HL Deb 13 February 1979 vol 398 cc1216-34

8.25 p.m.


My Lords, I beg to move that this Bill be now read a second time. It is a very important Bill which will need our careful concentration and, I hope, support. I am sorry it has come on at so late an hour, but that is not my responsibility. Buying a house is the most important, the most costly and without doubt the most worrying personal transaction undertaken by ordinary people in the course of their lives. They have long felt a sense of grievance that Parliament seemingly should be unconcerned about their plight and should be remarkably reluctant to take action to protect them from the unscrupulous minority of estate agents with whom they must deal. This lack of protection and this sense of grievance has not gone unnoticed. During the last 90 years many attempts have been made to introduce an element of legislative control over the estate agency business and all its activities.

I will not detain the House by giving the full history of some remarkable attempts made by Private Members of all Parties to try to obtain a Bill. It started in 1808 with a Bill by a Mr. Duncan. There have been 13 Bills all told and this is the fourteenth—and, I may add, a Government Bill for the first time. It received a firm and detailed examination in another place, where it left with the good wishes of all sides and the hope that noble Lords would give it a speedy passage.

What are the grievances the ordinary person wants remedied? Here I have in mind the individual buying or selling his own home. Our own experience of buying and selling our own homes surely provides the answer to that question. The consumer wants to be satisfied that the moneys he entrusts to an estate agent will be secured against defalcation or loss from any other means. He wants absolute honesty and openness in all dealings between him and the estate agent, whether he is the vendor or the purchaser. His arguments are unassailable. He also expects the agent to have a reasonable knowledge and experience of estate agency work. It is right that the minority of agents—I emphasise "minority"—who besmirch the good name of the honourable majority and who abuse the faith placed in them by the trusting consumer should run the risk of prohibition from practice. That is the essence of the Bill.

The Bill is not an attempt to regulate the estate agency profession and all the activities which may be undertaken by those who call themselves "estate agents". Its aim is to protect the consumer in a limited area of activity, and to that end is concerned only to control those who act as middlemen in the buying and selling of residential property. In this area it aims to strengthen existing self-regulation by sanctions. No attempt has been made to extend the protection afforded by the Bill into the wholly industrial and commercial field. There is no evidence of a general demand for such an extension, and even if there were this Bill, with its limited aims, is not the appropriate legislative vehicle. The large company buying and selling in these particular areas of activity is well able to take specialist advice and can in consequence adequately protect its own interests.

The Bill also eschews any attempt at licensing or registration. The introduction of a licensing system would require additional and unnecessary bureaucratic control to eradicate the abuses of a minority and this is simply not desirable in order to achieve the measure of protection required by the general public. What is required is a means of ensuring that the man in the street is protected in his dealings with estate agents. This protection is achieved by the introduction of what I believe is the novel concept of negative licensing—permitting the estate agent to continue to engage in his profession until he is found unfit to practise.

The dealings of the vast majority of estate agents are above reproach. These agents already operate to high standards and deal fairly and openly with their clients. They have nothing to fear, and they will be free to continue to practise as they always have done, without restrictions. But it will be against the unscrupulous, the fraudulent, and the dishonest, as well as the discriminator, and the fly-by-night that the Bill will bite, as well it should, my Lords. Undesirable practices may be proscribed by regulations under the Bill. Those who are unable adequately to indemnify their clients for loss of moneys entrusted to them will simply not be permitted to take money, and clients' liabilities for any prospective charges for agents' services, and the agents' personal interest they may have in any transaction will have to be declared to the parties involved.

I think that it will now be of advantage to your Lordships if I sketch in the main provisions and features of the Bill. The Bill is a consumer protection measure. With a view to affording protection to users of their services, it imposes a degree of control over certain activities of estate agents; essentially the broking activity of bringing together in the course of business a buyer and seller of substantially residential property, with the aim of securing transfer of interest in that property. This is the controlled activity that Clauses 1 and 2 define and limit. Any person who carries out the defined activity is controlled—and not only those who call themselves estate agents.

