HL Deb 19 March 1979 vol 399 cc870-940

3.3 p.m.


My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, that the House do now again resolve itself into Committee.—(Lord Wallace of Coslany.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 11 [Powers of entry and inspection]:

Lord AIREDALE moved Amendment No. 37:

Page 12, line 20, leave out from beginning to ("enter") in line 21, and insert— ("(a) if he has reasonable cause to suspect that an offence has been committed under this Act, in order to ascertain whether it has been committed").

The noble Lord said: I should first mention that this Amendment and the next Amendment are intended to be alternatives, so that if this Amendment is carried I should not feel it necessary to move Amendment No. 38. Clause 11 contains the enforcement provisions and I would first like to draw the attention of the Committee to the contrast between subsection (1)(a) and subsection (1)(b). Paragraph (b) which deals with the enforcement officer's power to inspect documents is preceded by the words "If he has reasonable cause to suspect … an offence"; but, by contrast, paragraph (a), which purports to give him power of entry into premises, is not preceded by any words indicating that he has to have suspicion of any offence being committed. I said "purports" and I will come back a little later to the reason why I say it only purports to give him power of entry.

First, I should like to consider the question whether this enforcement provision in fact represents the Government policy on this Bill with regard to enforcement. I should like to quote a very short part of the speech of the Minister in charge of the Bill in another place in Standing Committee E on 30th November, at column 90 of the Official Report of that Standing Committee, where the Minister said: 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".

The Committee may wonder, therefore, how it is that we are presented with a clause which is a total divergence from the Minister's stated policy about enforcement. I am afraid that the answer is that what we are presented with is an enforcement provision which has been lifted bodily from other legislation designed for quite other purposes. The last occasion—and I remember it very well—was when this enforcement provision was introduced into a Bill last summer, and it went into the Consumer Safety Bill of the noble Lord, Lord Mottistone.

I ventured to make a suggestion on the last Amendment which we dealt with on the present Bill rather late the other evening—and perhaps I may be forgiven for repeating this short point because there are many more Members of the Committee present this afternoon than there were then. What I ventured to say was that if an enforcement officer is concerned with the safety of goods and is looking round for goods which may be unsafe, it is one thing to allow him to go "fishing" (to use the Minister's expression) in warehouses, although he may not have any suspicion against the warehouse owner. But I went on to say the other evening that of course the estate agents are in a rather different position because estate agents do not keep their goods on the premises. What estate agents have on the premises of course are their documents and if, as is the case under subsection (1)(b), the officer is not allowed to inspect the documents unless he suspects an offence he is really not going to get very far if he goes into those premises without having any suspicion. It seems to me that all he will do is to incur the grave displeasure of the Minister in charge of the Bill.

The second point is that subsection (1)(a) only purports to give the officer this power to enter without suspicion. This becomes apparent when we consider what happens in the quite likely event of admission being refused. The clause deals with that situation in subsection (4), where it says that the officer can go to a magistrate and can get a warrant from the magistrate, if the magistrate first is satisfied that admission to the premises has been refused, but only if the magistrate is also satisfied that there is reasonable cause to suspect the commission of an offence. At that point the enforcement officer comes unstuck; he comes up against a fence which he is unable to surmount. That is why I venture to say to the Committee that subsection (1)(a) only purports to give him power of entry without suspecting an offence. What (1)(a) really amounts to and boils down to is that an officer may go in without suspecting an offence unless admission is refused. But one does not need an Act of Parliament to achieve that position. We can all go in anywhere provided admission is not refused.

The noble Lord, Lord Darling, told us the other evening that of course trading standards officers are not out to catch people and institute prosecutions; they are out to help people. I venture to suggest that Parliament owes a duty to enforcement officers to help them and not put them in the false position of supposing that they have an unrestricted right of entry without entertaining suspicion when it turns out that they have in fact no such right, and that if they attempt to exercise it against a determined estate agent they are liable to come unstuck.

So the purpose of this Amendment is to turn subsection (1)(a), which at the moment is unenforceable, into something which is enforceable by inserting the words, "if he has reasonable grounds for suspicion". Then subsection (1)(a) and subsection (4), which gives magistrates power to issue a warrant if there is suspicion, will fit together and make sense. At the moment subsection (1)(a) is simply an empty shell. I beg to move.


I should like to support the noble Lord, Lord Airedale, in the Amendment he has moved. I think we should consider very carefully the proposition he has made, and also bear in mind what has been said in another place about trading standards officers. I think we are glad that the noble Lord, Lord Darling, took part in the discussions we had on the last occasion, but I would remind him here this afternoon of what his right honourable friend said in another place. The Minister of State, Mr. Fraser, was asked this question: What assurance can the Minister give that the officers appointed"— —that is, of course, the trading standards officers— by local authorities know something about estate agency work and have experience of the background? The Minister replied: They will be trading standards officers. They have responsibilities ranging from animal diseases to the inspection of certificates in sauna parlours. They do not need to know much about estate agency. They need to know the law relating to their inspection duties and to have a good fund of commonsense".—[Official Report] (Commons, Standing Committee E), 30/11/78; c. 96.) I think we ought to pause here and consider very carefully the role of trading standards officers. We have been reminded that, of course, a police officer is in an entirely different position. No police officer, as your Lordships are well aware, may enter premises without a search warrant. Under the Bill, the Government are, as the clause is drafted at the moment, empowering the trading standards officer to enter with only a very hazy idea that an offence has been committed.

I have no doubt that trading standards officers do act and have acted in the past in the best way they possibly can, but let us consider the situation in an estate agency. An estate agency is essentially a property which is open to the public during reasonable hours, normally laid down, and of course any person can enter those premises. But the point is that the duly authorised officer may go anywhere within the premises, and that, of course, is a very important factor. He may look at any book or document if he has reasonable cause, and that of course follows in (1)(b). I feel that there are the strongest grounds for considering the Amendment put forward by the noble Lord, Lord Airedale, on the matter which he has raised.


I have listened very carefully. I think that the members of my own profession are very keen that there should not be anything in the nature of free access to premises. Quite frankly I have not been convinced by the arguments that have been put forward, for this reason: An officer is not going to walk into a place if he has not got some kind of reason to believe that something is happening. It must be the case, unless someone is suggesting they have malice against an individual, or something of that nature, that he will not walk into a place without believing that something untoward is happening. To do so would be absurd because it would mean that officers could go bobbing into one estate agent or another instead of acting like sensible people who feel that something untoward is happening.

I do hope that the noble Lords who are pressing this matter will withdraw it, because it really implies a slur on the officers. Certainly, no officer is likely to abuse a position of this kind. Of course, we understand that if a person refuses to let an officer in there is a procedure which enables the latter to give a reason for entering. I really cannot believe that these officers are going indiscriminately to walk into a place without some kind of suspicion that there is something wrong.


May I say, before the noble Lord continues further, that there was not the slightest intention to cast a slur upon the trading standards officers. What we maintain is that the trading standards officer is in a false position under the Bill.


Of course, I understand that. But I think the noble Lord is mistaken. I think he is underestimating the common sense of an officer who is put in that position. I do not think they are going to be so foolish as to attempt to enter premises if they have not got some sort of suspicion that there is something wrong.

3.20 p.m.


When I read the answer to the question in Committee which was given by my right honourable friend, I was rather disturbed. I think we can excuse it to some extent because it was not a prepared statement but a reply to a question. What I think my right honourable friend was saying—and in the context this would be perfectly sound—was that the trading standards officers cover a very wide field of activity, but the various Acts call on them to be qualified officers in regard to the Act they are administering. Therefore, although enforcement will fall legally on the local authority, in practice it will be for the chief trading standards officer of a local authority to ensure that two or three of his staff become fully qualified to deal with estate agency work. In that context, although I would agree that perhaps the choice of words is maladroit, I think that what the Minister was saying is perfectly sound, and, of course, we must bear in mind that the various statutes to which the noble Lord, Lord Airedale, referred call for qualified officers.

The noble Lord, Lord Airedale, said that, by extending this consumer protection legislation to estate agents, we are breaking new ground. I tried to say on the last occasion that we are not doing so, because services of this kind—I agree that they are not exactly analogous—are covered, and have been covered for 12 years, by the Trade Descriptions Act. That Act refers, among other services, to travel agents. Therefore, there is nothing new about this.

Three Amendments have been tabled in this connection and, if noble Lords will permit me, I should like to make only one speech instead of repeating myself on three occasions. It is obvious from the way that discussions have developed on this and similar legislation, that someone must say something about the way in which the trading standards services of local authorities work, because it is that practical fact that tends to be omitted. I hope, therefore, that noble Lords will allow me to make a speech covering that matter.

The noble Lord, Lord Airedale, who I think is making progress in his understanding of this legislation, now concedes that a trading standards officer should have a free right of access when he is dealing with hazardous or potentially dangerous goods. Of course, it would be quite wrong to say that an officer cannot enter a dairy to ensure that the milk is pure unless he has a search warrant. There must be routine visits.

I do not think that the noble Lord even yet understands the scope of the service. Whenever we have a debate he brings forward another Act at which he has been looking. In point of fact the service covers 19 statutes and 200 regulations. Therefore, there is plenty of scope for maladministration and yet, whenever I ask during these debates for any noble Lord to bring me evidence of maladministration, there is no response. The reason in part lies in the fact that there is a good tradition of service, and it is also due to the long experience of the senior officers; but what is far more fundamental is that it happens to be a local government service.

I agree with the noble Lord, Lord Sandys, who pointed to the dangers that may arise—and he gave evidence of dangers that have arisen—in a central Government State service where inspectors are given new duties, and over-zealous inspectors overstep the mark. It can be exaggerated, but I agree that there is a danger in that connection. However, there is something that is far more serious: how is the aggrieved trader, who has a genuine complaint about the way he is being treated, to get redress? To whom does he go? He may find out the address of the central office somewhere in Whitehall, or Newcastle-upon-Tyne or Swansea. He may write a letter to that address or he may take the matter up with his Member of Parliament; and his Member of Parliament will then take it up with the Minister. It is all too remote.

That, I think, is the basis of the complaint that the noble Lord was bringing forward about this type of service. I agree with him, but, of course, it does not apply in local government service. If a trader has a complaint about the conduct of a trading standards officer he can deal with it right away, on the same day. He probably knows the name of the chief officer but, if not, at least the address of the chief officer is in the telephone book. If he does not receive a satisfactory response from that approach he can go to the boss of the chief trading standards officer, or perhaps I should say to one of 20 or so of his bosses—the members of the trading standards committee of the county council. They appoint the senior officers and they must approve the appointments of all the staff. Surely no trading standards officer of any rank, if he is thinking of his career, will want to have a stack of complaints piled up against him—of course not. That, I think, is the fundamental difference between the two types of services, and at least one of the main reasons why there are so few complaints from traders about this service.

I have said that the noble Lord, Lord Airedale, has found, as he has studied this matter, that there are statutes under which he agrees that the trading standards officer should have freedom of access; and I think that he would also agree to concede that, as regards unsafe goods, these include the Pharmacy and Poisons Act, the Medicines Act, the Petroleum Act and other statutes of that kind in which health and safety are involved. However, there are other measures as regards which I am also sure he would concede the right of free access. We do not want, for example, weights and measures inspectors to have a search warrant to test scales and weighing machines in shops. After all, if a weighing machine is faulty there is a fifty-fifty chance that it will be faulty in the customer's favour. The appropriate Act—the Weights and Measures Act—gives the officers the statutory duty to test all weighing machines in the country, and therefore they do not need a search warrant.

I believe that as we have more of these discussions the noble Lord will eventually come around to my point of view that they should have free access for everything, for the reason that, if it is important that they have free access with routine visits to ensure that health and safety rules are not being breached, then it is equally important that they should make routine visits to ensure that an honest trader is not being subjected to dishonest competition. Time and again the evidence of dishonest competition arises not out of complaints—under the terms of the noble Lord's Amendment they would then have access on a search warrant—but from routine visits as regards which they find evidence of chicanery and dishonesty. We must look at the legislation. It is called "consumer protection legislation", but the important point is that it is legislation for the protection of honest traders. Therefore, for that reason, too, I think that they should continue to have freedom of access.

However, there are other issues involved. Another good reason why noble Lords cannot find any complaints against these local government officers is that they earn the goodwill of the traders with whom they deal. They must earn such goodwill in order to do their job properly. They earn it by providing advice and information services on a very large scale. In all deference, I would suggest that if this trading standards service is to be subjected to this kind of examination, noble Lords should go and look at it to discover how it works, instead of raising these theoretical arguments, many of which have no basis in fact whatever.

As I have said, the officers for whom I speak earn the goodwill of the traders, the honest traders. During the last debate I gave the example of South Yorkshire. I do not want to go over it again, but one figure at least is important. Of the 40,000 complaints which that service received last year in South Yorkshire, in the opinion of the officers only 9,000 were serious enough to warrant a visit to the traders concerned. Arising from those 9,000 visits there were 100 prosecutions. Most of the complaints that were substantiated were dealt with by the officers giving advice and help to the traders to ensure that they did not commit the offence again. That is how it works, and that is how it should work.

I should like to make just one further observation in case the noble Earl, Lord Caithness, follows up the argument that he advanced on the last occasion, that an estate agent will be put at a disadvantage if his clients see a trading standards officer going into his premises. I shall do it in this way. All of us go shopping in shops of all kinds. We go into pubs, cafes and restaurants; we buy petrol at petrol stations; we take our cars to garages for repairs, and so on. All those activities come under the supervision of these officers carrying out their duties under 19 Acts of Parliament and 200 regulations.

