Responsibility without power…

It was Tom Stoppard talking about the House of Lords who described it as an illusion to which he had never been able to subscribe – “responsibility without power, the prerogative of the eunuch throughout the ages.” and so it seems to be with the poor old Property Ombudsman.

In reality of course it is not the Ombudsman (for whom I have the highest regard) and indeed his office work hard to try and give confidence to the public by suggesting that he can bring estate agents to heel. He is keen to get stuck in but the problem is that he is impotent.

Just last week the Ombudsman expelled two lettings agents from his scheme which might seem like a victory for consumers and proof that the industry can clean up it’s own mess. Sadly, due to the brief from OFT and the madness of the Human Rights Act both firms can in fact continue to trade.

When the Office of Fair Trading first approved The Property Ombudsman (and it’s tiny sibling the Surveyors Ombudsman Service) as a redress scheme they stipulated that they could not require a firm to sign up to a Code of Practice since this could be a barrier to entry and… yes you’ve guessed it… it fell foul of the Human Rights Act by arguably disadvantaging an individual and effectively stopping him from earning a living.

So we now witness the farce that when a firm who has accepted full sales jurisdiction is found guilty of a disciplinary breach by the Ombudsman they can be expelled but cannot have their registration under CEARA (The Consumer, Estate Agent & Redress Act) withdrawn. Only the OFT has the power to ban an estate agent from practicing under the 1979 Estate Agents Act and the Estate Agents Register currently lists just 109 such individuals.

Lettings agents are more complicated. Since he is largely toothless they can only be ‘gummed to death’ rather than savaged by an Ombudsman as they are not actually estate agents as defined by the ’79 Act and therefore are not bound by CEARA. They can be expelled from a scheme that they voluntarily joined but with no OFT input if they are kicked out they can continue to trade.

In his latest report for 2010 The Property Ombudsman states that he took on 1,318 new referrals during the year. Like most professions, estate agency reputations are garnered by from the actions of a small minority. Of the 11,794 enquires he looked at during 2010 the Ombudsman found in favour of just 997 complainants across both sales & lettings. When one considers that there will have been around 1.7m buyers and sellers who might have complained last year and another 800,000 landlords and tenants who may have had cause to contact the Ombudsman this is not an industry in professional crisis.

However, the fact remains that if a consumer complains to the Ombudsman and if he finds in their favour and the firm involved in selling or letting the property is judged to have got it so wrong that they are expelled from ‘the Club’ then if they are selling homes they can still continue to trade until the OFT intervenes – if it ever does and if they are just letting properties then it seems that there is no way to stop them from continuing to do so for ever – even if they are holding a huge amount of un-bonded money on behalf of their clients.

Something is not right.