The Bill concentrates on residential accommodation because it is the individual buying and selling his own home who most needs protection. It covers the single residence, as well as the mixed property with a substantial residential element. It excludes buildings which are essentially non-residential, even though they might have an incidental residential content. I suppose that the most obvious example is the large office block containing a flat to enable the caretaker properly to carry out his function. The small businessman who sinks his capital in a business is also given a fair measure of protection. Residential property has been so defined as to include a single transaction which might embrace a dwelling where a business is carried on and where the assets are sold for a capital sum, the property being let at a rack rent.

The Bill exempts solicitors from control. In Scotland the buying and selling of houses is frequently an integral part of the work of solicitors. Since solicitors are already subject by statute to strict and rigorous rules—certainly as strict and as rigorous as anything proposed in the Bill—practising solicitors engaged in the course of their profession have been excluded from the scope of the Bill. It would be nonsensical to have two similar, but different, systems of control applicable to the same person.

Clauses 3 to 8 embody the general control principle of the Bill, which is the concept of negative licensing: that anyone may practise estate agency work unless and until he proves himself to be unfit to do so. Subject to appeal and to a warning in some cases, the Director General of Fair Trading will be able to prohibit by order any person engaging in estate agency work, either wholly or in part, if he considers that person to be unfit to practise on clearly defined and specified grounds. These grounds include certain criminal convictions, findings of racial or sex discrimination in the course of estate agency work, and engaging in practices declared by order of my right honourable friend the Secretary of State to be undesirable.

Because a sanction which can result in the deprivation of a person's livelihood, or at least an important part of it, is a swingeing and powerful weapon, it must be used with discretion and only after due thought and careful consideration. The Bill therefore provides that before the Director General has formed a fully rounded judgment of an estate agent's fitness to practise, that agent will be afforded the right to make representations to him. And when the Director General has made a fitness order, or has refused to revoke or vary such an order, the agent will be able to appeal against the Director General's decision, first to the Secretary of State, and, secondly, to the courts on a point of law, from a decision by the Secretary of State.

It is important that any powerful sanction should not be more onerous than is needed to stop the mischief which renders the agent unfit. The Bill therefore permits the Director Genral in certain cases to issue an order banning an estate agent from carrying on estate agency work, either generally or in a particular area, which may be as wide as a country, or as small as a district, or of a particular description. Thus where, for instance, a rogue manager in a branch has committed discrimination in the course of estate agency work, the Director General will be able to ban the activities of that branch in relation to the given area, but not hamper the activities of branches in other areas.

The Director General's powers under the Bill do not duplicate those under the existing legislation on discrimination. As my honourable friend the Minister of State said in another place; as reported at column 51 of the Official Report, Standing Committee E, 28th November 1978: The Director General will not have any power to determine whether an estate agent has committed sex or race discrimination. It is not his judgment. That would be the judgment of a court or tribunal under the Race Relations Act and the Sex Discrimination Act. The judgment that he will have to make is this. Once there is a finding—it is not an offence; no criminality is involved in those two Acts—or a confirmed non-discrimination notice has been issued, he will have to determine for himself whether the discrimination was committed in the course of estate agency work. I think that that is a fairly easy judgment for him to make. Once the Director General is satisfied that there is that finding by another court or tribunal, and that it took place in the course of the man's work, he has to decide whether that justifies setting up an inquiry on whether the person is unfit to practise as an estate agent". The procedures proposed in the Bill place a clear duty on the Director General to exercise effective control by giving him the necessary flexibility to form a fully rounded judgment about the fitness of an estate agent to practise. At the same time they leave the practising agent in no doubt at all about what actions of his may cause the Director General to move against him. By these proposals justice will clearly be seen to be done to all estate agents without any dilution of the consumer protection element afforded by the Bill.