Has any noble Lord ever seen one of these officers at work? Has he, knowingly, seen a local government inspector or a trading standards officer at work in any of those premises? The odds are well over 1 million to one against anyone knowingly seeing these inspectors or officers at work. It is a most unobtrusive service, and for a very good reason: these officers have earned the goodwill of the traders with whom they deal. It is quite true that we may have seen some of these officers at work but have not realised who they are; the chap dealing with the scales in a shop would probably appear to be a mechanic from the scales company, but in reality he is a local inspector adjusting the scales. So it goes on.

I emphasise that the service has developed in such a way that the main work of these officers is not to prosecute, but to give advice and help. Therefore, I suggest that these Amendments should be withdrawn and that the traders themselves—in this case the Estate Agents' Association—should be approached. Let that Association decide whether it wants these Amendments included in the Bill. If it does, let us look at the matter again on Report. However, I am absolutely convinced that the reply from the Estate Agents' Association will be that it does not want the Amendments. In that case, why press them?


If I may interrupt the noble Lord, I cannot speak for the Estate Agents' Association, but the Royal Institution of Chartered Surveyors certainly wants these Amendments.


I am going on the correspondence that I have had from the Estate Agents' Association—and this is an Estate Agents Bill. If the surveyors want to change anything in the Bill, surely it would not be this clause. Nobody is suggesting that the surveyors will be put at a disadvantage by keeping the Bill as it is. In any case, we now have a conflict of opinion. Who is to decide? We have to decide on the basis of the evidence that we receive, and the evidence is that the Estate Agents' Association does not want these Amendments. Therefore, I urge the noble Lord, Lord Airedale, to withdraw the Amendments, and let us consult the Estates Agents' Association again, to ask whether it wants these Amendments.


Before the noble Lord sits down, may I point out that the Corporation of Estate Agents and the Incorporated Society of Valuers and Auctioneers certainly want the Amendments.


Before the noble Lord sits down, perhaps he would declare his interest in this matter. I know that on other occasions he has formally declared his interest in this matter. However, I am not sure that he did so this afternoon. Therefore, will he kindly do so?


I declared my interest in the previous debate and did not think that I needed to do it again. However, in case anyone does not know, I am the president of the professional institute of the trading standards officers.

3.38 p.m.


I hope that the noble Lord, Lord Darling of Hillsborough, will not mind if I use an analogy that came to mind during his speech. It is the analogy of a bowl of prunes. In spite of the necessity to beware of the stones in the prunes, to accept some of them could do one much good, but to eat the lot could be quite disastrous. There is a need for these Amendments. The Royal Institution of Chartered Surveyors want them, as do the valuers. We have been to the agents who will be affected by the Bill and their answer is, "Yes, we want the Amendments". Therefore, I do not think that we should wait for the Report Stage; I think that the noble Lord, Lord Airedale, should ask the Committee to decide on these Amendments, which I strongly support.

I am still worried about this innuendo of suspicion which is caused by a visit from a trading standards officer. The work that an agent does is so very different from that done by a normal shop. It is true to say that he is selling goods, but he sells something which is the most expensive purchase a normal person makes, and in many instances is probably a once-in-a-lifetime purchase. If the word gets out that the trading standards officer was at the premises—and I do not dispute that he normally does his job as quietly as possible—the difference in the work would be such that suspicion might be caused, and that point still worries me.

I should like to raise a point of detail on the speech made by the noble Lord, Lord Darling of Hillsborough, during the first part of this Committee stage. It might help to clarify the proceedings if he would tell the Committee the name of the noble Lord to whom he referred at column 149 of Hansard. If he was referring to me, I would point out that I was not present during the Second Reading debate. Perhaps the Committee could be enlightened on that matter. I hope that the noble Lord, Lord Airedale, will ask the Committee to decide on these Amendments; they are very worth while and have the full support of all the agents.


I should like to support these two Amendments. I do not propose to speak in the debate on the Motion to leave out Clause 11, but wish instead to speak now because these Amendments seek to do the same thing. There is no doubt that the professional bodies are strongly opposed to this clause and find it highly objectionable. The offence created under Clause 9(4) makes it unnecessary; after all, the maximum fine on conviction for failure to provide information is £1,000. Surely that is an adequate deterrent. As it stands, the Bill will allow an official to demand entry without warrant, and break into files and boxes if he wishes to do so. The trading standards officers may have a very high reputation—I would not doubt that they probably have—but I think it is silly to suggest that there are not some among them (I have come across one recently) who are young, keen and inexperienced. One encounters them occasionally. They are not representative, but this sort of chap could barge into an office and demand to see boxes, break into files of an estate agent, who would probably he refusing to allow him to do so. This action would be known immediately to staff and customers. The information would get out and seriously damage the reputation of an agent.

The agent need not even be in his own office at the time, because he could be informed, as would require to be done under line 45, while he was perhaps in his office elsewhere a few miles away. There is no parallel to the VAT inspectors. There is no parallel with unsafe goods or food, where obviously time is of the essence. There is no parallel with weights and measures, which certainly is an advisory service, like so many. This is a disciplinary matter. They can only come in if they have cause to come in, and this therefore implies that it is disciplinary and not advisory.

Furthermore, the profession objects that they are singled out among all other professions for this forced entry and inspection, should the inspectors so wish. The issuing of a warrant is the minimum protection needed against any vexatious, bureaucratic interference which may occur, be it ever so seldom. Unless he can show reasonable cause there should be no entry unless there is prior agreement to visit by appointment.

3.42 p.m.


I am not an estate agent, nor am I a chartered surveyor. I do not go around offering for sale desirable residences with all mod. cons., but I want to make a comparison between the wording of the Bill and the wording of the Amendment. I suggest that we want to be fair to the estate agents, although no estate agents have been in correspondence with me and neither have any chartered surveyors. The Bill as it stands says: … in order to ascertain whether an offence has been committed …". Prima facie that is conveying to the estate agent himself, and to the tradesmen in the neighbouring premises, that he is, for the time being at least, innocent. If we look at the terms of the Amendment, it states: … if he has reasonable cause to suspect that an offence has been committed …". Surely that indicates to the estate agent himself, and to his neighbouring shopkeepers, that he is not innocent; that most probably he is guilty. I want to be very brief indeed and not make a Second Reading speech. We want to be fair to the estate agents. I suggest that there is a greater degree of fairness in the original wording of the Bill than there is in this Amendment, which immediately plants the stamp of guilt on any estate agent whose premises the trading officers may enter.


I do not think that the arguments that come from this clause and these Amendments are anything to do with estate agents, surveyors, or trading standards officers. This is to do with Parliament in its biggest and widest responsibility. We are here once again interfering in some way with the freedom of the individual to run his show and run his life in a normal way. If you take any of the occasions where we give authority to people to break into houses, offices, and take away books, in individual cases you can in theory make out a strong case. The noble Lord does. He is very persuasive. But if you add them together, it becomes clear that you are no longer in charge of your premises; no longer in charge of your business. You have to add to this particular clause the numbers of other people who have authority to break in and to interfere.

Now we have got to the stage where almost all our freedoms are being whittled away. I am not exaggerating. I do not know how many businesses the noble Lord has to run from day to day, but I am interested as an owner in two different types of business which come under the investigation of these various offices, and I would tell him that it is damaging. It is interfering with the efficient running of a business, and with people who are honest and want to run it properly. It interferes with the morale of your staff when one or other of these officers comes in.

I believe that because all those things happen to a greater or lesser extent, it is not unreasonable for the officer who wants to make an investigation in order to do his duty to have to satisfy somebody else by getting a warrant, and making out a prima facie case, before he inflicts on the property owner, or the businessman, the indignity and the interference of being able to walk in in this way. I support my noble friend's argument, too. I would say overwhelmingly that trading standards officers are people who could be trusted, but all our laws are to deal with the minorities who are not to be trusted. That is what all the laws are about. The majority of people are honest and decent. The majority of people are good neighbours. But because a minority are not, we have to have policemen and regulations. In terms of businesses such as we are discussing now we have to give certain powers in order that certain investigations can be made, but some of the officers are not to be trusted. Often it is not necessarily because they deliberately want to do the wrong thing, but because they get enthusiastic and get their emotions out of context. Extra powers such as these do go to the heads of some people. We find that with some policemen, and with others given this authority. Because we know that, we have to be careful in Parliament when we are chiselling away, however marginally, at our freedoms to run our businesses and our houses in our own way.

I hope that the noble Lords who have Amendments down will put them to the vote. I should like to see once again how careful Parliament is in looking after the freedom of the individual. We are not saying that the officers shall not get the information. We are not saying that they shall not be able to carry out the instructions given to them if this Bill becomes an Act. We are saying that where in doing their duty they are likely to come into conflict with the free, honest running of a business, they ought prima facie to satisfy somebody other than themselves before they infringe on the liberties and the freedoms of people running that business.

3.48 p.m.


I think that your Lordships are fully entitled to scrutinise a clause of this kind very carefully indeed. My noble friend Lord Darling has just made a most persuasive speech. He described this as an estate agent's Bill, but it is a public Bill and it affects the rights of the citizen. The liberty of the subject is involved in this clause. Whenever any proposal is made for a further erosion of the liberty of the subject it is the duty of Parliament to examine that proposal closely indeed. Here we have a Bill which is partly for the protection of estate agents themselves, but, probably more important, for the protection of the public. One has to reconcile the duty to the public with the duty to the citizen. Each have their rights, and they have to be brought together in some acceptable harmony before we can be satisfied with what we are doing.

This clause, and the provision which is the subject of the Amendment, goes as wide as the Exchange Control Act 1947, which is probably wider than nearly all legislation since dealing with the right of entry. Certainly it goes wider than the right of entry conferred upon officers of the Inland Revenue. The provision in the Bill reads: in order to ascertain whether an offence has been committed under this Act", whereas the Amendment substitutes: If he has reasonable cause to suspect that an offence has been committed under this Act". These are two very different criteria, and, in the case of the Inland Revenue, the latter are the words of the Amendment that Parliament in its widsom used in recent extensions of the right of entry of the Inland Revenue. I believe we are coming to the stage when it is desirable that the whole question of the right of entry should come within some common code of law and practice. We are dealing with these matters piecemeal and we think we are adjusting rights of entry to the needs of a particular situation, but by the time the pattern is complete we see a very wide extension of the rights of entry into premises belonging to the private citizen.

Admittedly, premises used wholly as a private dwelling are excluded in this case, but in the income tax Acts and Exchange Control Act 1947 a dwellinghouse is not excluded. Here we have differences of rights of entry according to the particular statute law which is under consideration. But there are really only one citizen and one code of rights of civil liberty which have to be looked at in connection with proposals of this kind, and I am uneasy about the clause as it stands and for that reason would favour the Amendment.

I entirely agree with those who advance the integrity, common sense and judgment of individuals into whose hands is entrusted the right of entry. I have no doubt they are conscientious members of the bureaucracy. They are discharging in many cases a distasteful task in the most acceptable possible way, but some dreadful things happen and one day I believe it will be desirable to bring out some of the methods adopted when people exercise the right of forcible entry—and that right is contained later in this clause. It requires of course the fiat of a magistrate to do so, as it does in the case of the Exchange Control Act 1947, but in the case of the income tax Acts it requires a certificate by a circuit judge. The House of Commons would not give the magistracy the right to authorise a search warrant in the case of the Inland Revenue—they said it must go to a circuit judge—but in the Exchange Control Act 1947 it is a magistrate and under this Bill it is a magistrate, so again we have differences between the authorities who may authorise forcible entry.

Noble Lords will understand that when a search warrant is issued and the officers concerned go to execute it, they are anxious to discharge their task as expeditiously as possible, but they want to take away as many documents as they think will be required; a clean sweep may be made and a business may be brought to a standstill by the extent of the documents which may be seized as possibly being relevant. They do not have to stop there and then and convince the poor citizen—if he is poor, or hapless as he mostly is—that all they are taking is arguably relevant to what they are investigating. There is no opportunity for that debate to take place on the premises while the search is in progress. They are all swept into the bags and there is a van outside waiting to take them away. That is how it is done, and then everything is sorted out at leisure by those who have seized the documents.

In some cases the right of entry is put in the hands of civilians; in other cases the right of entry is reserved to the police. In the case of the Obscene I Publications Act it is the police who raid the premises and not civilians; to stop imported goods which may be caught under the obscenity laws is the duty of the Customs and Excise officials, though no immediate raid on a citizen's premises is involved in stopping goods as they are landed from a ship or an aeroplane, as the case may be. Believe me, there are aspects of this problem which, if one comes rather close to it, show many respects in which there should be an understood and publicised code of practice.

The Judges' Rules are made public regarding the conditions in which, for example, suspected persons may be interrogated. There are often criticisms of the methods of the police in that connection and proposals are often put forward as to the rights of accused persons in those conditions. Apparently these are not fully understood and are not always conceded when they are asked for. But here it is very easy indeed to think of the broad public good, which we all acknowledge, without examining the effect on individuals in given circumstances which may give rise to deep concern as to how we are treating people in the name of the overriding good of the community.

I believe that if we are to concede this further right of entry—and if we did not have the Bill at all we should not be considering this fresh extension of the right of entry; it is an accompaniment of almost every piece of consumer protection, every piece of statute law regarding the enforcement of taxation or exchange control and other matters which are of great public importance—we must be very careful to be satisfied that what we are doing is essential in the public interest notwithstanding the fact that it may cause hardship or even injustice to individuals in the process. One can identify a police officer but one cannot always identify a civilian officer. One can ask to see a police officer's warrant. With civilian officers, in some cases one could be faced not with one but with perhaps 10, in some cases as many as 20, and in one case it was 30. The persons who had the right of entry were listed on a sheet of paper in that instance, but one could not be certain who was who on the premises and exercising the rights under the search warrant that had been granted to them.

