HL Deb 16 September 2004 vol 664 cc1294-303
The Minister of State, Office of the Deputy Prime Minister (Lord Rooker)

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 Rooker.)

On Question, Motion agreed to.

House in Committee accordingly.


Clause 145 [Home condition reports]:

[Amendments Nos. 208A to 210 not moved.]

Clause 145 agreed to.

Clause 146 [Enforcement authorities]:

Lord Rooker moved Amendment No. 210ZA:

Page 100, line 21, leave out "this Part" and insert"—

  1. (a) the duties under sections 137 to 141 and 147(4), and
  2. (b) any duty imposed under section (Power to require estate agents to belong to a redress scheme)(1),"

The noble Lord said: With this amendment, we will discuss a host of other government amendments relating to estate agents. The introduction of home information packs will enhance the role for estate agents in the home buying and selling process. Agents will be marketing homes with home information packs and will also have the opportunity to be pack providers. As we have discussed in relation to earlier amendments, home information packs will cover a range of documents and information that is important to sellers and buyers and, indeed, to the whole transaction process. For probably the first time, agents will have full information about the property when the property is marketed. This will put agents in a central and highly influential position.

Your Lordships will be aware that the recent report from the Office of Fair Trading found a high degree of consumer dissatisfaction with estate agents. Among the report's recommendations was a suggestion that a power should be taken to impose a statutory redress scheme for use if voluntary codes of practice did not bring about sufficient improvement.

The OFT investigation and resulting report were largely concerned with the role of estate agents in the home buying and selling process as it exists today. The introduction of home information packs makes the imperative of a more effective consumer redress even more pressing.

The provisions set out in this group of government amendments are a variant of the OFT recommendation. They give the Secretary of State powers to approve one or more redress schemes and thereafter to require, by order, estate agents to become members of such a scheme. They provide also for the Secretary of State to withdraw any such approval. It would be open to any organisation or person to seek the Secretary of State's approval for a redress scheme. There could be more than one approved scheme. We hope that redress schemes will be run by the industry itself. We are holding discussions with the industry to bring this about. If it is necessary—although we hope that it will not be—the Secretary of State could establish a scheme himself. Sellers and buyers would be able to make complaints. The process would be independent and free to complainants. Members of an approved redress scheme would be under an obligation to abide by any recommendation or sanction resulting from an adjudication on a complaint.

Amendments Nos. 210ZA and 210ZB are consequential. They provide for local weights and measures authorities to enforce the duty to belong to a redress scheme, in addition to enforcing other duties relating to home information packs. We envisage that redress schemes may also operate on a voluntary basis. This voluntary element could relate to activities that are not connected with agents' activities with regard to home information packs.

Because this is a new proposal on which the Government have yet to consult—and brand new for the other place—we would not propose to exercise the power until it was clear what industry scheme or schemes would seek approval and what arrangements they would have for providing redress, including the fees that they would charge estate agents. Consultation needs to be carried out on the detailed arrangements, and a full regulatory impact assessment completed.

We are bringing forward this package of amendments as part of the package of measures that the Government announced in our response to the OFT report. The Department of Trade and Industry will also consult on proposals to improve transparency in this market and make enforcement of the legislation more effective. This is an important and timely consumer protection measure; it would provide consumers with an effective redress when estate agents marketing homes with packs fail to match up to the high standards of care that home buyers and sellers need.

I do not want to make long speeches, but this is a brand new package so it is important to put as much on the record as possible. There is a fairly narrow scope to the amendments and we do not really want to widen it; however, the House may wish to widen it—though after proper scrutiny, of course, not at this stage. We have sought to take maximum advantage of the opportunity provided by this Bill to bring forward this amendment to facilitate the introduction of a redress scheme. Of course, that means that we are, or were, constrained by the scope of the Bill.

The Bill is about marketing homes for sale with home information packs. Once it is in force we expect that the business of buying and selling a home will be heavily influenced, if not dominated, by the additional presence of home information packs. Consequently, the landscape will also change for estate agents. Many of the problems that cause consumers to complain may decline or even cease as a result of the packs. Equally some new problems may surface that the redress scheme will be called upon to take account of.

Therefore, it is difficult now, before home information packs are in place, to say what problems will arise that the redress scheme will cover. However, marketing homes for sale is probably the area that has given rise to most of the dissatisfaction—though not all of it—that consumers feel about estate agents. The redress measure will cover—and this is set out in subsection (6)(b)—an, act or omission affecting the complainant in the course of the estate agent's activities in relation to a home information pack that is (or will be) required for that property (including the giving of advice as to whether such a pack is required)".