Clauses 9 to 11 enable the Director General to call for information to assist him in the discharge of his functions, and the usual restrictions and penalties apply to the unauthorised disclosure to third parties of information obtained by virtue of Clause 9. Provision is also made for the powers of entry and inspection to be given to duly authorised enforcement officers. The provisions are no more stringent than is necessary in the consumer interest while, at the same time, providing adequate protection for the estate agent by circumscribing the circumstances under which the enforcement officer can act.

Clauses 12 to 17 attempt to satisfy the needs and desires of consumers that any moneys they entrust to estate agents should be secured against defalcation or loss. Thus, unless some form of indemnity cover is obtained by an agent against his failure to account for those moneys, he will not be permitted to accept clients' money. Exceptions can be made however when either the Secretary of State or the Director General is satisfied that the protection afforded by the Bill will not be endangered. In order to ensure that the public has sufficient guidance to judge whether deposits can safely be placed with an agent, the Bill controls the circumstances and conditions in which a person can describe himself as an estate agent or indicate that he acts as a broker of residential property.

An estate agent will be required to maintain, and pay any clients' money he may receive into, a separate client account. The Secretary of State will be enabled to prescribe by regulation the manner in which the client account is operated, maintained, and audited. Thus the best practices of existing agents can be imposed on all agents, and so a valuable measure of protection will be afforded in an area where, over the years, evidence of abuse and malpractices has come to light.

Clauses 18 to 23 regulate various other aspects of estate agency work. Clause 18 provides for the disclosure to a client of full particulars and details of the circumstances in which he will become liable for charges and remuneration. Should it seem desirable, in the light of experience, to bring certain terms of contract more prominently to the attention of the client—for example, the exact circumstances in which sole agency arrangements terminate—provision is made for my right honourable friend the Secretary of State to require additional information by regulation. Clause 19 empowers the Secretary of State to prescribe by regulation a limit on pre-contract deposits taken in the course of estate agency work outside Scotland. Pre-contract deposits are not customary in Scotland; and Clause 20 prohibits the seeking or acceptance of such deposits by any person engaged in estate agency work in Scotland, whether or not the interest in residential property which is being acquired is situated in Scotland or elsewhere in the United Kingdom.

Clause 21 requires an estate agent to declare a personal interest of his or his associates in any residential property for which he is acting as an agent. It is not an uncommon source of complaint that a person ostensibly acts as an estate agent in the sale or purchase of a property in which he or his associates have a personal financial interest, the implication being that his position is used to buy cheaply and then to sell at a substantial profit. The consumer tends to think of estate agents as independent experts whose views on market values, et cetera, can be relied upon to be impartial. Provided both outside parties are aware of any interest the agent might have, they are free to go elsewhere or to take another opinion, and no harm is done.

Clause 22 will enable my right honourable friend the Secretary of State to make provision by regulation for ensuring that estate agents satisfy minimum standards of competence. Fears have been expressed that this provision will lead to a closed shop by excluding those who do not have technical and professional qualifications. I therefore repeat, "minimum standards of competence". Technical expertise and professional qualifications are not necessary to engage in the activity controlled by this Bill. To insist upon such standards would limit entry to the profession and restrict competition to the public disadvantage. In setting minimum standards, the Secretary of State must in any regulation he might make recognise practical experience, which alone will be taken as evidence of competence. He may, in addition, prescribe professional or academic qualifications as acceptable alternatives.