Even if we are here all night, it is still desirable to remember that with every fresh attempt to erode the liberty of the subject, which in sum total may amount to a great deal of restraint on civil liberty, we are justified in examining the proposal very closely indeed. I am not at the moment debating whether the clause should stand part of the Bill, but so far as this provision is concerned I believe it would be reasonable to accept the Amendment so that, at least where these rights are to be exercised, there is reasonable cause to suspect that an offence has been committed, rather than leave it on the basis that entry may take place in order to ascertain whether an offence has been committed. There should be reasonable suspicion about something before one goes into premises to exercise the rights which are provided for in this clause.

3.59 p.m.


I would remind noble Lords, and particularly the mover of the Amendment, that we have been through this before. I seem to recall that throughout the passage of the Trade Descriptions Bill the noble Lord raised, rightly in his view, the very same point. I certainly recall that in the debates on the Dangerous Drugs Bill I had the misfortune to be on the receiving end from noble Lords opposite when they said we were eroding the freedom of the individual.

I must say to my noble friend Lord Houghton of Sowerby, that one gets the impression nowadays from some interesting examples in the newspapers, that we are very much on the side of the citizen even though the citizen has committed an offence; that we have been so anxious to protect the powers and privacy of the citizen that we have actually allowed villains to operate because we have been a little nervous to enforce certain laws. I have never heard evidence to the effect that under the Trade Descriptions Act enforcement officers have had to use the kind of emotive language which has been referred to, or that they have "rushed" into offices or indeed into shops in some numbers, and forced open files (presumably with crowbars, though we have not actually been told that) in order to gather information.

Like many other of your Lordships, run an organisation of business. One has visits from such people as the crime prevention officer. He questions one about the doors to premises and about people entering and leaving the premises. Similarly, one also has visits from the fire prevention officer. Indeed, there are innumerable people whom we invite to our premises and whom we pay very highly. I have in mind, for example, auditors who visit premises to search books, so that we can produce balance sheets which satisfactorily comply with the Companies Acts.

I feel that much nonsense has been generated about this "poor citizen". Incidentally, I do not think I have ever met a poor estate agent, though possibly there are such people—presumably, those who have become bankrupt. Here I take the point of the noble Lord, Lord Leatherland. If it is normal procedure for people to be allowed to enter premises, that is one matter, and no one will take any notice of it. The enforcement officers will not be searching for work; there are not too many of them, as we well know. However, if on the other hand, they were operating on grounds of suspicion, that would certainly be known, and I think would be very undesirable. Clauses of this kind are inserted in almost all Acts of Parliament. This is done so that the rogues can be rooted out. But I can recall no evidence throughout my lifetime to suggest that honest people are subjected to harassment, or that enforcement officers enter premises against people's will. If you have nothing to fear, you have nothing to hide, and you will be quite happy for any enforcement officer or policeman to visit you.

4.2 p.m.


We have had a rather extensive and at times passionate debate. I consider that so far as the Bill is concerned, we should confine ourselves to the situation which it needs to put right; namely, to get rid of, or check upon, the rogue estate agent, of whom there are very few. The remainder are of good repute, are well able to take care of themselves, and need have no fear whatever of interference in their work. They have high standards in their associations, and noble Lords should not get too worried about such estate agents.

The noble Earl, Lord Caithness, and the noble Lord, Lord Gisborough, seem to have got their briefs in a twist. As I understand it, two professional associations want the Amendments, and one (the National Association) does not. Thus it is a two-to-one situation, and the agents themselves are divided. The best course I can take is to reply in some detail to the noble Lord, Lord Airedale. Although the noble Lord has spoken only to Amendment No. 37, it seems that both this Amendment and Amendment No. 38 are essentially directed at the same point; namely, that trading standards officers should not have an unrestricted right of access to premises where estate agency work may be carried out, or if they have such a right, should not be free to take away books and documents.

I wish to deal first with the detailed points raised by the Amendment of the noble Lord, Lord Airedale, and then I should like to show that the clause, far from being mere slavish copying from earlier precedents, is designed to give enforcement authorities just the powers they need for the purposes of the Bill, balancing against that the need to avoid interference with the liberty of the subject, about which we have heard much during the speeches on the Amendment. I should also like to suggest that in the interests of both enforcement authorities and the subject there is a virtue in consistency.

The noble Lord has said that paragraph (a) is ineffective: if admission is refused there is nothing that the officer can do. That is not so. The power to enter premises is conferred so as to relieve the officer from a charge of trespass. It is true that one does not normally think of oneself as trespassing when one goes into a public office, but that is because the owner of the office has given an implied licence to the public to enter it for the purpose of doing business with him. That licence does not extend to others. The owner would be quite within his rights to throw out a vagrant, for example. If the owner were to put up a notice stating, "No trading standards officer may enter," that would not be refusal of entry; it would be an express declaration that the implied licence did not extend to trading standards officers, whatever their business. Entry would be refused within the meaning of the clause only if, at a reasonable hour and on production of his credentials, a trading standards officer sought admission for the purpose of ascertaining whether an offence had been committed, and was told to go away.

It will be an offence under the Bill wilfully to tell an officer to go away in such circumstances. That is the effect of Clause 27(1) (b). (Incidentally, that is why the notice would be ineffective: the law would not presume that a person intended to commit the offence.) So once he has been refused entry in the way that I have described, the trading standards officer would be able to obtain a warrant under subsection (4), because the magistrate could properly be satisfied that there were reasonable grounds for believing that an offence had been committed. I think that that explanation disposes of the charge of illogicality.

Whatever its merits, or otherwise, the clause is internally consistent. Indeed, the noble Lord's Amendment would destroy this consistency. If an agent could refuse entry for no reason without committing an offence, it might well be that no warrant could be issued. The enforcement authority would have no means of discovering whether an offence had been committed.

I now turn to the charge that the provision in the Bill as it stands is an invasion of the liberty of the subject—a matter which of course concerns us all. I do not deny that the clause relies heavily on precedents, and in a moment I hope to justify that approach. However, it is right to follow a precedent only if it is appropriate and fits the novel circumstances to which it is applied. I submit that it does exactly that. The Bill controls an activity, not a defined class of persons. Anyone can be engaged in estate agency work. The greengrocer who acts as an intermediary in domestic property within the meaning of Clause 1 is doing so.

In the interests of economy and of not imposing an unnecessary bureaucratic structure, the Bill does not require those engaged in estate agency work, as defined, to take out a licence. The honest and competent agent should find that the Bill hardly impinges upon him. Instead, the Bill confers power to ban the rogue. It is thus far more necessary than it would have been under a licensing system for enforcement authorities to know where estate agency work is being carried out, so that they can check on compliance with the requirements of the Bill. The provision which the Amendments would restrict seeks to give the enforcement authority the right to do just that, and no more. The trading standards officer can go into an office to listen and observe. If, for example, he sees deposits being taken when there is no certificate of insurance displayed, the other provisions of the clause will come into operation, and he will be able to ask to see the books. It would be just as wrong to deny him this right as it would be to give him an unrestricted right of access to private papers. It is my view that the clause is exactly appropriate to the circumstances as we see them. Paragraph (a) is the starting point from which the greater powers in the remainder of the clause flow.

Finally, I should like to say a few words about the wider question. It is surely right, and in the interests of everyone, that the powers of trading standards officers should conform to a general pattern unless there is good reason to depart from it. It means that the trading standards officer can work to a consistent set of rules. He will become used to them, and will know what he can and cannot do. In this way, he is unlikely to overstep his powers in a particular case. Similarly, the agent, who may also be engaged in the provision of credit or of insurance, or even, as I have mentioned, of vegetables, is entitled to expect a clear and consistent system of control for all his activities. He should not always be having to consider whether his rights in one case are slightly greater or slightly less than in another case. That would be a recipe for conflict and distrust. There is a saying, "hard cases make bad law". I would suggest that the best way to promote a harmonious relationship between trading standards officers and the traders with whom they deal is to make the legal framework in which they operate as simple as possible. That is achieved by using standard form clauses whenever they are appropriate.

I do not think there is anything more I can say at this stage. I do not think noble Lords need have the fears which have been expressed in some quarters of the Committee today; I think they have been raised unduly. This is purely a correct and proper way of checking on people who are fleecing the customer; that is, the rogues. As I have already stated, in this particular instance it is my view and advice that as far as the estate agents' profession is concerned the cases are few and far between. Certainly, again as I have already stated, those in their professional organisations have their own set of rules and controls, and therefore need not have the slightest fear or worry. As two organisations out of three have already indicated their support of the Bill as it stands, I hope the Committee will consider this position carefully and not accept the Amendment as it is proposed at the present time.


Before the noble Lord sits down, I think he may have misheard me. The two professional bodies which I mentioned are in full agreement with that referred to by my noble friend Lord Caithness. Not only that, but they feel extremely strongly about this.


Could the noble Lord also reply, please, to a question I raised the last time we were in Committee? That is, what is the remedy that an innocent agent has if his premises are visited by a trading standards officer and as a result of that visit his trade is injuriously affected?


I do not think there is any risk whatever. I cannot envisage a situation in which there would be any injury. A trading standards officer, having had reason—and this is the important point—to visit an estate agent, the proceedings between the two would be confidential. News of this would not be widespread; no one would be talking to the local newspaper, and so on; and there would not be any prejudice. In any case, if the man is innocent he has nothing to fear, and he will be told so.


We have had quite a long debate, and I propose to be brief in reply to it for fear that if I take much more time I may be throwing votes away. I am very grateful to noble Lords who have supported the Amendment. I am bound to say that I am extremely disappointed in the noble Lord, Lord Janner, who said he was against the Amendment, because I thought his argument was entirely in support of it. The noble Lord said that these officers will not go in unless they think there is something untoward going on, unless they have some suspicion. That is what the Amendment introduces by using the words, "if he has reasonable cause to suspect". I had hoped that the noble Lord and I were ad unum on this point.

The noble Lord, Lord Darling, appeared to draw a distinction between the standards operated by the enforcement officers appointed by local authorities and those operated by other enforcement officers acting under the central Executive. I do not have the knowledge to go into that argument with him; I only find it slightly disturbing to think that there should be a separate standard in this way.


I am sure it is not the intention of the noble Lord to misinterpret what I was saying. I was supporting the view expressed by the noble Lord, Lord Sandys, that there is a possible danger in the State service—the central Government service—in that it is so remote from the person who may have a grievance against it, and that that does not apply in local government services.


I am very much obliged to the noble Lord. Then let me pass on to only one other matter concerning the noble Lord, Lord Darling. It seems to me that what the noble Lord did not face up to in his speech is this. What is the trading standards officer going to achieve in the estate agent's office? The agent does not have dangerous goods, he does not have weights and measures and weighing machines. What he does have are documents. But under paragraph (b) the officer may inspect the documents only if he has reasonable cause for suspicion. So what is he going to achieve by going, purely on spec, into the premises in the first place?


Does the noble Lord want me to reply?


It is entirely up to the noble Lord.


Willingly, if the noble Lord will allow me. He is surely not going to suggest that every estate agent in this country has nothing but satisfied customers; and, as shown by the figures that I gave for South Yorkshire (admittedly about other forms of trading) when you establish an advisory service which becomes a complaints service, you are going to get complaints. The noble Lord is suggesting that the only way the trading standards officer can deal with a complaint is by getting a search warrant. I say he should be allowed to go to the estate agent and say, "I have a complaint; can I see whether there is anything in it?", without a search warrant.


Very well; that is the noble Lord's explanation. Now let me come—because I want to be brief—to the Minister's speech, and mention quite quickly just two points. The Minister invoked Clause 27. That deals with obstruction; and we are to envisage a case in which the estate agent is prosecuted before the magistrates for obstruction. I do not know what experience the Minister has of the sort of things that go on in magistrates' courts, but what kind of sympathy does he think the enforcement officer would get before the magistrates? Would the court not say to him, "What were you doing putting yourself in a place in which you got yourself obstructed? Have you not-read subsection (4)? You were supposed to come to one of us for a warrant". I do not think the court would be very pleased with a prosecution for obstruction in the absence of any application for a warrant.

My final word is this. I really think that the most important part of this Amendment is that it prevents the enforcement officer from getting into a false position. If he comes up against an estate agent who knows the law and who says to him, "Have you any suspicions against me?", and he has to say. "No, it is a purely routine visit", and if the estate agent says, "Very well; off you go to the magistrate for a warrant; you are not coming in here without it", at that moment the officer will have come unstuck. He cannot exercise the right which the paragraph purports to give him because he cannot get his warrant since he does not have any suspicion. I suggest that we owe the hardworking enforcement officer better service than that. That is the basic point of this Amendment, and I think that we should test the matter in the Division Lobby.

4.20 p.m.

On Question, Whether the said Amendment (No. 37) be agreed to?

Their Lordships divided: Contents, 103; Not-Contents, 46.

