Agents with Ombudsman must now protect client money

Two major advances in consumer protection in the lettings industry came into effect this week.

The Property Ombudsman scheme launched its strengthened Code of Practice for member lettings agents, and announced that the revised Code will also complete the first stage of the Office of Fair Trading’s consumer codes approval scheme.

Under the revised Code, letting agent members will have to have separate client money accounts and professional indemnity insurance.

The OFT approvals process has two stages, and over the coming months TPO is required to demonstrate to the OFT that its members are complying with the Code in order to gain final approval.

When this occurs it will mean that both the TPO sales and lettings codes will have full OFT approval and, like sales agents, lettings members will also be able to use the OFT logo.

Lengthy negotiations with the OFT have largely been conducted by Bill McClintock, chairman of the TPO operating company. OFT approval of the Ombudsman’s lettings code has taken so long to come through that, in a clear sign of frustration, the scheme announced that it would launch its revised Code anyway.

However, in what appears to be a breakthrough, the OFT has finally given its nod of approval.

McClintock said: “The OFT scheme is recognised by consumers as being totally independent of the industry, a unique feature that no other body for lettings membership can offer.

“This is an important step forward for lettings agents, but especially for the landlords and tenants who use them.”

He went on: “Now that we have completed Stage One, lettings agents will undergo the same random monitoring we already apply to residential sales agents, which not only ensures higher standards for consumers but also points out to member agents precisely what they need to do to improve the service they offer.

“Consumers will be able to give feedback directly to TPO about their level of satisfaction.

“Agents cannot influence the outcome of these surveys because if there are any results pointing to exemplary or very poor service we then mystery shop the agents to make our own assessment.

“Enforcement of our Code of Practice for sales agents has resulted in a reduction of the seriousness of complaints brought to the Ombudsman.”

The Ombudsman scheme now has 8,130 member residential lettings offices, all of them joining the scheme since redress for lettings agents was launched in 2006.

However, membership of the scheme remains voluntary, although professional and trade bodies RICS, NAEA, ARLA and NALS all insist on their own lettings members belonging to an Ombudsman scheme.

Whilst lettings agents do not have to belong to an Ombudsman scheme, sales agents have been required to do so since October 1, 2008, under the Consumers, Estate Agents and Redress Act.

Click to see story on EAT