It simply is not possible, within the scope of this Bill at present, to provide for redress schemes to cover all estate agents' activities—for example, commercial sales. But if it is the mood of the House that the scope of the scheme is more narrow than it needs to be, we will be more than happy to reflect on the matter further. In any event, we anticipate that those compiling redress schemes will expand their scope on a voluntary basis. Subsection (5) specifically allows for this. It makes it clear that these provisions do not prevent approved schemes from providing for the investigation and determination of complaints about other matters when members—that is, estate agents—have voluntarily accepted the jurisdiction of the scheme over such complaints.

Thus there is a real opportunity to expand the coverage of redress schemes beyond the requirements of this amendment. We will be exploring this further in the context of the consultations that the Government will be undertaking on this measure and the wider issues arising from the OFT report. But the final decision, of course, rests not with any technocrat, but with this House. I beg to move.

11.45 a.m.

Baroness Hanham

The Minister's explanation of the amendments is very welcome. As he said, this is an important part of the Bill, which is being inserted at quite a late stage and which it will be the responsibility of this House to see through.

I have a couple of worries. One is that the redress scheme seems to be, by any other name, a complaints system. Will the Minister confirm that that is the situation? If that is so, it is a very poor second guess at having estate agents registered and licensed. If it is a complaints system, the Minister is probably right in believing that there will be pressure to extend the scope more widely, rather than limiting it to the home information packs. It may be worth tabling an amendment and discussing the implications of making the scope wider, to cover the activities of estate agents.

The Minister might be kind enough to respond to another thought I had when he was introducing the amendment. It was not something we discussed when we talked about the home information packs. Is it a sine qua non that estate agents will always be the people who put the packs together? Off the top of my head, I cannot see why a solicitor should not do that. After a home inspector has been instructed to get the report done, is there any reason why a solicitor should not complete them? In that case, will the redress scheme be wide enough on that basis, too?

I am not being unwelcoming of the amendments, which are moving in the right direction, although they will probably need expanding at the next stage, when we can discuss them a little further. In the mean time, perhaps the Minister would consider whether this is not a rather limited response to the pressure that we applied over estate agents' registration, and whether the measure should be extended to anyone who is putting together the home information packs.

Baroness Maddock

We, too, welcome the Government's efforts. This issue is quite difficult because, as with other amendments, this is the first time that we have discussed them, and we have not had long to consider them. However, I am grateful for the Minister's explanation of why the scope is so limited, and why the provision deals with home information packs alone. That creates a difficulty for us, after the discussions that we have had so far. The nature of the Bill is such that trying to widen the scheme to the activities of estate agents not only associated with the home information packs is actually quite difficult. The Minister alluded to that in his last sentence.

I welcome the Minister's comment that we should not be ruled by technocrats, but I believe that there will be a problem. The National Association of Estate Agents has been advising me; it welcomes what the Government have done so far but along with others would like to see all aspects of the buying and selling process encompassed.

It will be difficult to get to grips with the issue because Parliament will not be sitting for the next three weeks and some of us have other commitments. I hope that it will not come up in the first week when we are back, so maybe we will be able to get to grips with it. I can see that we are going to have more arguments about how we get down anything that we can discuss to widen the scheme. The noble Baroness, Lady Hanham, is of the same view. The estate agents would like to see it wider, and I think I am correct that the DTI was hoping for a wider scheme. We will have to put our heads around it. That is the main disappointment; we are pleased about the rest.

Lord Borrie

Perhaps I may express a word of welcome for the new clause that the Minister has in mind. The scheme intended is both a complaint and a redress scheme. The existing ombudsman for estate agents scheme, which has been operative for 14 years and is the most obvious existing scheme—I do not think that there are any others—to be approved by the Government for the purposes of the new clause offers redress as a response to complaints about estate agents who are members of the scheme.

Unfortunately, the scheme does not have in its membership anywhere near as many estate agents as one would like. It does not quite cover 50 per cent of the total market. I declare a past interest: I was for some years a member of the council on the ombudsman for estate agents under the chairmanship of my noble friend Lady Mallalieu. I believe that the present chairman is the former Conservative Cabinet Minister the right honourable Gillian Shephard. She has continued the valuable work of the voluntary ombudsman scheme as it is as the moment.

It seems the most obvious scheme to receive government approval. No doubt the Government and the Benches opposite favour competition in the supply of goods and services, but I am not sure that it is such a good idea to have competition among those who offer redress facilities. It would probably be rather confusing, and there would be a risk of inconsistency in decisions and so on if two or more systems were operating.