Adeane, L. Emmet of Amberley, B. Nugent of Guildford, L.
Airedale, L. [Teller.] Evans of Hungershall, L. Nunburnholme, L.
Alexander of Tunis, E. Exeter, M. Pender, L.
Alport, L. Fairhaven, L. Porritt, L.
Amherst, E. Fletcher, L. Rankeillour, L.
Amory, V. Gainford, L. Reigate, L.
Ampthill, L. Gisborough, L. [Teller.] St. Davids, V.
Amulree, L. Gladwyn, L. Sandford, L.
Auckland, L. Glasgow, E. Sandys, L.
Avon, E. Glenkinglas, L. Shannon, E.
Balfour of Inchrye, L. Grey, E. Sharples, B.
Banks, L. Gridley, L. Sherfield, L.
Barnby, L. Halsbury, E. Sligo, M.
Barrington, V. Hampton, L. Spens, L.
Beaumont of Whitley, L. Hanworth, V. Stamp, L.
Bessborough, E. Harmar-Nicholls, L. Strathcarron, L.
Bethell, L. Home of the Hirsel, L. Strathclyde, L.
Birdwood, L. Hornsby-Smith, B. Strathspey, L.
Caithness, E. Houghton of Sowerby, L. Swaythling, L.
Carr of Hadley, L. Hylton-Foster, B. Swinfen, L.
Cathcart, E. Ilchester, E. Tanlaw, L.
Clancarty, E. Jeffreys, L. Teviot, L.
Clitheroe, L. Kimberley, E. Thomas, L.
Clwyd, L. Kinnaird, L. Tranmire, L.
Cockfield, L. Linlithgow, M. Trefgarne, L.
Cottesloe, L. Long, V. Trenchard, V.
Craigavon, V. Lyell, L. Ullswater, V.
Daventry, V. Molson, L. Vaux of Harrowden, L.
Davidson, V. Monck, V. Vickers, B.
Derwent, L. Monson, L. Ward of North Tyneside, B.
Donegall, M. Morris, L. Westbury, L.
Dudley, B. Newall, L. Wigoder, L.
Effingham, E. Norfolk, D. Willoughby de Broke, L.
Ellenborough, L. Northchurch, B. Winstanley, L.
Elles, B.
Aylestone, L. Hatch of Lusby, L. Peart, L. (L. Privy Seal.)
Blease, L. Henderson, L. Phillips, B.
Blyton, L. Jacques, L. Plant, L.
Boston of Faversham, L. Janner, L. Ritchie-Calder, L.
Brockway, L. Kilbracken, L. Sainsbury, L.
Castle, L. Leatherland, L. Shinwell, L.
Collison, L. Lee of Newton, L. Snow, L.
Cooper of Stockton Heath, L. Leonard, L. Stedman, B.
Darling of Hillsborough, L. Llewelyn-Davies of Hastoe, B. Stewart of Alvechurch, B.
David, B. [Teller.] Lovell-Davis, L. Stone, L.
Donaldson of Kingsbridge, L. McCluskey, L. Strabolgi, L. [Teller.]
Elwyn-Jones, L. (L. Chancellor.) McGregor of Durris, L. Taylor of Mansfield, L.
Fisher of Rednal, B. Noel-Baker, L. Wallace of Coslany, L.
Gaitskell, B. Northfield, L. Wynne-Jones, L.
Gordon-Walker, L. Paget of Northampton, L.
Hale, L. Pargiter, L.

On Question, Motion agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.

[Amendments Nos. 38, 38A and 38B not moved.]

On Question, Whether Clause 11, as amended, shall stand part of the Bill?

4.29 p.m.


I think it would be easier if on this Motion I dealt with the two Amendments in my name. What I think would be an ideal situation, so far as one can get it to an ideal situation, is for the words has reasonable cause to suspect an offence had been committed to be included under subsection (1) before paragraphs (a), (b), (c) and (d). This would make the Bill more easily understood. There is the theoretical situation that, although the enforcement officer could have reasonable cause to suspect that an offence has been committed and he goes into the premises, but finds that an offence has not been committed, he could, as the Act stands, seize and detain books or open documents. This is theoretical and probably unlikely to happen but I hope that the Government will give consideration to amending the clause before the Report stage.


I am in a slightly difficult position about this. Obviously I want the clause to remain in the Bill unamended. But I want to follow up, if I may, a point which was at the centre of what I thought was the speech of my noble friend Lord Houghton. He has a capacity that I have admired for years of being able to stir things up and to get the point that he really wants to drive home brought out of the confusion that is thus created. He has done so on this occasion, and his point is that this kind of clause is unsuitable for this kind of legislation. It is a consistent clause. It appears in most of our consumer legislation, more or less in this form, and therefore, in order to get consistency, we go on putting it in Bill after Bill.

Several years ago I tried to get away from this legalistic stuff which confuses me. I tried to get this very simply stated; in other words, to say that an authorised officer has a free right of entry for the purpose of carrying out the terms of the Act and, if he is refused admittance, he can get a warrant to go in; and then to say what he can do if he has got a warrant and what he can do if he has got a free right of access. But the lawyers will not allow simplicity. I think what we need to do is to get a united front against the lawyers who will insist on writing this kind of language into a Bill. But we cannot do it on this occasion.

If I may, seeing that we are dealing with the question of whether the clause shall stand part, I should like briefly, (although he is not present) to deal with the point that was raised by Lord Harmar-Nicholls. He was dealing with the question of the rights of a citizen being infringed by all the rights of entry, search warrants and so on that we hand out under this kind of legislation to so many police officers and other kinds of officer. He is in a difficulty because I know that he believes that our trading system should be run on the basis of free and fair competition. In order to get free and fair competition you must lay down free and fair trading rules. Those trading rules have to be adhered to and enforced somehow.

In the best way that we can we have put that supervision of fair trading rules into this legislation. There is an interesting development from this. The Fair-Trading Act, which was produced—although it was a non-partisan Act—by a Government of the party represented on the other Benches, contains a provision (I had a hand in getting that provision into the Act) that allows the Director of Fair Trading to give approval to voluntary codes of practice in order, if possible, to stem the tide of legislation that applies to individual trading associations. If the Director gives his approval to a code of practice, he can also take action against any trader who persistently offends against that code.

There are difficulties in supervising voluntary codes of practice to make sure that all the traders in that trade are sticking to the code of practice. Now what is happening is that trades that have worked out their own codes of practice—voluntary codes of practice—and had them approved by the Director of Fair Trading, are now asking trading standards officers freely to supervise the fair trading rules that are in their voluntary codes of practice. It will create a few difficulties, but the idea that traders do not want this kind of legislation is of course quite wrong. It depends how it is exercised. I agree with everyone who has criticised the wording of our legislation. As I have said, the reason why trade associations give their approval to it is that they know from experience that the trading standards officers will work in close co-operation with them and that they have nothing to fear so long as their trading activities are perfectly honest under the rather draconian terms of the legislation that we approved.


I have listened to what the noble Lord, Lord Darling of Hillsborough, has said on this and on previous occasions. From this side of the Committee we agree regarding the merits of eliminating dishonest competition. This Bill, as the noble Lord, Lord Wallace of Coslany, reminded us, the fourteenth concerned with estate agents since 1888, has run into some of the same difficulties as its predecessors. The field of consumer protection dates back to the 13th century. There are weights and measures Acts and Acts of Parliament concerned broadly with trading practices and the management of markets which date back to some of the very earliest statutes. This one concerns a rather different type of activity. Discussions that we have had have pointed this out and the Committee have rightly reached the conclusion on the Bill that we should think very carefully about it.


In reply to the noble Earl, Lord Caithness, the amendments he originally put down place no additional constraint on the trading standards officer. As the clause stands, before he asks to see and requires reproductions or takes copies of books and documents, he must, under subsection (1)(b) have reasonable cause to suspect that an offence has been committed under the Act. Only thereafter can he proceed to seize and detain books and documents, require the breaking open or himself break open a container to do so, and then only if he has reason to believe that they may be required as evidence in proceedings for an offence under the Act; that is, there must be reason to believe that proceedings will be brought and that particular books and documents are themselves required as evidence.

The Amendments that the noble Earl put forward would have been unnecessary and if they had gone through would have only confused matters by suggesting some difference between the powers of trading standards officers in so far as estate agency work was concerned and the powers under other enactments. I have already explained some of this in detail. That is my reply to the noble Earl; but, as always, if there is any particular point later that we can deal with, perhaps he will let me know and I shall find out about it for him.

Clause 11, as amended, agreed to.

Clause 12 [Meaning of "clients' money" etc.]:

4.39 p.m.

The Earl of CAITHNESS moved Amendment No. 39: Page 14, line 14, at end insert ("or other payment").

The noble Earl said: This is a probing Amendment and a similar one to Amendment No. 50. I understand that even if that Amendment is accepted the following points will not be covered: the noble Lord, Lord Wallace of Coslany, was quoted in column 95 of Hansard for 6th March as saying: It is the main object of the Bill to protect stakeholders' money". I cannot correlate that statement with these circumstances: a prospective purchaser of a house may pay an agent, as stakeholder, a sum to cover a structural survey, for example. There is also the situation between exchange of contracts and completion, when the purchaser pays an agent sufficient sums to pay the first insurance premium or alternatively the first mortgage repayment. It appears that if the agent absconds with these sums there is very little that the prospective purchaser can do about it. Ought not these situations to be covered if the Government are serious in their endeavours to protect the consumer? I beg to move.


The Bill, as I have already emphasised on a number of occasions, is essentially a consumer measure which aims to protect the individual buying or selling his home. Its scope is, therefore, limited and relates to broking activities in relation to transactions involving a capital payment for a substantially residential property. The money it seeks to protect is the money the prospective purchaser pays in such transactions to another person's agent and which is dealt with by the latter rather than passed on and is in certain circumstances returnable. In the event of default, the person who paid the money has no protection. The moneys are in all cases of a type which the agent does not need to take to carry on his business. If he chooses not to do so, we shall not be faced with the need to find insurance or other cover against its loss. If there are other payments of the type which the Bill seeks to protect, can your Lordships provide instances? The essential test is that the moneys should be paid by one person to another person's agent in relation to transactions involving substantially residential property which might in certain circumstances be returnable. That is the position, and the Government certainly could not accept the Amendment put down by the noble Earl.


I think the noble Lord did ask whether any of your Lordships could cite cases in which other payments might arise. A considerable debate did take place in another place and a later Amendment, No. 44, is going to be put to your Lordships by the noble Lord, Lord Wallace, relating to Clause 12(5). We are very glad that the noble Lord is bringing forward Amendment No. 44, which relates to "any relevant assets". Those relevant assets will be part of the client's money which will be protected.

In response to the noble Lord's question, I think we should say that there may well be other aspects of the deposit money. It is just conceivable that there would be rents; it is conceivable that there would be a mortgage payment or something of that nature, or even an insurance policy. I believe that the Amendment put down by my noble friend has particular merit when related to Amendment No. 44 which the noble Lord is going to look at. I hope that when he comes to Amendment No. 44 he will refer to this Amendment moved previously.


I shall read the speech of the noble Lord very carefully when it is printed, and at this stage I should like to ask leave to withdraw the Amendment, but I might come back to it at a later stage. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

The Earl of KINNOULL moved Amendments Nos. 40 to 43: Page 14, line 15, leave out ("residential") Page 14, line 44, leave out ("residential") Page 14, line 41, leave out ("subject to subsection (6) below") Page 15, line 2, leave out ("residential").

The noble Earl said: Amendments Nos. 40 to 43 are consequential on an earlier Amendment which was accepted by the Committee. I beg to move these Amendments en bloc.

Lord WALLACE of COSLANY had given Notice of his intention to move Amendment No. 44: Page 15, line 3, leave out ("other") and insert ("any relevant").

The noble Lord said: Amendments Nos. 44, 46 and 68 were consequential on adjustments made to the definition of "residential property" in Clause 2 in another place. The Government have indicated that they are prepared to accept without prejudice Amendments consequential upon the passing of Amendment No. 1 following the defeat of the Government. In the light of this indication, it is inappropriate for me to move these Amendments, but that is not to say that we shall not be bringing forward either the same or possibly similar Amendments at a later stage. I do not propose to move Amendment No. 44, but reserve the right to being Amendments forward at a later stage.

[Amendment No. 44 not moved.]

The Earl of KINNOULL moved Amendment No. 45: Page 15, line 5, leave out ("residential").

[Amendment No. 46 not moved.]

Lord GISBOROUGH moved Amendment No. 47: Page 15, line 7, leave out subsection (6).

The noble Lord said: This, I think, is also consequential. I beg to move.

Clause 12, as amended, agreed to.

Clause 13 [Clients' money held on trust or as agent]:

Lord GISBOROUGH moved Amendment No. 48: Page 15, line 43, leave out from ("relates") to end of line 44.

The noble Lord said: This is a probing Amendment because it is felt that it is surely quite wrong that new trustees' expenses can be paid from clients' moneys. Surely this goes against the whole principle of protecting clients' funds. Clients' accounts could quite legally be dissipated by these third party trustees. However justified it might be, I think it requires some explanation. I beg to move.


This Amendment, with respect to the noble Lord, Lord Gisborough, is short-sighted. The words which it seeks to delete make provision for the worst possible case, namely when a banned agent is hopelessly insolvent and the only way to distribute the clients' money (which the Bill will have safeguarded) is to bring in someone else to sort out the mess. Nobody is going to do that job gratuitously. He must be paid from somewhere and it is at least better for the clients to give up a proportion of their money in the interest of getting the rest back than for them not to get any money back at all. In this respect, the clause follows the system adopted for bankruptcy, liquidation and receivership. That is the position, and I would ask the noble Lord to withdraw his Amendment.


Before the noble Lord sits down, can he tell me what is the position where a prospective purchaser has paid a deposit to the vendor's agent and that deposit forms part of the purchase money and is used, or part of it is used, for the expenses of the trustee before completion of the sale? The money will therefore not be available to form part of the total sum involved in the purchase. There might be a case for the vendor refusing to complete.


That is what I call a sticky one!—to put it mildly. If the noble Lord will allow me, I will certainly look into this point. It needs an answer but, quite frankly, on the spur of the moment it is impossible to answer such an involved question.


I think the way in which the Bill is worded at the moment means that it does need looking at.


Yes, I have agreed to that.


I beg leave to withdraw this Amendment.

Amendment, by leave, withdrawn.

Clause 13 agreed to.

Clause 14 [Keeping of client accounts]:

4.49 p.m.

