Two prominent industry figures have expressed their support for the new ombudsman, the Property Redress Scheme, after concerns were raised about it in the House of Lords.

Baroness Hayter, who queried whether it had commercial interests, used to chair the Property Standards Board and campaigns for the regulation of letting agents to be raised to that of sales agents, so that they can be banned from the industry.

In the Lords last week, where the requirement to make letting agents join an approved redress scheme was debated, Hayter asked why a “for-profit” organisation had been authorised to run an ombudsman scheme.

She said that the Property Redress Scheme – which is run by insurance brokers Hamilton Fraser – represented the first time that a profit-making body had been allowed to operate any ombudsman scheme.

Hayter received no answer to her question, but on behalf of the Government, Baroness Williams said: “Perhaps I could write to the noble Baroness on that point.”

Eye covered the debate in our Monday issue, which also included other concerns raised by Hayter.

We have now received this statement from property lawyer Tessa Shepperson and evictions specialist Paul Shamplina, both of whom are on the advisory board of the PRS.

Their statement says: “We (Tessa Shepperson and Paul Shamplina) are Council members of the newly formed Property Redress Scheme.

“The points set out in the [Eye] article were extensively discussed by us with the PRS before we agreed to join.

“The situation, as we understand it, is as follows:

“All the redress schemes will exchange information with each other about expelled members and none of them, including PRS, will accept a member who has been expelled from another scheme for failing to comply with a decision, unless and until that member complies with it.

“So, an expelled member who fails to comply will be unable to join any scheme.  The local authority can then issue a fine of up to £5,000 for the offence of not being a member of an accredited scheme, which can be enforced through the magistrates courts.

“The redress schemes will also be able to ‘name and shame’ expelled members.

“The decision itself can be enforced by the complainant through the courts through normal civil means if the agent does not comply.

“All in all, it is unlikely that any agent will be prepared to risk all this unless they are in the 0.1% rogue element that no regulation can really deal with.

“So far as a code is concerned, we understand that a draft code is currently with the housing minister and will be published before the regulations come into force.

“The PRS will work to this code, save where a member has signed up to a different and more onerous code, in which case the PRS will apply the standards of that code when making any decision about that member.

“All three of the approved redress schemes are private companies and will need to make money in order to operate.

“This is no different from the tenancy deposit scheme regime. The schemes have to be self-supporting.

“We would also like to point out that this compulsory redress scheme is the first move towards a much needed regulation of the lettings industry.

“It may not be as comprehensive as many people would like, but it is considerably better than the current situation.

“At least after the regulations come into force, landlords and tenants will have somewhere to complain and get redress if they have suffered loss or poor service from their letting agents or property managers.

“We are therefore proud to support and be a part of this new initiative.”

Eye asked Shamplina for a further comment in relation to whether he was satisfied that Hamilton Fraser would not, for example, use the redress scheme to market its Client Money Protection insurance policy.

Shamplina, who is founder of Landlord Action, told us: “I am confident there is no conflict of interest as the PRS is a standalone scheme. It is not compulsory for agents to purchase Client Money Protection in order to sign up, but they will of course have access to this.

“What we are doing, however, is trying to improve standards in the industry by highlighting the benefits and advantages of having deposit and client money protection in place.

“Landlord Action always has half a dozen debt recovery cases against rogue agents which have stolen rent from landlords. If CMP was in place, these landlords would be protected.”

“Our aim is to help the lettings industry win back its reputation and continue the great work the vast majority of agents do in the local communities.

“We are there to help and guide those smaller agents that want to give a good service but don’t know how to.”

Ombudsman Services says on its website that it is a non-profit making organisation, and yesterday afternoon The Property Ombudsman confirmed to Eye that it is a not for profit company which is not limited by guarantee and does not have share capital.