The clause is framed in such a way as to allow recognition of the professional qualifications of professional bodies, and for the introduction of much lesser academic or professional qualifications, and in fact gives recognition to the former bodies. He may also designate or constitute a body to examine and inquire into the competence of unattached persons engaged in estate agency work. The body's function would be to test and prescribe minimum qualifications which are to be taken as evidence of competence. The qualifications will not take account of expertise irrelevant to the broking activities covered by the Bill, and will be concerned, as my honourable friend the Minister of State said in another place: … with those who engage in estate agency work which, although requiring high standards, will not necessarily require the range of qualifications required for other purposes by the existing professional bodies. It will, of course, be necessary for my right honourable friend to appoint persons with the necessary knowledge to test the competence of those who do not wish to join the designated bodies, and to prescribe standards for them. I think I can assure the Committee that in order to get the body off to a good start it will be necessary for my right honourable friend to draw upon the knowledge and expertise of members of the existing bodies". That is, the existing estate agency bodies.

Clause 23 provides that undischarged bankrupts may not engage in estate agency work except as employees of another person. I do not think, my Lords, that anyone would disagree that it is undesirable that such persons should be in a position to receive money from the public which should be paid into a client account. These are the main proposals. There is, however, one remaining clause to which I wish to draw attention. Clause 35 amends the Scotland Act 1978 to take account of the devolution of matters covered by the Act, and reserves out of them matters relating to the fees paid or to be paid to the Director General of Fair Trading. This does not amend the constitution. All it does is to recognise the position, as do other Bills now going through Parliament, such as the Banking and the Nurses, Midwives and Health Visitors Bills.

My Lords, 90 years is a long time for some form of consumer legislation in this field to evolve. That may be absolutely amazing, but it is true. The Bill aims to protect the consumer in a limited area of the estate agent's activity, but that limited area is where the demand by the consumer for some measure of protection is the greatest, and it is the one area that, sooner or later, affects us all. It is an area where the consumer can easily be so palpably lacking in experience and patently vulnerable to the inadequacies and malpractices of certain agents. I do not pretend that the Bill is the complete answer to all the consumers' problems. As my honourable friend the Minister of State said in responding to certain matters raised in the Second Reading debate on this Bill in another place: The purchasers and vendors of houses will not be able to rest all their confidence and faith in a modest Estate Agents Bill. They will still need care and advice. They will need legal and other guidance about surveys and valuations. The Bill will not remove all the attendant risks of buying and selling a house. I do not wish to give the impression that it will. It lays down a number of minimum requirements that I think will improve the protection of house purchasers and vendors".—[Official Report, Commons, 16/11/78, col. 689.] It does, indeed, do that, my Lords, and for that reason I hope the Bill will be supported. Let us not forget that for 90 years many Private Members have been trying to enact such a Bill. The Government have now brought it forward, it is warmly supported in another place, and they ask your Lordships to speed its progress through this House. I therefore commend the Bill to the House, and beg to move that it be read a second time.

Moved, That the Bill be now read 2a.—(Lord Wallace of Coslany.)

8.47 p.m.


My Lords, the House will be grateful to the noble Lord, Lord Wallace of Coslany, for explaining this very important Bill. The noble Lord suggested to your Lordships that we should be speedy in our consideration of it. At this late hour I shall certainly attempt to comply with his suggestion, but I would at the same time sound a note of caution, because, although this Bill has been before another place on many occasions—as the noble Lord rightly said, this is the fourteenth Bill—it is a very difficult area in which to legislate, as has been proved in the past. My Lords, we welcome this Bill from this side of the House. I would heartily support the noble Lord, Lord Wallace of Coslany, when he said that it was—and I quote his words—"to strengthen through self-regulation and sanctions". I think that was the phrase he used. This builds upon the situation as we know it, in which the professions generally, through their own schemes of admission and through their own Royal Charters in certain particular cases, have endeared themselves to the public over a very long period. The principal agencies in this profession—that is, the National Association of Estate Agents, the Royal Institute of Chartered Surveyors and the Incorporated Society of Valuers and Auctioneers—all warmly support this Bill, although in detail they seek to bring forward certain Amendments to it.

