§ Mr. Coeasked the President of the Board of Trade whether he will make a statement on the report of the Monopolies Commission on the supply of certain services by estate agents.
§ Mr. CroslandThe Report was published this morning. The Commission have found that monopoly conditions, as defined in the legislation, prevail in the supply of certain services by estate agents in connection with the selling, purchasing and taking on lease of unfurnished dwellings, since at least one-third of such services supplied in England and Wales is supplied by persons who charge fees or commission at standard rates. The Commission, with one member dissenting, have concluded that these conditions operate and may be expected to operate against the public interest since, at least in some cases, fees are likely to be higher than they otherwise would be, resources are likely to be wasted, the incentive to introduce or experiment with new methods is likely to be reduced, and the customer is denied the option of a lower price if he does not want the full service that goes with the standard price.
The Commission find no grounds for suggesting that the present practice of charging fees ad valorem on a contingency basis is inherently objectionable. They think it possible that the level of fees and the level of services which it 289W provides in different areas is that which most vendors would in fact prefer, and they do not consider they have any grounds for suggesting that any other method would in general be preferable. The Commission think it likely that if standard rates were no longer recommended or enforced, the majority of estate agents would continue to apply the familiar methods of charging. However, the present system of standard scales of charges provides little choice for the user of the services, and the Commission think that the very uniformity of the system is undesirable.
As remedies, the Commission recommend that national and local societies of estate agents should no longer recommend or publish scales of fees for the services covered by the reference. They also recommend that certain rules of these societies which prevent or discourage competition on the basis of fees should be withdrawn. The Commission also consider it important that the proposal that registration should become a statutory requirement should not lead to restraints on entry to the business which would reinforce the tendency to refrain from competition in fees.
The Commission have produced a useful report and I accept in principle their conclusions. In particular, I think it undesirable that estate agents should not feel free to offer alternative methods of charging, or to experiment with different combinations of service and charge. My Department will now discuss with the estate agents how the Commission's recommendations might best be implemented.