the estate agents do not, take deposits they need not be bonded. Does that mean that if they are not bonded and do not take deposits they may not use the words "estate agent"?

Mr. Fraser

No. The amendment does not have that effect. It simply requires the prescribed information if somebody is an estate agent. That is putting it briefly but properly.

Amendment agreed to.

Amendments made: No. 9, in page 19, line 1, leave out '(2)(f) above' and insert '(2A) above,—(a)'

No. 10, in page 19, line 3, at end insert 'and (b) "relevant document" means any advertisement, notice or other written material which might reasonably induce any person to use the services of another in connection with the acquisition or disposal of an interest in residential property.'.

No. 11, in page 19, line 5, after '(1)', insert 'or subsection (2A)'.—[Mr. John Fraser.]

10.53 p.m.

Mr. John Fraser

I beg to move, That the Bill be now read the Third Time.

I move the Third Reading with some pride and pleasure. For 90 years hon. Members on both sides of the House have tried to obtain a Third Reading for legislation of this nature. I am pleased that even at this late hour we are able to do it on this occasion.

I am sure that the Bill is welcomed on both sides of the House, and especially by those who buy houses, for some of whom it is the most important transaction in their lives.

I conclude by thanking members of the Committee for the helpful and constructive way in which they assisted with the passage of the Bill. I particularly thank my now silenced lion. Friend the Member for Enfield, North (Mr. Davies), without whom, as they say, this would not have been possible.

10.54 p.m.

Mr. Neubert

Perhaps I may take a little longer further to echo the tribute paid to the silenced hon. Member for Enfield, North (Mr. Davies), whose original Private Member's measure formed the basis for this Government Bill. In some small respects it is a better Bill than when we discussed it on Second Reading, following the amendments made in Committee and tonight.

In addition, assurances were given on a number of points of anxiety to members of the profession—that they would be consulted on the definition of "undesirable practices" in clause 3; that an estate agent would have a chance to put his case to the Director General of Fair Trading before a decision was made affecting his livelihood; that the appeals panel should almost certainly include those with experience of estate agency work—the Minister undertook to consult along those lines—and that the professional institute would also be consulted when it came to laying down minimum standards of competence. That is a very important feature of this Bill, of which we have had very little indication in our discussions so far. We await regulations.

Finally, the profession was anxious that there should be some provision that those practising now, not being otherwise undesirable in their activities, would not be excluded by the provisions of this Bill.

The Bill still does not go as far as some, notably the professional institutions, would wish. For example, they would want solicitors to be excluded. However, it is a valid argument to say that solicitors are already regulated by conditions which are at least as stringent as those imposed by this Bill on estate agents. It has not been extended to commercial property. In our view, there is no ground for that as large business organisations are well able to look after themselves. At least two-thirds of them professed themselves satisfied with the service of their estate agent and only a very small fraction found their estate agent's service to be poor. In those circumstances, there hardly seems any reason at all for widening the scope of the Bill to that extent. For the same reason it is not extended to all estate agents.

It never ceases to astonish me that the institutions are so enthusiastic to put their professional necks in the statutory noose. I can understand that after 90 years they may wish to make the most of this legislative opportunity, but I remind them and others that a similar Bill has already foundered once as a Private Member's measure last Session. With the Government rapidly approaching the precipice of an unavoidable general election, it could well stand a chance of lapsing a second time. Any attempt to expand the Bill's scope and/or to increase its cost at this stage might well prejudice its passage through Parliament. Friends of the Bill, whether members of the profession or prospective home buyers, would be well advised to settle for the measure as it stands.

The Bill strikes a sensible balance by its deterrent powers. It avoids the twin excesses of over-regulation and overprotection. It concentrates on the worst abuses to which the house buyer is vulnerable, offering a substantial degree of protection in what remains for most people the single most important transaction in their lives. They will still have to keep their wits about them, but that is as it should be.

At the same time, the Bill will undoubtedly enhance standards in the estate agency profession. It is for the profession to publicise much more widely the advantage of dealing with estate agents of proven competence and integrity. It is far better to have this self-regulation, strengthened by sanctions, than to hanker after a costly bureaucratic Government licensing system which would confer the State seal of approval on every practising estate agent. The Bill, however, will not preclude entry to the profession except by reference to minimum standards of competence and practical experience. It will not stifle innovation or enterprise. On the other hand, it will not totally prevent the activities of fly-by-nights and other unscrupulous operators. But that is the price we pay for freedom. It is a price well worth paying.

We commend the Bill and wish it well on its way to another place. We shall hope to see it return here in as short a time as possible.

10.57 p.m.

Mr. Moate

I wish on Third Reading simply to register one or two of the points that we expanded at far greater length when we considered a similar Private Member's Bill in the last Session of Parliament.