Lord HOUGHTON of SOWERBY moved Amendment No. 48A:

Page 17, line 27, at end insert— ("( ) in the case of a client account maintained otherwise than by a company, a person approved in writing by the Secretary of State as a qualified auditor for the purposes of this subsection; or"). The noble Lord said: I beg to move Amendment No. 48A, which stands in my name. If your Lordships look at Clause 14(5)(a), you will see that for the purpose of auditing accounts relating to clients' money, regulations may be made requiring— … such accounts to be drawn up in respect of specified accounting periods and to be audited by a qualified auditor …". This is the point of the Amendment. Subsection (6), on page 17 of the Bill, sets out the persons who are regarded as qualified auditors. These are bodies of accountants established in the United Kingdom, which are at present recognised by the Secretary of State for the purposes of the Companies Act, and they include the Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants of Scotland, the Association of Certified Accountants and the Institute of Chartered Accountants in Ireland.

It is represented to me that this restriction of the qualification of auditors to the bodies that I have just enumerated could cause difficulty for some estate agents, who are private individuals or a partnership, and might lead to hardship for some accountants and auditors, who are at present acting for estate agents in this regard but fall outside the list of qualified bodies. The organisation which has represented to me that some safeguard might be introduced into this clause is the Association of International Accountants. I am advised that some of its members already act for estate agents who are private individuals or partnerships in regard to the preparation of accounts for income tax purposes. They are accepted by the Inland Revenue. At the present time no audit is required, so no question of their capacity as auditors arises. But under the terms of this clause, accountants who now may act for sonic estate agents would be barred from acting as auditors, because they are not within the bodies recognised by the Secretary of State as being qualified.

This is a problem which inevitably arises when transition is taking place from one set of conditions to a new set of conditions. The present set of conditions does not require any audit of the accounts of estate agents. Very properly, the new conditions require estate agents to keep a client account, and the Bill provides for the auditing of the client account which the law requires estate agents to keep. I understand that this is on all fours with the statutory provision for a client account which must be kept by solicitors. This means, therefore, that in some cases either the estate agent concerned must dismiss his present accountants, because they could not be qualified to act as auditors, or he must engage auditors within the list of qualifications, in addition to employing the accountants whom he has hitherto employed, and who have given satisfaction both to him and to the Inland Revenue. So that this Amendment is an attempt to provide some safeguard against conditions of hardship or overlapping of function, which might otherwise arise.

Your Lordships will see that the Amendment provides: in the case of a client account maintained otherwise than by a company, a person approved in writing by the Secretary of State as a qualified auditor for the purposes of this subsection". This, admittedly, puts upon the Secretary of State a responsibility for giving a certificate of qualification for the purposes of this clause—and this clause only—in cases where he thinks that he would be justified in so doing. I hope that it is not too cumbersome a way of making some provision for the problems of transition. But when switching from one to the other, unless we are to be quite inflexible about it, some easement is justified for the time being—and it will be only for the time being—while the provisions of the new Act are settling down. In future, in engaging their accountants and auditors, estate agents will clearly comply with the requirements of the Act, but those who have an existing service which is to their satisfaction will be enabled to continue with it, if the Secretary of State approves in writing that an accountant may carry on performing the function that he has already discharged for the person or partnership concerned.

So I submit this Amendment for the favourable consideration of my noble friend, in the hope that it will meet with his approval. I do not know how many cases there might be. But I do not think that to put this small amount of discretion in the hands of the Secretary of State would be in conflict with the general intentions of the Bill, and in the cases concerned would not give rise to any possible cause of dissatisfaction. I beg to move.

4.57 p.m.


I can understand the concern that underlies the spirit of the Amendment moved by my noble friend. Nevertheless, I believe that it should be resisted. In my view, it would undermine the Government's general policy of maintaining a uniformity of audit requirements and standards for all statutory audits, and of ensuring that the undertaking of such audits shall be confined in all cases to persons who are qualified to audit company accounts as prescribed in the Companies Act. That is the motivation behind Clause 14, which extends this policy to the area of statutory audits of unlimited companies, partnerships and sole traders, and follows the precedent of the Insurance Brokers Registration Act.

The corollary of the maintenance of high standards—standards which, I emphasise, are maintained solely for the protection of the consumer—may mean that certain persons who are at present undertaking non-statutory accountancy functions for those estate agents who are partnerships or sole traders will lose some work. This would arise when such estate agents wished the same accountant to carry out the newly required audit, as well as to handle their bookkeeping. That is, of course, a risk, but it can apply even in normal circumstances when an unincorporated clerk becomes incorporated, and therefore subject to Companies Act requirements, but only when no member of the accountancy practice concerned is properly qualified. So long as someone in the practice is qualified, he can be appointed to carry out the audit functions.

The objective of the Bill is to ensure high professional standards in an area of business activity which has, hitherto, not been free from examples of malpractice by the unscrupulous minority of rogue estate agents and where members of the public have been seriously prejudiced. Since some estate agents hold considerable sums of money on behalf of their clients, is it not axiomatic that high standards of auditing should therefore be necessary? I believe that the Government's policy must be sustained. It must not be diluted. The Amendment would offer unqualified accountants a lever to obtain recognition for statutory audits by a backdoor method, and would be but a first step in undermining the policy. For these reasons, with the greatest respect to my noble friend,I urge the Committee to reject the Amendment.


I am very disappointed by my noble friend's reply. Bernard Shaw said that all professional bodies are a conspiracy against society. There is a good deal of truth in what he said. I have sought in my Amendment to give temporary protection to those who are not part of the monopolistic professional bodies which are listed as qualified within the meaning of the Companies' Act. To have spoken and voted against the Government once in an afternoon will do me for the time being. Therefore I shall take fresh advice on the matter for a later stage of the Bill. In the meantime, with reluctance and with an element of defiance in my voice, I beg to withdraw the Amendment.

Amendment, by leave, withdrawn.

5 p.m.

On Question, Whether Clause 14 shall stand part of the Bill?

The Earl of KINNOULL

I wonder whether I may ask a question regarding Clause 14(6)(d). This refers to the qualifications of Scottish auditors. Clause 12 sets out the definition of clients' money held by estate agents. This means deposits, and these are dealt with in Clause 14. I understood that Scottish estate agents cannot hold deposits under Scottish law. I have been advised that deposits automatically go to lawyers, not to estate agents. Therefore I am wondering why there should be a paragraph in Clause 14(6)(b) which deals specifically with the qualifications of auditors in Scotland.


In Scotland, it is common practice for estate agency work to be carried out by solicitors. May I obtain the required information for the noble Earl and send it to him as soon as possible? I am afraid that I cannot give it to him immediately.


There is one point relating to the accounts regulations which I should like to raise. Estate agents should know where they stand and should not be subject to subsequent orders which might come out from time to time. All the regulations called for by the Bill should be introduced on a specified date, in one go, otherwise estate agents will have to spend much of their working time keeping their ears to the ground and hoping that they do not miss the publication of any of the regulations. Surely the Government must know what they have in mind. Therefore, draft regulations ought to be available. It would be a great comfort to the professional bodies if by the Report stage, or as early as possible, they could have some indication of what are the draft regulations.


It is not possible for me to give the draft regulations at this stage, and I do not think that the noble Lord, Lord Gisborough, would expect me to do so. At a later stage we might be able to give the noble Lord some information, but to do so at the moment is out of the question. That is as far as I can go at the moment.

Clause 14 agreed to.

Clause 15 [Interest on clients' money]:

Lord WALLACE of COSLANY moved Amendment No. 49:

Page 18, line 20, at end insert— ("( ) Failure of any person to comply with any provision of accounts regulations made by virtue of this section may be taken into account by the Director in accordance with section 3(1)(c) above and may form the basis of a civil claim for interest which was or should have been earned on clients' money but shall not render that person liable to any criminal penalty.").

The noble Lord said: This is largely a technical Amendment. The private Member's Bill on which this Bill is based would have imposed a criminal sanction for breach of the interest requirements. This sanction was removed but it was not clear that the criminal penalty for breach of accounts regulations imposed by Clause 14(8) did not extend to breach of regulations made by virtue of Clause 15. The Government's view is that breach of any obligation introduced by virtue of this clause to account for interest earned on clients' money was not sufficiently serious to attract a criminal penalty. The Amendment removes the doubt on this score and also makes it clear that the client who does not receive any interest due has a right of recourse against the agent at civil law. A breach of the requirements is, I need hardly remind your Lordships, a trigger event which could lead the Director to look at the offending agent's fitness to practise. I beg to move.


I rise to mention only that the wording of the last line of the Amendment seems to be a little unusual. It says, "but shall not render that person liable to any criminal penalty". I should have thought that the conventional language was, "but shall not render that person guilty of any offence". It is only a drafting point.


All I can say at the moment is that the point is taken and noted.

On Question, Whether Clause 15, as amended, shall stand part of the Bill?


In Clause 15(1) there is a reference to "any clients' money". I should like to draw the attention of the Government to the need for a de minimis provision—a starting point from which the accounting procedure can begin.


I have noted the point and will deal with it at a later stage.

Clause 15, as amended, agreed to.

Clause 16 [Insurance cover for clients' money]:

The Earl of KINNOULL moved Amendment No. 50: Page 18, line 24, leave out from beginning to ("authorised") in line 25 and insert ("carrying out estate agency work must be covered by").

The noble Earl said: We come now to what in my view is one of the most important clauses and, indeed, one of the bulwarks of the Bill. It deals with protection for those who have submitted deposits and who then find that the agent has absconded. Every Member of this Committee will recall that over the last five or 10 years there have been a number of very sad cases perhaps of young couples going to purchase a house, with great excitement laying down a 10 per cent. deposit and then finding, to their sadness, that the agent has absconded and that there is absolutely no redress. Everybody welcomes the inclusion in the Bill of Clause 16. However, the main problem with Clause 16 as it is now drafted is that it covers only a certain section of estate agents.

The Government believe it to be wise that insurance cover protection should be mandatory only when an agent insists upon receiving a deposit from a would-be purchaser. They believe that if the agent does not insist upon receiving a deposit there is no reason to insist upon an insurance policy. That, in a sense, seems to be fair. Certainly it seems to be fair to an agent, but is it really fair to the purchaser?

I think that the case was argued in another place on two occasions: there was doubt whether a purchaser—perhaps a first time buyer—would be able to distinguish between those agents who are and those agents who are not bonded. The matter was discussed at some length during the Committee stage in another place and the Minister agreed to look at it again. The Minister did indeed look at the matter again and he introduced what he felt would be further protection. The first protection which was included during the Committee stage was that the agent would have to display somewhere in his office a certificate of insurance which would indicate to a member of the public that he was bonded. As Members of another place pointed out, this is hardly a security, because very few people would see the certificate, or realise that there was one, and therefore might not ask the agent about it.

The Minister then introduced into the Bill at Third Reading the provision that an agent would not only have to display in his office his certificate of insurance but would also have to state on his notepaper that he was a bonded agent. It was at this stage that the Government decided that they had gone far enough. I think members of the estate agency profession still generally feel that this provision does not give sufficient protection to the public, and it is very little help for a member of the public not to spot that the agency is not bonded and then to find that he has lost his deposit and to be told, "Oh, don't worry. Next time it will not happen because that agent will be struck off". That is of very little assistance to the person whom we are trying to protect under this Bill.

The argument of the Government to date—and I have seen letters which the Minister has written to various bodies—comes down to two things: first, that bonding for all agents, and particularly for those who did not seek deposits, will be punitive; and if that is the reply this evening I hope that the noble Lord will be able to give us some idea of how punitive it will be, because I suggest that it will not be punitive. Secondly, there would be resistance from some agents on religious grounds against insurance. I see the noble Lord is nodding his head. I have spoken to a number of solicitors and possibly the noble Lord, Lord Janner, will be able to enlighten the Committee but I have never come across a case where an agent refused to insure on religious grounds. If I may say so, it seems un-businesslike and hardly conducive to the protection of his clients.


I am sorry, I do not know of any cases, but of course I would not be sure that my knowledge of this matter is as perfect as it should be.

The Earl of KINNOULL

I am grateful for that support. The Amendment simply seeks that all agents should be bonded. It is as simple as that. I would suggest to the noble Lord that if he stills feels that this is not acceptable at this stage he might look at the law on the point that I raised with the noble Lord a moment ago, that is operative in Scotland. I understand that estate agents in Scotland are forbidden by law to accept deposits pre-contract. Rather than having these provisions for insurance and bonding, how simple it would be if we simply followed the Scottish law and prevented estate agents from taking part in what is, after all, an act of faith in accepting a deposit before the exchange of contracts. I beg to move.


I rise to support the Amendment because as my noble friend, Lord Kinnoull, said, it lies in the heartland of the Bill. Unhappily we do not and cannot operate estate agency business in England and Wales—and for that matter in Northern Ireland—on the same basis as it operates in Scotland, partly because of past practice, partly because of the legal system and partly because of custom. With that in mind there is an absolutely inescapable argument that we should make provision in Clause 16 for the Amendment which my noble friend has so rightly adduced.


I should like to support this Amendment. One has the picture of the average man who buys a new house every seven years, and while he is busy looking for a house as well as working, he is probably not aware whether or not the agent is bonded and it is a bit late when the agent runs off and the man discovers that, while he has lost his deposit, the agent will not be allowed to act again.

To take another case, what happens where a house is being sold by an un-bonded agent? There is no option for the purchaser to go elsewhere; he has to deal with that agent because he is the only one with the house on his books. If he is un-bonded, perhaps if a deposit is demanded it may not be noticed that he is an un-bonded agent. The remedy is to amend Clause 16 to require all estate agents to be bonded, and not only those seeking, or purporting to seek, deposit payment. Mandatory bonding for all must be introduced within a prescribed period and the Bill should so provide.

5.15 p.m.


