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Estate Agents (Independent Redress Scheme) Bill [HL]

My Lords, I am sure that we are all grateful to the noble Lord, Lord Dubs, for his full and helpful explanation of this measure, the Estate Agents (Independent Redress Scheme) Bill. The noble Lord’s Bill raises important issues about how we should provide consumers with redress when they suffer at the hands of estate agents, and how we can improve and extend the provisions on redress in the Housing Act 2004. Let me say at the outset that the Government welcome the principles of the Bill and I am pleased to see that that is shared throughout the House. I am glad to have the opportunity to explain to your Lordships the Government’s approach to these issues. It may be helpful for me to begin by going over the background to these issues, some of which the noble Lord also alluded to. In March 2004, the Office of Fair Trading issued a report on the estate agency market in England and Wales. The OFT report found that there was significant consumer dissatisfaction with estate agency services, which ranged from suffering serious abuse such as failure to pass on offers to concern about quality of service issues, such as poor administration by estate agents. The noble Lord, Lord Dubs, spoke strongly on that point. Estate agents have a key role in the housing market, and a hugely significant one. For most people, buying a house is the most expensive purchase they ever make, and sometimes the most stressful, for both buyers and sellers. It is vital that the market works well and that consumers are adequately protected against unfair practices. As regards consumer redress, the OFT recommended that more estate agents should subscribe to voluntary codes of practice, which provide redress for consumers and set service standards over and above the legal minimum. Because of the risk that that exhortation might not be heeded, the OFT recommended that the Government should take a power to require estate agents to belong to independent industry redress schemes. In its response to the OFT report in July 2004, the Government said that they intended to go further than the OFT’s recommendations. We said that we would seek to take powers in the Housing Bill, which was then before Parliament, to enable the Secretary of State to approve one or more estate agent redress schemes and to require estate agents to belong to one. Some noble Lords referred to that earlier. As some noble Lords may recall, there was considerable support in your Lordships’ House for that policy. There was also strong support for the view that the provisions in the then Housing Bill should allow a redress scheme to cover any relevant acts or omissions of an estate agent. Indeed that was the Government’s view. However—and this is the point that the noble Baroness, Lady Byford, impressed on me—the House authorities ruled that the scope of the Housing Bill was not wide enough to enable redress schemes to cover general complaints about estate agents. A redress scheme under the Bill would need to be confined to complaints about estate agent services linked to the provision of a home information pack. So the Housing Act 2004 does contain provisions enabling the Secretary of State to approve redress schemes and to require estate agents in England and Wales to belong to one, but the scope of such schemes is much narrower than we had originally intended. Moreover, as we have always recognised, the Bill could not make corresponding provision for Scotland and Northern Ireland. The Housing Bill covered only England and Wales. Further legislation was therefore always contemplated. As the Government have therefore made clear, we would need further legislation to cover not only Scotland and Northern Ireland but also, following the decision over the scope of the Housing Bill, to enable estate agents redress schemes to address a wider range of complaints by consumers over the service provided by their estate agents. The Bill proposed by the noble Lord seeks to implement those changes. In effect, the Bill would repeal the Housing Act provisions and insert corresponding provisions into the Estate Agents Act 1979, but with the two important changes to the scope that we wish to see. The Bill is very similar to the one introduced in another place in the previous Session by the right honourable Alan Williams MP, which ran out of time before the election. As noble Lords know, the Government offered a handout Bill for this Session to achieve our intentions in that area, but no Member in another place was persuaded to take it up. I therefore fully support, on behalf of the Government, what the noble Lord is trying to achieve, which is the same as what the Government want to achieve. Those objectives are also shared by consumer groups and by many estate agents themselves and their representative bodies. Compulsory membership of redress schemes will improve standards of service and provide a cost-effective means of redress for consumers. That is necessary to overcome significant consumer dissatisfaction with estate agency services, which was brought out in the Office of Fair Trading report. Consumer access to independent redress in this sector is currently limited, with only around 40 per cent or so of estate agents belonging to the existing ombudsman for estate agents scheme. That means that many consumers who are dissatisfied by the response of an estate agent to their complaint only have the option of seeking redress through the courts, which can be difficult and costly, as noble Lords have recognised. The Government believe that all consumers buying and selling residential property in the UK should have access to a redress scheme to enable their complaints about estate agency services to be investigated and determined by an independent adjudicator. The availability of a free, independent and efficient redress scheme would be important to consumers in this vital market. Indeed, so supportive are we of what the noble Lord is trying to achieve that I assure your Lordships that we fully intend to bring forward government legislation, when parliamentary time permits, to implement these shared objectives. The noble Lord will ask, reasonably enough, when that may be. I can only say that it will not be in this Session. The Government will set out their procedures for the next Session in the usual time. I cannot anticipate the Queen’s Speech. However, I can assure noble Lords that we fully recognise the importance of legislation on this issue. Your Lordships may ask why, then, we cannot give full support to this Bill. It is not as simple as that. The Government have their own programme for this Session. We and another place already have much business to get through. It is hard to see how the Bill could be enacted in this Session, given other pressures on time. Moreover, although the changes we wish to make to the provisions in the Housing Act may seem simple on the surface, achieving them is not as straightforward as it may seem. It is rather more complicated than simply seeking to transpose the provisions of the Housing Act to the Estate Agents Act 1979. The noble Baroness, Lady Byford, raised the point about sanctions if someone was not prepared to enter a redress scheme; indeed, that is one of the defective points in the current drafting of the Bill that would have to be catered for in full legislation. It was also asked whether the redress scheme could cover lettings. The Estate Agents Act 1979 does not do so. A case would have to be made for regulating lettings with regard to regulatory principles, and a proper cost/benefit analysis would need to be undertaken. That would be a matter for the ODPM. My noble friend Lord Dubs raised the question of what is happening on the consultation document that was promised. The Government have been considering the drafting of this document, but we have been considering carefully a number of legal points that arise over how the OFT proposals can be given legal effect. These matters are moving forward. I hope that will reassure noble Lords. We support the thrust of the Bill, but we must be neutral on it, as we cannot offer government support to ease its passage through both Houses. I hope, however, that your Lordships are reassured by what I have said about the Government’s commitment to bringing forward their own legislation in due course.