I think the Government have passed through a metamorphosis in the last two or three years in regard to this Bill, which proves what a difficult subject it is, because in their Green Paper of 1976 they proposed a system of positive licensing. After careful consideration of the consumer credit aspects, they have revised their views and have brought this Bill forward, which is now very much more acceptable. Of course, it builds upon the Private Member's Bill which was before another place last Session, and is almost identical in terms to it, but there are three principal changes. The first is that local authorities, housing associations and housing corporations are brought within the Bill; the second is that the activities of receivers in fiduciary awards are excluded; and the third is that the definition of "indirect personal interest" is further confirmed.

Long reference has been made by the noble Lord to the number of attempts. We have, of course, a very different situation in 1979 because the structure of arrangements for consumer protection is very much better than it has been over a long period—and for these reasons: that self-regulating arrangements have been made within the professions; that the Government seek to introduce a new feature, the Director General of Fair Trading into affairs, and, further, that they seek to clarify certain provisions. I was interested to hear that the noble Lord's right honourable friend the Minister for Consumer Affairs, Mr. John Fraser, in Standing Committee E on 28th November (and I am quoting from column 31) said: We attempted to find a precise definition of what was residential property and what was not, but we found it impossible to achieve any worthwhile result". This problem occurs in the very first sentence of Clause 1 of the Bill and carries over into Clause 2. The Minister believes that he has discovered a satisfactory definition. But we shall intend—and I make mention of this now—to probe a little further into this problem, because on my first reading of the Bill it was not clear to me (and I am sure it was not clear to many other people) that those very important words which occur in Clause 2 are sufficient to cover properties other than purely residential ones. The noble Lord's right honourable friend went on to say: I have said that the definition in the Bill includes the mixed heraditament: the newsagents' shop in Harrow with the flat above it or the garage with the adjoining house. So far we have the virtual unanimity of consumers and professions that those are areas that need to be covered". This is a very difficult point. I make special mention of it at this early stage because I believe that we ought to examine this with the greatest care as we proceed through the Committee stage.

The further matter that we shall be considering is the matter raised under Clause 7. The noble Lord referred to the question of appeals from the Director General's ruling to the Secretary of State and, further, to the High Court, the Court of Session or Judge of the High Court in Northern Ireland. This is an area to which we shall certainly be addressing ourselves because we believe that the appellate procedure should be spelled out very much more clearly in the Bill and not be permitted to form part of regulations.

I come now to Clause 11—a matter of considerable public interest. That is the question of the powers of entry. There are precedents here and, if I may, I will quote five of them which I believe to be in some way cognate, if not identical. Powers of entry were conferred in the Weights and Measures Act 1963, in the Criminal Law Act 1967, in the Finance Act 1972, in the Counter-Inflation Act 1973 and in the Consumer Credit Act of the same year. All these separate Acts give powers of entry, some of them without a warrant; and there is a parallel situation under this Bill. We attach very great importance to this particular clause and we believe that it should be possible for the Director General of Fair Trading, when he has considered a case, duly to instruct his authorised officer to obtain a warrant from a magistrate before making forcible entry to premises. It may be that there are special circumstances here; but for a situation of this type we believe that the greatest care should be taken before permitting this clause as it stands at the moment to pass from your Lordships' House.

I turn to Clause 16, the indemnity cover. The question of bonding aroused considerable interest in another place and we believe that the existing arrangements as practised by the joint indemnity scheme in a number of professional bodies is the most satisfactory. If it is the Government's intention under Clause 16 that indemnity cover should recognise (as we believe it does) the joint scheme that is, to a fair measure, satisfactory. But we believe that there are amendments which can be adduced to this situation. I promised that I would address myself briefly on Second Reading. I could go on considerably further, but there is more business to be covered this evening and I will content myself by advising the House that we shall have a number of Amendments to bring forward at Committee stage.

8.58 p.m.