This is a key Amendment and I should like to bring my comments to bear also on Amendment No. 52 because it is virtually related to this Amendment. First, I should like to say that I cannot deny that in the absence of a requirement for cover for all who carry on estate agency work as defined in the Bill, there is some risk of rogue agents taking and making away with clients' money. However, strong objections in principle to a universal requirement for bonding—I use the term as shorthand—outweigh the risk which, given the controls of the Bill, should be both limited and shortlived. It must be remembered that the custom of taking deposits is by no means universal among estate agents and I am sure your Lordships will appreciate the unfairness of placing a requirement for cover—indeed, in effect, of taxing—those who do not take deposits. Such a requirement would have the further effect of driving from business the honest and efficient agent who, for instance, has religious objections to taking out insurance. Here I can say most definitely that there are quite a number of estate agents who on religious grounds do not agree with this. I have had representations, and no doubt other noble Lords will have had such representations, and we are very anxious indeed that people with genuine religious objections should have those religious objections respected.


I am grateful to the noble Lord for giving way. I am not at all an expert on religious objections, but I cannot myself see how having to take out cover if you do not yourself take deposits could be any great hardship, because the cover would surely be nil. There would be nothing to cover.


If an estate agent wants to take out general cover there will be expenses but I will deal with that later on, because I want to give something approaching a detailed statement at the end of my present remarks.


Can the noble Lord say whether this is general throughout all religions or whether it is a specific creed which causes people to believe that they should not do this?


Without notice I would hesitate to go into detail, but I should imagine that it is one creed. I have had representations and I have had to write back and give my own views. I do not know whether other noble Lords have received them. It might surprise some people but there are some estate agents who do not believe in this practice on religious grounds. I do not agree with it but everybody has a right to his own religious belief.

The clause as it stands makes it possible for him and for agents who might find the cost of insurance rendered them un- competitive not to take cover but to carry on business without taking deposits. It thus avoids the creation of a closed shop with its resultant disadvantages to the public in limiting competition. The memorandum issued to certain of your Lordships by the Consumer Association highlights this very point in emphasising the importance they attach to consumer choice and is concerned about the additional costs which will be placed on the consumer if those agents who do not take deposits have to meet the additional expense of insurance—an expense which will inevitably be greater for the unattached agent seeking cover for the first time than for the currently established group schemes. In other words, if it is laid down in the Act that there must be cover then they will have to take cover under the Amendment.

The safeguards of the Bill for the depositor are twofold. First, Clause 16(3) enables my right honourable friend to require those who call themselves estate agents to display in their places of business and on their business documents information which will enable consumers to check whether an estate agent is bonded or not before placing a deposit. Secondly, the risk those who take deposits without cover run of being banned from business and the fact that to do so will be a criminal offence should mean that any loophole is shortlived. The issue of one or two banning orders, I submit, will have an inevitable salutary effect on potential rogues. In any case, the Amendment would not close any theoretical loophole there may be. The rogue agent who is prepared to take the risk of being banned and of committing a criminal offence by taking deposits without cover is scarcely going to be deflected from his intention by making it a criminal offence for others not to be covered when they do not take deposits. I ask, is it not an invasion of the liberty of the subject to require an honest and reputable agent who for good reason does not take deposits—and it is in no way an essential part of the business—to obtain cover for something he does not do?

In relation to the second Amendment, No. 52, it might be helpful if I give some explanation of the reasons for the inclusion of Clause 16(2). My right honourable friend's power to except persons and classes of person from the requirement for cover is provided to deal with groups of persons, whether named as a class or listed separately, who are already covered by legislation which is deemed to give adequate protection to the consumer; example might be building societies, banks or life offices. The omission of the power would do nothing to help the consumer.

I think it would be helpful at this stage that I make some statement on insurance or other cover for clients' money. Clause 16 of the Bill requires anyone who takes deposits to be covered by authorised arrangements to protect depositors against loss of the money. Although it is in no way essential to the carrying on of estate agency work for deposits to be taken, it might be argued that the Government should not impose such a requirement without ensuring that suitable arrangements were available for any agent who wanted them. To this end a number of meetings have been held with the insurance industry, from which the following has emerged: (a) the existing indemnity schemes of the main national organisations of estate agents could be expected to continue unaffected; (b) the insurers would favour and would in principle be prepared to cover group schemes on a national or at a local level. It is for those concerned to join together to form such schemes. Then (c) for those unable or unwilling to join such schemes the insurance companies would in principle be willing to issue individual bonds. It is possible that bonds would require to be issued to a named third party.

The Government have it in mind to bring in an Amendment on Report so that the regulations can provide the maximum flexibility and in a way which would oust the general law of contract along the lines of the statutory provisions relating to administration guarantees. (d) As a very rough estimate, the cost of obtaining cover per annum would be £150 per practitioner for £25,000, with a minimum insured of £50,000, and a minimum annual premium of £300. (e) The insurers would not be happy with a requirement for universal bonding—and I use the term in shorthand—whether deposits are taken or not, as has been proposed by some. In particular, they feel it would impose upon them the intolerable burden of deciding whether or not a man was allowed to pursue his livelihood. The Government have every sympathy with the insurers on this matter, and it is one among various reasons why the Government remain resolutely opposed to a requirement for universal bonding.

The Government believe that the understandings outlined above should ensure that arrangements are available for those who feel they need to take deposits. In any case, it is worth repeating that it is not an essential part of estate agency work to take or hold deposits, and nothing in what the Government propose will, therefore, deprive a person unable to obtain cover of his livelihood. That is the position, and therefore, generally speaking, I must reject the Amendment and support Clause 16 as it stands.

5.24 p.m.


I am sure we will all read what the noble Lord has said, and particularly that statement on how it affects what we are trying to achieve by this Amendment. I am not sure that it does cover the point that my noble friend was making, and I am still concerned about the possibility of a rogue agent going away with a deposit. He might in the normal course of his business not accept deposits, and by trading as an estate agent he might not be buying and selling houses that frequently. When he suddenly is offered the job of selling a substantial house and takes a deposit, he might be tempted to go away with it at that stage. That is the situation we are trying to cover. I am not sure that what the noble Lord has said does cover that situation. Therefore, I feel it is a very necessary, to clear up any misunderstanding at this stage and to make the Bill more workable when it is passed, that the clause is extended by the Amendment in the name of my noble friend and myself.


With due respect to the noble Earl, the Committee, in its wisdom or otherwise, has passed an Amendment which will reduce the opportunities of dealing with such a rogue agent.

The Earl of KINNOULL

I should like to thank all those who have taken part in this discussion. I should also like to thank the noble Lord for his very full statement on this point. I do not think it would be right to press this Amendment tonight. I should like to examine carefully what he has said. I would put three points to which we might return at a later stage. In Clause 16(2)(a), which gives the exceptions under this Bill, those agents who would not need to be bonded, the noble Lord mentioned building societies and banks. I noticed that this was given as a reason in another place. I should like to ask, when is a bank or a building society really operative as an estate agent? When a building society takes action to sell a house usually it is for the very sad reason that they have had to take possession, and they come under the most stringent rules of trusteeship. They certainly do not act on their own account as an estate agent, They usually take two or three opinions from estate agents and seek to get the best price through an estate agent. I think it is wrong and misleading to suggest that a building society or a bank would be excluded, because I do not think they would ever come under this clause.

The second point concerns the religious reasons. If there really is a case for religious exemption, then of course it could be written into the Bill. Having practised myself for about 25 years, I have never heard of this sort of case. I accept what the noble Lord says, but I have never heard of such a case. Even so, this could be exempted under the Bill; this could be a reason for exemption.

I think my noble friend Lord Caithness really summarised our arguments. We are seeking to cover the rogue agent who will have absconded criminally with depositors' money. We have, sadly, read of that very case on two or three occasions in the last five years, very painful examples of this abuse that we are trying to prevent. I would hope to look at this again and perhaps see the noble Lord before the next stage to discuss it. I hope he will be prepared to do that, to see whether we can compromise in some way. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Lord GISBOROUGH had given Notice of his intention to move Amendment No. 51: Page 18, line 28, leave out subsection (2).

The noble Lord said: This matter has been substantially dealt with and therefore I shall not move the Amendment.

[Amendments Nos. 51 and 52 not moved.]

Lord GISBOROUGH moved Amendment No. 53: Page 19, line 8, leave out ("residential").

The noble Lord said: Amendments Nos. 53 and 54 are consequential. I beg to move.

Lord GISBOROUGH moved Amendment No. 54: Page 19, line 22, leave out ("residential").

The Earl of CAITHNESS moved Amendment No. 54A:

Page 19, line 29, at end insert— ("(6) For the purposes of this section "authorised arrangements" may include payments by an estate agent to an authorised insurance company and payments to an organisation operating an approved compensation scheme. (7) "An approved compensation scheme" for the purposes of section 16(6) is one approved by the Secretary of State by regulation under section 16(2), for the purpose of compensating a person entitled to any clients' money in the event of an authorised insurance policy, in relation to clients' money, no having been taken out or being invalid for any reason.")

The noble Earl said: The purpose of the addition of two new subsections to Clause 16 is to extend the consumer protection a stage further. One of the main aims of the Bill is to prevent estate agents from absconding with prospective purchasers' deposits, through a system of compulsory insurance or bonding. The Bill, however, does not cover the situation and the problems that will arise if the insurance is not taken out or renewed, or is invalid on the grounds of non-disclosure by the agent to the insurance company. For full protection a back-up fund is needed and there are already such schemes in existence. The RICS and ISVA run a joint indemnity scheme and its purpose—and I quote from their document is as follows: The scheme provides for any member of the public to be reimbursed his direct pecuniary loss arising from the fraud or dishonesty of, or misappropriation by, any member of either of the two societies and/or of any principal or employee of any qualified firm in respect of deposits held by such member or qualified firm, whilst acting in the capacity of estate agents in the British Isles". The scheme automatically covers every member of either of the societies. It has to date been restricted to loss of deposits on purchasing, acquiring or leasing real property up to a certain figure. But I understand that the ISVA has extended its part of the scheme to cover all aspects of estate agency work. Solicitors operate a similar scheme under the control of the Law Society and provision is made for it in Sections 36 and 37 of, and Schedule 2 to, the Solicitors Act 1974. It is a natural extension of the Bill to include these Amendments and I hope that the Government will see fit to accept them. I beg to move.


I should like to support the Amendment. My noble friend has cited solicitors as a parallel case and I think that one should also perhaps cite travel agents. One has seen in the past most unfortunate situations which have arisen in which a case has come about when clients' deposits, as regards a travel package, have been made away with. I believe that this device, which is really a fail-safe technique, should produce a satisfactory result. It relates to a situation when an insurance policy falls out of date possibly for no particular failure on the part of anyone except the firm concerned. I think that it is a device which we should welcome.


The Amendment has the laudable aim of seeking to ensure that a depositor can be sure that his money will be returned to him in full in all circumstances. That. I believe, is the general purpose. The possibility is one that has been considered with care, but such funds are difficult and costly as regards administration and would involve a levy on estate agents, the cost of which would inevitably be passed forward to the consumer. As noble Lords will remember, the memorandum from the Consumers Association, which some of your Lordships received, was concerned to maintain consumer choice and the availability of services which did not include any additional expense for insurance. In the Government's view the cost of administering such a fund would be out of proportion to the mischief involved. The circumstances in which there is likely to be a shortfall in clients' money would inevitably be limited. The arrangements now envisaged for cover, as outlined in the statement that I have just made, will mean that the question of policies becoming invalid because of non-disclosure will not arise. Other failures, for instance, to renew or take out cover, will be short-lived; the issue of a few banning orders should see to that.

The provisions of Clause 16(4) mean that the public will have ample guidance as to where they can safely place a deposit. Perhaps I may remind your Lordships that the subsection requires those who call themselves estate agents and who carry on estates broking, to display information, to be specified by regulation, about their cover—whether they take deposits and so on. The creation of a compensation fund would not only require the trustworthy agent to shoulder part of the burden of the careless or rogue agent, but would, as in the case of the proposal for universal bonding, drive from business the honest and efficient agent who had religious objections to taking out any form of cover and to participating in any association, and as I have already indicated, such people do exist. It would lead to the creation of a closed-shop and the limitation of competition to the public disadvantage.

The Amendments imply that the compensation fund will apply to a class of persons; namely, estate agents. The Bill controls an activity and not a profession for the very reason that estate broking is carried out not only by those who call themselves estate agents. The organisation of a compensation fund would raise issues of definition which might prove insuperable. For all those reasons, and appreciating the points made, I would strongly urge your Lordships to reject these Amendments.


I thank the noble Lord for his remarks. In view of the statement that he has made it seems that part of what we were trying to achieve by these Amendments will be covered in any case. Therefore, at this stage, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 16, as amended, agreed to.

Clause 17 agreed to.

Clause 18 [information to clients of prospective liabilities.]:

5.38 p.m.

Lord GISBOROUGH moved Amendment No. 55: Page 20, line 34, leave out subsection (2).

The noble Lord said: This is a consequential Amendment. I beg to move.

Lord WALLACE of COSLANY moved Amendment No. 56: Page 21, line 9, at end insert ("for carrying out estate agency work").

The noble Lord said: Amendments Nos. 56, 57, 58, 59, 60, 61 and 62 are all covered by the comments which I made earlier. They clarify a doubt about the coverage of the clause and ensure that its requirements apply only to remuneration for estate agency work and other payments under the same contract. As drafted the clause would have been taken to cover remuneration for other matters. That is the situation. I beg to move.


I rise purely on a matter of drafting and terminology to ask the Government whether carrying out estate agency work is consistent with the Bill. If the noble Lord would care to look at Clause 6 I think he will find that it says: carry on … estate agency work". This is really a question of language and consistency throughout the Bill.

Lord WALLACE of COSLANY: That is a point that I shall certainly take into account and we shall probably deal with it at the next stage of the Bill.