The Minister and the two speakers from the Opposition Front Benches have noted that the proposal is limited to complaints or redress in relation to home information packs. It may be a much better idea, if one can properly fit it into the Bill, if it were widened beyond that, because I am sure that the Committee will feel that if there were a redress scheme working well, worthy of government approval and so on, it would be far better that that scheme go across all complaints concerning estate agents—at any rate in the residential property market—and not just the narrow complaints against estate agents in respect of home information packs.

The new clause would be better if it did not have the limitation that it has. Let us hope that a way can be found in the next few weeks for devising such. At any rate, for reasons that I have already indicated, it would be sensible to have one code of practice for the ombudsman or whomever rather than a number of rival codes, otherwise there will be a certain amount of inconsistency.

Finally, perhaps I may draw the Committee's attention to a recently published White Paper from the Department for Constitutional Affairs entitled Transforming Public Services: Complaints, Redress and Tribunals—Command Paper 6243, published two months ago. There is a chapter of commendation of various existing public and private sector ombudsman schemes. Towards the end of the report, it says that one of the objectives of government in this field should be consistent and comprehensible decisions.

We will obtain consistent and comprehensible decisions only if we have one scheme approved that is worthy of approval in the matter that the Government want to cover, and preferably rather wider than the Government have in the present new clause, so that all activities of estate agents in relation to residential property are included.

Lord Rooker

I am grateful for the comments, and I shall do my best to answer the brief number of questions. Yes, it is a complaints system. There is already a regulatory system for estate agents that the Government are committed to improving, following the report of the Office of Fair Trading. It is more than a complaints system. The noble Baroness, Lady Hanham, is right that estate agents will not always put together the packs. Solicitors could do so; and the advantage is that they are already covered by a redress scheme. Of all the bodies involved, it happens that estate agents are not covered. They fall through the net completely. Solicitors are covered by the legal services ombudsman. I cannot spell it out any more clearly: the Government are looking for some help in getting the provision wider than we have presented it today. I invite the Committee to consider that over the next three weeks before Report.

On Question, amendment agreed to.

On Question, Whether Clause 146, as amended, shall stand part of the Bill?

Lord Hanningfield

This grouping is intended to probe the Minister over enforcement in relation to packs. Unsurprisingly, given our general apprehension about the packs and their current mandatory nature, we are concerned that failure to provide a pack would result in possible enforcement action. That appears to be an "all stick and no carrot" approach.

If, as the Minister has tried to assure us throughout our discussions, people will accept and indeed embrace the packs, why do the Government feel it necessary to include what can only be seen as a set of draconian measures? Surely if what he says is true, there would be no need for such legislation. If there are to be packs, they should be voluntary, which would obviously preclude the need for this section on enforcement.

The Minister could additionally clarify some of the detail, which appears vague, in the section. For instance, exactly how much would a penalty charge be? What would be the grounds for a person having, a reasonable excuse for not complying with the requirement to have a pack, as set out in Clause 147(5)? Who and what would be an enforcement officer? How exactly is the section to be enforced? How will the necessary authorities know if someone has a home information pack? Not only are we opposed to this section of the Bill as it stands, but it is sufficiently vague to give rise to considerable confusion both among home sellers and the individuals who are supposed to enforce such draconian measures. I would therefore welcome the Minister's thoughts.

Baroness Hamwee

On enforcement my question is not so much about sticks and carrots, although the Minister may think that the answer is about sticks and carrots. The question is, do the Government, as they appear to, think that there is a place for the state in enforcing the provisions rather than leaving it entirely to matters between citizens?


Lord Rooker

The answer to that last question is yes. I shall give an example. We are dealing here with a narrow point relating to Clause 146 to which I referred earlier. The matter would be enforced by the local weights and measures authorities. The vast majority of people abide by the law. However, there will always be some who want to cut corners if they see an opportunity to do so. As we have said, failure to comply with the home information pack duties would impact on all other transactions in a chain. We are dealing here not with the individual transaction of the buyer and seller of one property. As I said, the average chain comprises four properties. Therefore, other people are affected. That is why effective enforcement is essential.

Local authority trading standards officers will play the major role in this respect. They are ideally placed to carry out this function. They are already responsible for enforcing the Property Misdescriptions Act 1991 and parts of the Estate Agents Act 1979. The enforcement of the home information pack duties is complementary to those activities. I am not aware of people complaining about the duties they already take on and enforce.