My Lords, this Bill has support from the Conservative Benches and from these Benches and we suppose—we can only suppose—that it has support also from the Labour Benches opposite. I want to confine my observations to one clause only, Clause 11, the enforcement provisions. This is, first, because it will shorten my speech at this rather late hour; secondly, because, to use the words of the noble Lord, Lord Sandys, this clause has aroused much public interest; and, thirdly, because it is a model clause. If I may, I will add to the list of existing statutes the Trade Descriptions Act 1968 and the Consumer Safety Act 1978. Here we have a list of statutes, all containing almost identical enforcement provisions to those in Clause 11 of this Bill; and, presumably, we shall go on having consumer protection measures incorporating this standard clause.

If the clause contains a defect—as I hope to be able to explain that it does—then I think this matter becomes more than just a Committee point because it affects so much besides the provisions of this particular Bill. I should like to contrast subsection (l)(a) with subsection (1)(b). Paragraph (b) which describes the enforcement officers' right to examine documents begins with the words: if he has reasonable cause to suspect that an offence has been committed under this Act …". But paragraph (a), above it, which describes the officer's power of entry, is not qualified by any reference to his having cause for suspicion. It appears, therefore, that the officer has power to enter purely at random to make inspections without acting on suspicion. Of course, when last summer we were discussing consumer safety and the safety of goods, undoubtedly it made sense to say that an officer at random could go into a warehouse and examine, if not the goods themselves, at least what was written on the containers describing the goods inside: the model numbers, countries of origin and so on. But of course estate agents do not keep their goods on the premises. I suggest to your Lordships that one does not get very far, having got into an estate agent's premises, unless one can inspect the documents. The officer can only inspect the documents if he is acting on some suspicion.

The Minister in the Standing Committee in another place gave an example. This was the power of the officer to inspect to see whether the required certificate of competence to practise was being displayed. Of course "being displayed" means being displayed where the clients can see it, and the clients are members of the public. The enforcement officer is a member of the public and he does not need an Act of Parliament to tell him that he can go into an estate agent's premises to see, just like everybody else, whether a certificate is hanging on the wall.

Then the Minister quoted the case of a premises where the estate agent had written up over the door: "No trading standards officers allowed in here". The implication seemed to be that, notwithstanding that, subsection (l)(a) gave him power to go past that notice into those premises. But unfortunately that simply is not the case because refusal of entry is dealt with specifically in the clause. It is subsection (4). It says that the officer can go to the magistrate for a warrant. If the magistrate is satisfied that entry to the premises has been refused, he can grant a warrant, but only if he, the magistrate, is satisfied that there is reasonable ground to believe that an offence either has been, is being or is about to be committed. So, of course, the officer's case falls flat if he starts out on a random expedition, is refused entry and then goes to the magistrates because the magistrate has to say to him: "Unless you can show me that you have reasonable cause for suspicion, I cannot give you a warrant."

The Minister in Standing Committee explained his policy with regard to this quite shortly and simply. I should like to quote this. It is at col. 90 of the report of the Standing Committee proceedings: … the trading standards officer or the enforcement officer can exercise these powers only if he has reasonable cause to suspect that an offence has been committed. If he goes merely on a fishing expedition or inspects merely as an arbitrary act, then he is himself breaking the law and is liable to action by the person whose premises are being inspected or whose books are being taken away". In the face of that, one may well ask: How does Clause 11(1)(a) come before us with no mention of suspicion in the mind of the officer? I regret to say it is because it is a model clause. It has been introduced in other Bills in the past designed for other purposes. Without real care being given to the question whether it is necessary here, it is simply put in the Bill and, I suppose, it is said: "Well, if objection is taken to it, at least we can say that there are precedents for it". I do not think that is good enough.