Lord WALLACE of COSLANY moved Amendments No. 57 to 62: Page 21, line 11, after ("remuneration") insert ("for carrying out estate agency work") Page 21, line 15, after ("remuneration") insert ("for carrying out estate agency work") Page 21, line 16, after ("which") insert ("under the contract referred to in subsection (1) above") Page 21, line 28, after ("varied") insert ("so far as they relate to the carrying out of estate agency work or any payment falling within subsection (3)(c) above") Page 21, line 33, leave out ("additional information") Page 21, line 34, after ("above") insert ("additional information relating to any estate agency work to be performed under the contract").

Clause 18, as amended, agreed to.

Clause 19 [Regulation of pre-contract deposits outside Scotland]:

Lord SWINFEN moved Amendment No. 62A: Page 23, line 14, leave out subsection (5). The noble Lord said: This is a probing Amendment to discover what sort of regulations the Government envisage. The other evening, when the Committee was discussing the Bill, it was obvious that at that stage the Government had given no great consideration to the various regulations that are to be made under the Bill. A pre-contract deposit is an exceedingly useful tool for the estate agent, bearing in mind that he is the agent of the vendor. It is not unusual for a purchaser to change his mind and decide not to continue with a purchase. Where there is no pre-contract deposit, the purchaser does not always take the trouble to advise the estate agent of his change of mind. Where there is a pre-contract deposit, he wants his money back and he wants it back fast. Therefore, he will advise the agent, who has the opportunity, immediately, of looking for another purchaser and, therefore, assisting his client. Can the Minister give me any indication of the regulations that are likely to be made? I beg to move.


To be brief, my right honourable friend has no immediate intention of using the power conferred on him by this clause. He is conscious that an imposed maximum would soon become the norm, and he is not aware of any widespread abuses. However, if the abuses did become widespread, his aim would be to set the level so that whatever was then reasonable and acceptable was unaffected and only the abuses were caught.

The clause relates only to pre-contract deposits, at present commonly of the order of £100 to £200, although I have heard of cases where as much as £1,000 was sought. The power is taken as a safeguard against the possibility of a trend towards the taking of excessively high pre-contract deposits, which might mean that amounts at any one time exceeded the limit of authorised cover during the term of a bond. That is the position. As the noble Lord said, this is a probing Amendment. If there is any further point, I shall try to answer him now; if not, I shall make further inquiries.


I thank the noble Lord for his reply, which has been most informative. With the leave of the Committee, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 19 agreed to.

Clause 20 agreed to.

Clause 21 [Transactions in which an estate agent has a personal interest]:

5.43 p.m.

Lord GISBOROUGH moved Amendments Nos. 63 to 67: Page 24, line 12, leave out ("residential") Page 24, line 18, leave out ("residential") Page 24, line 30, leave out ("residential") Page 24, line 32, leave out ("residential") Page 24, line 35, leave out ("residential").

The noble Lord said: With the leave of the Committee, I should like to move Amendments Nos. 63 to 67 en bloc. They are identical and consequential.

Lord WALLACE of COSLANY moved Amendment No. 68:

Page 24, line 44, at end insert— ("( ) Any reference in this section to "residential property" includes a reference to the stock-in-trade, goodwill and other assets of a business carried on in any part of the property.").

The noble Lord said: I have already spoken to this Amendment. I beg to move.

Clause 21, as amended, agreed to.

Clause 22 [Standards of competence]:

Lord GISBOROUGH moved Amendment No. 69: Page 25, line 6, leave out ("may") and insert ("shall, not later than two years from the passing of this act,").

The noble Lord said: With the leave of the Committee, I should like to move Amendment No. 69 and at the same time speak to Amendments Nos. 71, 72 and 73. This is a very important Amendment. Consumer protection will not be achieved unless minimum standards of competence are introduced. Greater loss than the loss of a deposit can be and is suffered consequent upon bad advice from an incompetent agent. A gross over- or under-estimate of the selling price through lack of knowledge, experience or, indeed, deliberate malpractice is illustrative of this fact. The remedy is to require rather than to permit the Secretary of State to define minimum standards of competence within a prescribed period. This represents the minimum requirement for the Bill to achieve its object as a consumer protection measure. Without this Amendment in the area where the public are at greatest risk, the Bill means nothing. It is a very important Amendment. I beg to move.


Clause 22 is the result of some considerable thought on the part of the Government, and is an attempt to balance the conflicting aims of protecting the public from incompetents and preserving free entry to the profession. The noble Earl, Lord Kinnoull, has given Notice of his intention to move that the clause should not stand part of the Bill and when we come to that debate I hope to explain in more detail why the clause is as it is.

However, at this stage I should say that the Government are not wedded to the idea of imposing standards of competence at all. Rather, we would rely on the other controls in the Bill to keep out incompetents than create a closed shop which would restrict entry to the profession. That is exactly what these Amendments tend towards. If I may be blunt, I suspect that some of them are initiated more by a desire to produce a monopoly—and perhaps a profitable one—than to protect the consumer. This Bill is about buying and selling domestic property. It is not about surveying, valuation or any other of the specialist skills in the property world.

The Government are strongly of the view that the standard of competence required should be no higher than that needed for the activity of buying and selling domestic property. The case for controls on other skills has not yet been made out, but if it had been or is in future made out, this Bill is not the place to introduce them. Furthermore—and here I turn to the detail of the Amendments—the Government see no reason to impose any standards unless and until the need for them is apparent. Is it not more in accordance with the tenets of the party opposite to work through proscription of what is undesirable than through unnecessary imposition of mandatory controls? These Amendments will require standards to be imposed within two years. The noble Lord has spoken of the need for them to be high standards. I am entirely unconvinced. It sounds to me like special pleading on the part of an interested party.

I hope that the Committee will reject these Amendments, and urge your Lordships to do so. But at the very least, I hope we can agree that it would be better to have no standards—coupled with fully adequate controls on the rogues—than to restrict free competition. If your Lordships are not enamoured of this clause, I suggest that we omit it rather than adopt the Amendments. If, however, the clause is to stand, it would be constitutionally indefensible to lay a duty on my right honourable friend to make regulations introducing minimum standards of competence, as a decision in the matter lies with a future Parliament.

The Earl of KINNOULL

I do not know whether the noble Lord has covered what he sought to cover as regards my Amendment, or whether he would like a general debate on Clause 22. My Motion to leave out Clause 22 is really more a probing one for general discussion than an actual intention to leave out the clause. Being an agent, I can assure the Committee that this is a very delicate area in the Bill, but it is a very important one and should be included. If the Government can get the regulations right, I am sure the Government are right to rely, on the one hand, on those qualified bodies to exert a standard of competence by examination and, on the other hand, to set up a body to determine whether or not someone has sufficient experience to operate and to purport to be an estate agent. I am sure that that is correct. However, my noble friend is concerned—and it is a very genuine concern on behalf of many people—about those agents who are not qualified but are practising at the moment, albeit for a short time. They are concerned that when the regulations are brought in there is no danger at all of their being—I will not say struck off, that would be too strong, but of their not succeeding in the examination of this new body to look into whether they are competent. I hope that the noble Lord can give some assurance tonight on that issue.

I would also hope that he could give tonight a little more information on these regulations. I think there was an undertaking in another place that the regulations would be drawn up after consultation, and that I am sure is welcome and accepted. But it was a little disturbing to read in the proceedings of another place that the regulations were not even a twinkle in the eye of the Parliamentary draftsman or the Department, and that nothing had been put to paper. I do not know whether that is correct or not, but when one is talking of producing a blanket competence clause, as in this Bill, affecting many people in this business, and particularly those coming into the business, I do not think that it is right that the Government should almost take credit for saying they have not anything to guide both Houses on the form of the regulations. I accept that this is a delicate area and would feel myself, as the noble Lord expressed, that it needs to be done with great care and attention.

5.52 p.m.


I think that my noble friends have put the point. It concerns we who are practising agents that the standards of competence are maintained. If one sees a clause such as this one would like to know when these regulations are going to be produced and if they are going to be produced, and what standards we have to go to. I am not against a closed shop in estate agency. It is such a highly complicated matter now that certain examinations should be passed before one can practise it. After all, in these inflationary times, one is dealing with large sums of money. Besides the other aspects of our work such as valuations, surveys, et cetera, the actual buying and selling of a house is an extremely skilled job. It would be beneficial to the public in this particular instance if there was a known standard of competence that an agent had to achieve before he could practice.


I believe I am right in thinking that the other night when the Committee discussed the Bill we widened the power of the Bill and did not limit it solely to residential property. There are certain areas of the country where there is continuing change of use from one form to another in property due to altering social patterns and social requirements. It is exceedingly important that an estate agent should have the knowledge and skill to understand what is going on, to advise his client correctly on the best way in which to deal with his property, and what the property should be sold as, and whether or not he needs to get any permissions or consent for change of use before handling the property.

At the moment, if he has the money, a young man straight out of school can open an estate agent's business with no skills or qualifications whatsoever. Such a person could lose a client many thousands of pounds by poor advice. I must support my noble friends' Amendment on this point because it is essential that minimum standards are set for estate agents.


We are virtually on a debate on clause stand part. In the interests of improving standards of performance, should this seem desirable, this clause enables the Secretary of State to impose minimum standards of competence on those engaged in estate agency work. The regulations must recognise practical experience and may additionally recognise professional or academic qualifications as evidence of competence. There is no national qualification in estate agency work. Members of two or three main national estate agents' bodies are employed separately to carry out structural surveys and valuation of dwellings other than assessment of market price, and are required to prove competence in these and other technical matters which is not needed to carry out the commercial activity of estate agency work within the scope of the Rill where surveys are limited to measuring up and describing the number of rooms, et cetera, in a property, and valuation relates to market values in the given area at a given time.

The expertise necessary for the valuation of business assets for a transaction of the type at Clause 2(2)(d), for example where the dwelling is let at a rack rent and the assets are sold for a capital sum, is probably rather greater. With the possible exception of this case, to insist on technical expertise and professional or academic qualifications for all persons engaged in estate agency work would unnecessarily limit entry to the occupation and restrict competition to the public disadvantage.

The position of estate agents already in practice who have no academic or professional qualifications but are giving the public a competent and satisfactory service. as well as that of future trainees on the job, is protected by the requirement to recognise competence by reference to experience as an alternative to formal qualifications. The Secretary of State may designate or constitute bodies to establish and implement the provisions.

The way in which these powers might be used is not at present clear. But if academic standards were laid down they might, for instance, relate to the ability to keep hooks, to understanding the accounting regulations and other provisions of the Bill in the normal case, with possibly more significant requirements for those dealing in transactions caught by Clause 2(2)(d). The aim would be to arrive at a minimum standard if this seems advisable to protect the public, while recognising the acceptability of higher standards. Before any regulations were made there would be wide consultations required by Clause 30, and by wide consultations that would be with all the professional bodies and any other body related to estate agency work in any way.

This is the general position, and it is therefore necessary to have a standard of competence but not necessary to make it rigid and confined to one particular set of standards only. But there must be a wide-ranging series of standards acceptable and operable for all estate agents whether they are professionally qualified (shall we put it that way?) in the sense of academic qualifications, or not.

The Earl of KINNOULL

From that second answer that the Minister has given I have got the impression that the Government have no intention of bringing this regulation in for many years. I do not know whether I misunderstood, but I think the noble Lord said, "if these regulations are required." I do not know whether that really is the intention of the Government. Obviously they can hide behind wide-ranging consultations for may years. I think the Minister ought to give an indication for which I asked, that those practising at the present time without qualifications, but who would come into the remit of this new body under this clause, could possibly lose their businesses on the grounds of incompetence due to a lack of experience. I think particularly not necessarily of those who have practised for many years and have an established record, but of those just coming in who have set up an office and gone to a lot of cost and at the moment would have no surety that they could continue in business.


I would say that anybody in business now establishing a reputation has no need to be concerned. I would say that as an on the spot remark, but it seems so obvious to me. We can get a firmer assurance in due course, but my view is that anyone in business at the present time who is honourable and straightforward in their dealings, and competent within the reasonable demands of their work, should have nothing to worry about.

The Earl of KINNOULL

I am grateful to the Minister for that assurance so far as it goes, but if he will not accept the Amendment and write into the Bill that within two years the Government will introduce a standard of competence, may I ask him to say after what period such a regulation will be introduced? It could take five or 10 years, according to what he said, and that is unsatisfactory. This is an important part of the Bill and I hope the Minister can say a little more about what is happening about it in his Department.


We think two years is too short a time. This is not a light-hearted matter that can be passed over quickly, but a very serious subject about which there must be extensive consultation and, of course, agreement. After all, one must have a standard which is acceptable to everyone for the benefit of the profession, and therefore the Government must go carefully over this. I cannot say exactly when they will introduce it—and, as for this Government, who knows?


I do not think it is fair to say there is any intention of creating a monopoly here and it is certainly not a question of protecting the professional bodies. Far from it; they are thinking in terms of the consumers, so and we are talking about the bad eggs. The word "may" could mean "never" and I do not see why it should be so difficult to produce examinations and so on which could be up to the same standard as those of the professional bodies. Indeed, they could even be prepared by the professional bodies. There is also the problem of new entrants into the profession who, if they are not joining a professional body, will not have to pass any exams and will have no experience, so I do not know how they will cope. The problem is that for people operating without experience and without having passed exams and so on, if things go wrong it is they who get the whole of the profession a bad name. I shall consider the matter further between now and Report; in the meantime I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

6.3 p.m.

Lord GISBOROUGH moved Amendment No. 70: Page 25, line 6, after ("may") insert ("after consultations with all established bodies representative of the estate agency profession").

The noble Lord said: I beg to move.