I welcome many of the provisions of the Bill as a consumer protection measure. It is very helpful and desirable to have on the statute be[...] measures which protect the public against those who might misuse public money. To that extent there is a great tradition of protection of the public, dating from the moneylenders' Acts of bygone times, and it is quite right and proper that there should be protection for depositors' money. In that sense, I very much welcome the Bill.

I also welcome the provisions in the Bill which require bonding for clients' money and separate bank accounts for depositors' money. In that respect, I welcome the measure and think it could help to curb some of the unfortunate practices which have received publicity over the years.

The clause I do not like in the Bill is the one which is, I feel, a bad omen for the future, clause 22, which gives the Secretary of State power to designate some body which can prescribe minimum standards of competence. That is where I fear that the closed shop will start to creep in.

I agree with my hon. Friend the Member for Romford (Mr. Neubert), who expressed some surprise at the enthusiasm of organisations which seem so keen to put their heads into the statutory noose. It never ceases to surprise me that organisations and individuals outside, who are the first to complain about the excesses of bureaucracy, and who complain about interfering legislation, are the first to suggest more legislation and more rules and regulations with which they will have to comply. I do not blame the Minister of State for this at all. The philosophy that he has pursued in this legislation has been much better than that pursued in other similar legislation—for example, the Insurance Brokers (Registration) Act. He has avoided the business of registration or licensing, but the seeds of the licensing and registration system are contained in clause 2. A future Government will have to implement that clause.

I hope that the professional bodies will not be able to exert pressure on the Government of the day to enforce what, in effect, would be a closed shop, to keep out innovation and to prevent—

Mr. John Fraser

There was a time last year when I used to think that the worst five-letter word in the English language was the name of the hon. Member for Faversham (Mr. Moate). I think that he recognises that I took account of the points that he made when last we debated the Bill and changed clause 22 to give myself the power to prescribe a degree of practical experience. The hon. Gentleman was worried about academic qualifications. I took his point on board and the Bill was altered in that respect. I hope that he will give some credit for the alteration that was made because of his genuine concern which I then recognised.

Mr. Moate

I am grateful to the Minister for his comments. Perhaps he would also acknowledge that when we engaged in extensive debate on the last occasion it was not out of a desire to hold up other legislation but because of a reluctance to see on the statute book more interfering legislation. My opinion of the Minister went up on that occasion, because he was attempting to avoid some of the pitfalls that others had not avoided. The simple inclusion of "practical experience" is not a complete safeguard, because that can be built into regulations and become a barrier to the innovator and newcomer wanting to set up in estate agency.

I conclude by registering my support for the consumer protection element in the Bill as it is today. To go back to the previous occasion, I expected that Private Member's Bill to succeed towards the end when I thought that we had reached a degree of understanding about these matters. The consumer protection provisions are good, and I welcome them. I read with some trepidation clause 22 and the possible threat of a closed shop on estate agency. I hope that my fears will prove unjustified. I hope that the Bill will do what it sets out to do—protect the public—and will not in any way diminish the competition that in the end is very much in the public interest.

11.3 p.m.

Mr. Stephen Ross

I am drawn to my feet by the few words that we heard from the hon. Member for Faversham (Mr. Moate). I am grateful that they were a few words. I thought that we might be here for another half an hour.

I welcome the Bill and the fact that it has reached this stage. I hope that it will pass rapidly through the other place so that we get it on to the statute book this time.

The response to the hon. Member for Faversham is that it is only fair to say to people who have practised or earned their living from estate agency over the last 10 years, particularly the more responsible bodies—including my own, the Royal Institution of Chartered Surveyors—that what has taken place is amazing. The attitude towards competition and presentation has changed beyond all belief. If 10 or 15 years ago I had put out the kind of advertisements which we see today—I welcome the way in which properties are properly presented and the competition which takes place over fees—I should have been hounded out of the institution. These innovations are all to the good. But we should give the profession some credit for the change in attitude which has taken place. I hope that it will continue.

I believe that the Bill is worth having. I think that it could have gone a little further, but I understand the restrictions which do not make it possible.

I add my congratulations to the hon. Member for Enfield, North (Mr. Davies), who started out on this path, and to the Minister, who seems to be able to come to the Dispatch Box without notes and deliver a speech, for which I admire him enormously.

11.5 p.m.

Mr. Bendall

I wish to add my good wishes to the Bill. It is a better Bill than when it started, and I congratulate the hon. Member for Enfield, North (Mr. Davies) who introduced it. The amendments which have been made have improved the Bill to a great extent. It will cover an area of protection that is needed by the public.

I am only sad that the Bill did not go a little further and deal with the rented sector. Sooner or later we shall have to deal with the question of accommodation bureaux, because there are problems in that regard. I wish the Bill well.

Question put and agreed to.

Bill accordingly read the Third time and passed.