Subsections (1) and (4) just simply do not fit together. What we must do is make a policy decision. By all means let us adopt the Minister's declared policy and insert the words "reasonable cause for suspicion" at the beginning of paragraph (a). That is much the most satisfactory solution. A possible alternative solution is to amend subsection (4) so that the magistrate's hand is freed and he may grant a warrant even without his having to be satisfied that there are reasonable grounds for suspicion. I do not think that is the best way of doing it. What is quite wrong is to leave the matter as it is with subsections (1) and (4) which simply do not fit together. My Lords, that is quite long enough to speak at Second Reading on a rather detailed matter. We must come back to this in Committee, and I hope that we shall be able to resolve this matter.

9.6 p.m.


My Lords, this Bill, after 90 years, is being rather hurried through Parliament to fill in time, I feel. It is remarkable that we have had no less than eight Second Readings in two days—certainly a big deal for small Bills. I feel that there has been inadequate consultation with some of the professional bodies and therefore that as it stands at the moment the Bill will fail in much of its intention.

The Bill requires that those estate agents who accept deposits should be bonded in respect of those deposit moneys. As the public becomes aware of the bonding situation, most will assume that all agents are bonded. They will put greater trust in all agents, regardless, and will be led into a sense of false security. This will not stop the dishonest or financially harassed non-bonded agents from accepting moneys, even though they have no right to do so. The Director of Fair Trading can only intervene after an agent has defaulted. It will be little comfort to the depositors who will be denied protection where it is most needed owing to their false sense of security. The respectability of the whole profession will then be lowered by these "cowboy" agents, to whom the Bill will have given a gloss of respectability. Surely, to avoid this, all agents should be bonded, so that there is no place at all for the cowboys. If they cannot get bonding, then they will not be able to operate, and they ought not to be operating anyway.

Further, surely there is no justification for covering only deposits. Should not the whole sum be covered, because that is much more important than the deposit itself? There is also another abuse involving deposits in connection with properties for rental. Often, this takes place in connection with rented property, very often at the upper end of the market, where perhaps 10 weeks' rent is demanded in advance as a deposit. At the end of the tenancy, the depositor is often prevented from getting back his deposit by reason of so-called "dipalidations," which may or may not be genuine. I think that tenants' protection in this sphere could well be covered in this Bill.

Clause 22 deals with standards of competence. Certainly, it is necessary that there should be minimum standards of competence because, after all, bad advice given by an incompetent agent can bring far greater loss to a house buyer or seller than the loss of a deposit—for example, by a gross under or over-estimate of the selling price. That can happen either through lack of experience or indeed as a result of malpractice. Surely, the remedy is to require that the Secretary of State should define minimum standards within the prescribed period of two years. The standards of the profession are, of course, already very high, and there is no attempt on the part of the profession to suggest that there should be a closed shop; but non-members of the profession conforming to Government standards of competence should surely be required to have standards which are least equal to those required by the professional bodies, with their years of expertise and experience. I see why the Bill should not apply to solicitors, but it should apply to estate agents, it should surely cover surveyors, valuers and others who are dealing in moneys, because they can do equal damage to house buyers.

There is too much dependence upon regulations. The Minister said that he would show these regulations at the Standing Committee, but I think I am right in saying that he then apologised and admitted that there were no draft regulations at all. That is a strange state of affairs. It also came out that there was an official intention to improve the Act after it came into use—but how much better it would be to get it right now. As drafted, there is certainly inadequate support for this Bill among the professions; nor will it serve the public. But it would gain that support if it were adequately amended and if the oppressive features were removed. Generally, any form of legislation which is designed to protect depositors and standards of competence will be greatly favoured by the profession. At the moment, as the Bill is drafted, the public would be better served without it than with it, am sure the Government mean well, as they so often do, but they have got it wrong and there will have to be a great number of Amendments.

9.12 p.m.


My Lords, I would thank all the noble Lords who have taken part in this debate. I shall be brief now because of the late hour and because there is further Business to follow. The noble Lord, Lord Gisborough, has rather underestimated the support for this Bill in another place. There was considerable Committee consideration, and indeed people representing various sides of the House made the plea that, although the Bill could perhaps have been stronger and covered a wider field, it was an important Bill, and they hoped that your Lordships' House would accept it.