Before the noble Lord explains the purpose of the Amendment, perhaps I should point out, coming before your Lordships in sackcloth and ashes, that I should not have moved Amendment No. 68. It was a mistake on my part; I glanced quickly at the documents and thought I saw No. 68, but I did not, which means I shall probably have to visit the optician. I cannot see how we can put this right now and we shall probably have to put it right on Report. It is rather sad that at a point in the Bill when we are dealing with competency I must rise to make an apology of this kind.


Amendment No. 70 has been partially dealt with. I think it is accepted that the Government's intention is that the importance of practical experience as an equivalent to theoretical qualification should be recognised, and important assurances have been given. However, I think it would be possible further to strengthen the clause to ensure that this philosophy is binding as far as possible on future Administrations. The professions are worried on this count, as was mentioned in the debate on the previous Amendment.


I have already covered this point and cannot advise the Committee to accept the Amendment.


I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 71, 72 and 73 not moved.]

Clause 22 agreed to.

Clause 23 [Bankrupts not to engage in estate agency work]:

On Question, Whether Clause 23 shall stand part of the Bill?


Very little discussion took place in another place on this clause and in fact it was not discussed at all there in Committee. The noble Lord, Lord Wallace of Coslany, referred to it on Second Reading when he said: I do not think that anyone would disagree that it is undesirable that such persons should be in a position to receive any money from the public". This is a clause dealing with the undischarged bankrupt and it places a prohibition preventing an undischarged bankrupt from practising as an estate agent. While wholly agreeing with what Lord Wallace said on this matter, we have had among our communications one, and I think only one, from the National Federation of Consumer Groups making this statement: Clause 23 is superfluous. It is clearly an offence for a bankrupt to trade on his own account. There are substantial defects in the laws of bankruptcy and liquidation, but they should not be remedied in the Bill". We are here dealing with individuals as bankrupts and not of course as companies; companies are dealt with under the Companies Act 1948 and other legislation. Why the Government feel it necessary to include bankrupts in this Bill specifically when the bankruptcy Acts in their judgment are insufficient to deal with the case I do not know. It would be interesting to have any comments Lord Wallace might have to make on the subject, and I feel we should be given more information as to why this clause is in the Bill.


This clause provides that undischarged bankrupts are not to engage in estate agency work except as employees of another person. In particular, it is not considered desirable that such persons should be in a position to receive money from the public which should be paid into a client account; that is Clause 13. Subsection (1) provides that any person adjudged bankrupt—or, in Scotland, whose estate is sequested—after the coming into force of this clause is not to engage on his own account in estate agency work. In order not to deny a bankrupt the opportunity of financial rehabilitation, he is permitted to continue in estate agency as the employee of another person who would be responsible for the maintenance of the financial safeguards.

Subsection (2) raises that prohibition when the adjudication of bankruptcy is annulled, or in Scotland where the sequestration of the estate is recalled or when the bankruptcy is discharged. Subsection (3) qualifies the saving in subsection (1) for engaging in estate agency work as an employee by prohibiting employment by a body corporate of which the bankrupt is a director or a controller as defined in Clause 31. In the absence of such a provision, a bankrupt could escape the prohibition by forming a company which would employ him. Subsection (4) makes it an offence to engage in estate agency work in contravention of those requirements. The penalty is, on conviction or indictment, a fine of unlimited amount and, on summary conviction, a fine not exceeding the statutory maximum at present of £1,000. There may be points here on which we might have to have discussions, which could readily be arranged.


We are very grateful to the noble Lord, Lord Wallace of Coslany, for going over the clause. This matter is important to the Bill, and perhaps any points arising can be raised in private discussion later.

Clause 23 agreed to.

Clauses 24 to 26 agreed to.

Clause 27 [Obstruction and personation of authorised officers]:

6.10 p.m.

The Earl of CAITHNESS moved Amendment No. 73A: Page 28, leave out line 39.

The noble Earl said: I am informed that if a person wilfully obstructs an authorised officer from carrying out his duty under the Bill, those actions will fall into the ambit of criminal law and appropriate action can be taken accordingly. Furthermore, if the officer is likely to know both what type of person the agent is and his likely reaction when the officer carries out his duty, and if the officer expects adverse reactions, he can apply for a warrant under Clause 11. It appears to me that paragraph (b) already covers the situation stated in paragraph (a), in that if the person, wilfully fails to comply with any requirement properly made to him under section 11", that will constitute obstructing the officer. Thus the situation is already catered for. I beg to move.


The Amendment would seriously undermine the consumer's right to protection and give the rogues a totally indefensible opportunity to evade detection. Subsection (1) contains four different offences. Paragraphs (b), (c) and (d) make it an offence to refuse to comply with a request, or to lie. These are all, as it were, failures to do what the officer has properly asked. Paragraph (a) deals with the case where the officer has a right to do something—for example, enter premises, or seize books—and the agent prevents him. The offences are thus complementary, and each is needed to enforce Clause 11. I shall give only two examples. The agent who took deposits and had no cover would be able with impunity to refuse entry to the enforcement officer who sought to go into his office to observe. The rogue agent who knew that he was under suspicion could wilfully destroy all relevant evidence without attracting any sanction.

The absence of any criminal offence for actions of this kind could mean the absence of a trigger event on which the Director could consider fitness to practise. In the result, the rogue agent, to the disadvantage of the consumer and the general reputation of estate agents, would be able to evade investigation and to continue in practice though he had been in breach of the requirements of the Bill.

I am not saying that people are to be treated as guilty until proved innocent. I am saying that if we are to regulate estate agents, which we all agree is desirable, there must be power to check up on whether the rules are being complied with. Regulation is in a sense a privilege, a recognition by Government that the matter is sufficiently important to the public that they are entitled to expect honesty and fair dealing. Enforcement is the price to be paid for the privilege, and for effective enforcement there must be sanctions.


I should not want to do anything that would undermine the consumer protection aspect of the Bill. If the noble Lord says that deletion of paragraph (a) undermines that aspect, I shall have another look at the Amendment and perhaps come back to the matter at a later stage. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 27 agreed to.

Clause 28 [General provisions us to offences]:

The Earl of KINNOULL moved Amendment No. 74: Page 29, line 26, leave out from ("corporate") to ("he") in lint 27.

The noble Earl said: It is surely wrong that any person who was purporting to act in any such capacity", presumably without proper authority, should be in a position to prejudice the interests of a body corporate. One can visualise the practical joker behind the empty desk, or, more likely, the malcontent member of staff who may assume a responsibility that he has not been given to commit an offence under the Bill. Surely this could be dealt with as a fraud or a deceit under existing law and for which the body corporate should not be automatically and legally presumed responsible. I beg to move.


Clause 28 is a common form clause in Bills creating offences which may be committed by a company. It does no good just to convict the company because it can be abandoned and the real criminal, the individual running the company, would get away scot free. The clause allows the individual responsible to be convicted, as well as the company. It frequently happens that the person running the company, particularly a dubious company, is not in law actually a director or other officer, although he may call himself such. It would clearly be wrong for him to escape by reason of some defect in his appointment. It would also leave a loophole in that such a person could deliberately appoint someone else as a nominee director while exercising the power himself. Thus this provision is a normal and a necessary one, and I hope that the noble Earl will not press the Amendment.

The Earl of KINNOULL

I wish to ask the noble Lord whether the words in question try to catch a person who has misappropriated funds on behalf of a firm. Can we have an assurance—and this was really the purpose of the Amendment—that the firm itself will not automatically be struck off? According to Clause 28(1), if an individual is charged with an offence under the Bill, he can lay a defence. What I am not sure about relates to the situation under subsection (2). Let us suppose that a firm employs a manager, a secretary, or other person who deals with the public and who does something which is wrong, which endangers not only his own career, but also that of the firm. I should like, first, clarification on whether, in those circumstances, the firm itself would be able to plead a defence to the Director of Fair Trading and, secondly, an assurance that it would not lose its licence because of the malpractice of a member of its staff.


The noble Earl has a point which we can clarify. We are after the real rogue the, one who has "done the dirty," and it does not follow that other people who are completely innocent should suffer. This is a matter which I think can be sorted out quite easily. In the case described the company must be convicted first. The company would be liable only under the normal rules of criminal law.

The Earl of KINNOULL

I thank the noble Lord for that information, which probably covers the point that I had in mind. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 28 agreed to.

Clause 29 [Service of notices, etc.]:

On Question, Whether Clause 29 shall stand part of the Bill?


I wish to raise one small point at this stage. Clause 29(1)(c) refers to the posting of a notice by the Director. The matter is further covered by the Interpretation Act 1978; in particular, Section 7. As a result of that Act the onus of proof is upon the recipient of the notice. I should have thought that in matters involving a person's livelihood, as is the case in this instance, the notice ought to be served by recorded delivery, not by ordinary post.


I am not here to guarantee the efficiency of the postal service. This point is not of great importance, yet is of sufficient importance to merit consideration. I do not think that one can specify registered post or recorded delivery, but I shall check on this.

Clause 29 agreed to.

Clause 30 [Orders and regulations]:

6.20 p.m.

Lord GISBOROUGH moved Amendment No. 75: Page 30, line 31, leave out ("such") and insert ("all established").

The noble Lord said: With leave, in moving Amendment No. 75 I should like to speak to Amendments Nos. 76, 77 and 78 as well. The purpose of these Amendments is to strengthen the obligation on the Secretary of State to consult all relevant bodies before making any regulations. The obligations placed on the Secretary of State and the Director General of Fair Trading to consult with bodies representative of the profession are inadequate. During the Committee proceedings in another place, Mr. John Fraser said: The Secretary of State is obliged to consult the Director, such bodies representative of persons carrying on estate agency work, and such other persons as he thinks fit". This is not an acceptable argument. The Secretary of State should not be able to pick and choose which bodies he wishes to consult. The phrase "as he thinks fit" could well be enough to get him off the hook altogether. An Amendment is needed to ensure that any action is taken only after consultation with all representative bodies. I beg to move.


It may be convenient—and I think the noble Lord will agree—when dealing with Amendment No. 75, to deal also with Amendments Nos. 76 to 78. Clause 30 already requires my right honourable friend to consult with estate agency bodies, among others, before making regulations about competence and other matters. These Amendments display a misunderstanding of the discretion conferred on my right honourable friend under the established rules of administrative law, as enforced by the courts. These rules lay down that any such discretion must be exercised reasonably. It would be wrong, and open to challenge in the courts, for my right honourable friend arbitrarily to exclude from consideration any body which was representative at a national level of estate agents, or of consumers; and I can assure your Lordships that he has no intention of doing so.

As the profession is currently organised, the bodies of which I am aware which are representative at a national level of significant numbers of those engaged in estate agency work are the Royal Institution, the Incorporated Society, the National Association, the Institute of Business Agents and the Corporation of Estate Agents. I see no reason why my right honourable friend should not consult all of them and any others who make themselves known to my right honourable friend and who meet these criteria. Your Lordships may ask why, in that case, I do not accept the Amendments. The answer is that Clause 30 imposes a formal statutory requirement. Amendment No. 70 would have meant that my right honourable friend had to consult every single body representative of estate agents, whether local or national, and whether or not the body concerned had made known its existence to my right honourable friend. If he did not do so, then the validity of any regulations made would be in doubt. It would be intolerable if some unknown body could throw into doubt regulations made in good faith. These Amendments would thus do nothing to promote the interests of established bodies of which my right honourable friend is aware, but would obscure the position and make the task of consultation well nigh impossible. I urge your Lordships to reject the Amendments.


I think the spirit of that assurance will be quite adequate for the associations, and I beg leave to withdraw this Amendment and not to move the next three.

Amendment, by leave, withdrawn.

[Amendments Nos. 76 to 78 not moved.]

Clause 30 agreed to.

Clauses 31 and 32 agreed to.

Clause 33 [General interpretation provisions]:

Lord GISBOROUGH moved Amendment No.79:

Page 32, line 23, at end insert— (""business property" means any land which consists, wholly or substantially, of one or more premises used in connection with a business or a site on which one or more premises are to be, or are in the course of being, constructed, for use in connection with a business except that where such land is or is to be used for both business and residential purposes it shall be deemed residential property; and for the purpose of this subsection any land which is or is intended to be, occupied and enjoyed with any such premises shall be treated as part of the premises; reference to disposing of, or acquiring an interest in business property shall be construed in accordance with subsections (2)to(4)of section 2 above; and business includes a trade, profession or employment").

The noble Lord said: Amendments Nos. 79 and 80 are both consequential. I beg to move Amendment No. 79.

Lord GISBOROUGH moved Amendment No. 80:

Page 33, line 4, at end insert— (""property" means residential property or business property").

Lord GISBOROUGH moved Amendment No. 81:

Page 33, line 5, leave out from beginning to end of line 9 and insert— (""residential property" means land which consists, wholly or substantially, of one or more dwellings or a site on which one or more dwellings are to be, or are in the course of being, constructed; and for purpose of this subsection any land which is intended to be occupied and enjoyed with a dwelling shall be treated as part of the dwelling and reference to disposing of, or acquiring an interest in residential property shall be construed in accordance with subsections (2) to (4) of section 2 above").


This Amendment is also consequential. I beg to move.

Clause 33, as amended, agreed to.

Remaining clauses and the Schedules agreed to.

In the Title:

The Earl of KINNOULL had given Notice of his intention to move Amendment No. 82: Line 4, leave out from beginning to ("and") in line 5.

The noble Earl said: I was going to take half an hour to exploit the arguments on this Amendment, but in view of the splendid way in which the noble Lord the Minister has striven to answer all our questions with such equanimity this afternoon, and in view of, I am sure, the growing impatience of my noble friend on the Front Bench, I do not intend to move this Amendment.

House resumed: Bill reported with Amendments.