Trading standards officers are the front line of consumer protection in a whole host of activities. People might ask what the state is doing in that regard. Trading standards officers are the front-line troops in terms of health and safety and food, for example. They have a fantastic range of expertise. I never see any reports that their duties are onerous or oppressive. They get on and do the job. Most trading standards officers will follow the law and add the duty that we are discussing to the activities they carry out under the two property-related Acts that they already enforce. Therefore, we do not envisage any major difficulty in that regard at all.

Lord Hanningfield

Will the Minister clarify the matter? I am the leader of an authority whose trading standards department will carry out this work. We mainly carry out spot checks. How does the Minister expect the measure to operate? As we have said several times, about 1.4 million homes change hands every year. That will involve 1.4 million home information packs. Does the Minister expect trading standards officers to double check that every home has one, or will there be spot checks? There may be an army of trading standards officers looking at 1.4 million packs. At the moment such laws are mainly enforced through spot checks rather than, for example, checking every pub to ensure that its staff are serving the correct measures, or checking every shop to ensure that its staff are selling the correct items.

Lord Rooker

I do not see the problem. I note that I am being asked that question by a good leader of a major, well run authority. He is asking Ministers to tell professional local government officers how to do their job. They will do the job in the same way they do it now. First, they will presumably operate on the basis of complaints from the public, because that is what trading standards officers do. Secondly, they will police the system on the basis of the risk that they countenance from the areas they are asked to police.

The noble Lord asks me whether trading standards officers will check every one of the 40,000 dwellings that go on sale every week. I should be astonished if the answer to that was yes as that would be an abject waste of their professional time. They will look at the risks, add their policing role to their existing roles and operate on the basis of complaints from the public, or complaints from other people. They will carry that out in the same professional way as Essex trading standards officers carry out their existing duties. So far as I can see, there will be no difference.

Lord Avebury

Relating to the production of the documents in a visible and legible documentary form, when the trading standards officer wants to verify that a particular document exists, why should it not be satisfactory for the person who holds that document simply to show it to him in electronic form? It is not necessary for the purpose of ascertaining that the document exists to print out the 200 pages or whatever it may consist of. One could simply show it to the enforcement officer as it exists on the hard disk of the particular estate agent.

Lord Rooker

The noble Lord is asking me almost to prescribe the way in which the job should be done. I do not know how trading standards officers will assess what documents are in the pack. That will be for them to assess. If they are prepared to accept information in an electronic format, that is up to them. That is the way of the world. I am confident that trading standards officers will do their job professionally. I shall not try to second-guess them.

I refer to the amount of penalty prescribed by the Secretary of State. The Bill as amended sets a maximum of £500. We have in mind setting the charge initially at about £200. The trading standards officers' primary enforcement role will be to inform and advise. A penalty will be issued only as a last resort. Trading standards officers are extremely helpful to the industries that they police.

Lord Hanningfield

I thank the Minister for that reply. We still do not agree with the whole provision as we consider that the packs should be voluntary. If they were voluntary, they would not need to be policed. However, I thank the Minister for his comments as they indicate that no one is expected to police every single pack. I am grateful for that useful comment.

Clause 146, as amended, agreed to.

Clause 147 [Power to require production of home information packs]:

On Question, Whether Clause 147 shall stand part of the Bill?

Lord Hanningfield

We on these Benches in no way condone those who systematically and cynically abuse the right-to-buy scheme. I believe that I have the wrong script.

Clause 147 agreed to.

Clause 148 [Penalty charge notices]:

Lord Rooker moved Amendments Nos. 210ZB and 210ZC:

Page 101, line 8, leave out from "of" to "give" in line 9 and insert"—

  1. (a) any duty under sections 137 to 141 and 147(4), or
  2. (b) any duty imposed under section (Power to require estate agents to belong to a redress scheme)(1),"

Page 101, line 11, after "day" insert "(or in the case of a continuing breach the last day)"

On Question, amendments agreed to.

On Question, Whether Clause 148, as amended, shall stand part of the Bill?

Lord Hanningfield

I shall not speak to that Question.

The Deputy Chairman of Committees (Lord Lyell)

I have it on my instructions that the noble Lord had given notice that he might wish to oppose the Question that the clause stand part. That is why I called it carefully. The Question is that Clause 148, as amended, shall stand part of the Bill. As many as are of that opinion shall say "Content".

Noble Lords


The Deputy Chairman of Committees

The "Contents" have it.

Clause 148, as amended, agreed to.

Lord Rooker moved Amendment No. 210A:

Before Schedule 7, insert the following new schedule—