I thank the noble Lord, Lord Sandys, for having given me notice of his points in advance, and I have duly noted them. We shall have a very interesting Committee stage. Powers of entry have inevitably been arranged. As soon as I saw the name of the noble Lord, Lord Airedale, on the list of speakers, I thought, "Good gracious me! we are going to get powers of entry". I was not mistaken and, of course, the noble Lord has been joined by the noble Lord, Lord Sandys. I think it would be as well for me to make just a few comments on this vexed question, which indeed vexes the noble Lord—I almost called him "Lord Hampden", because he was referred to as "the poor man's Hampden" somewhere else!

Looking first at consumer interests, the right to enter and look around is necessary to give the enforcement officer a defence against the possible charge of trespass. He needs the protection if he is to be assured of being in a position to ascertain whether, for instance, a person subject to a total banning order is not carrying out estate agency work as defined in the Bill, or to observe whether a person who does not display a certificate of insurance is, or is not, taking deposits. It is equally important that, where complaints are received that pre-contract deposits have not been returned on demand to the would-be purchaser, the officer should be able without delay both to examine the books and, if there appears to have been a fraud, to seize and detain the books as evidence. Delay could provide the rogue with a chance for a quick getaway, and I am sure that the noble Lord would not like to encourage that.

From the agents' viewpoint, there are a number of safeguards, because the circumstances in which the enforcement officer can act without laying himself open to civil action are circumscribed. Entry is permitted to business premises, or, for instance, in the case of a flat above an estate agent's office, only where the estate agent occupies both and might take his books into the flat. The enforcement officer cannot require the production of books and documents, unless he has reasonable cause to suspect an offence. He cannot seize and detain them without reason to believe that they will be needed in evidence, and he cannot require the breaking open, or himself break open, a container unless it is reasonably necessary.

The requirement that an officer must have "reasonable cause to believe" has been interpreted by the courts as a protection for the alleged suspect and the officer breaks the law if he acts arbitrarily. The estate agent who believes that there is no cause for the officer's action can refuse his request to inspect and take copies of books and documents, or to break open a container. The officer would then need a warrant to go ahead. The agent is further protected by the fact that the Secretary of State has power by regulation to require that enforcement officers can be authorised under the Bill by the Director; that Director can constrain any misuse of powers by any individual officer, and limit the number to carry out the duty.

I think that we should leave the question of bonding until the Committee stage, because there is obviously an Amendment looming up. As regards professional bodies and standards of competence, I think that I should be best serving the House by quoting an assurance given by the Minister of State in Committee in another place. He said: I give the Committee the assurance that the existing professional bodies with their own stringent examination systems, will be designated under Clause 22(2)(d) to set the standards of competence for their own members, so that those arrangements continue largely undisturbed. The body under Clause 22(2)(c) will not be concerned with those who engage in estate agency work which, although requiring high standards, will not necessarily require the range of qualifications required for other purposes by existing professional bodies. It will, of course, be necessary for my right honourable friend to appoint persons with the necessary knowledge to test the competence of those who do not wish to join the designated bodies and to prescribe standards for them. I assure the Committee that, in order to get the body off to a good start, it will be necessary for my right honourable friend to draw upon the knowledge and expertise of members of the existing bodies in providing for a further designated body to provide an alternative to the arrangements which are institutionalised by the existing professional bodies".—[Official Report, Commons, 5/12/78.] On the question of bonding, the terrible term "closed shop" arose, and it is the view that if certain requirements are met from some of the professional bodies we shall be creating a closed shop. Considering the warnings that have issued from Opposition Benches on this issue, I shudder at the prospect. Apart from that, I look forward to a very interesting Committee stage and I thank noble Lords for giving me advance information, which I hope will enable me to provide adequate and satisfactory answers.

On Question, Bill read 2a, and committed to a Committee of the Whole House.