I spent much of my career working in legal and regulatory environments, so it will come as no surprise that I believe regulation, done properly, benefits not only consumers but professionals too. Good regulation can bring certainty, facilitate a level playing field between professionals and give consumers confidence and assurance.
Regulators, however, are often unloved institutions. Professionals can treat them with indifference, caution or, at worst, hostility; while the public can place huge expectations on them, expecting lightning-fast responses and, sometimes, draconian measures. Notwithstanding all of this, regulation presents a significant opportunity to drive meaningful improvements across a sector, by setting standards for training and continuing professional development and by establishing clear expectations around professional conduct.
We also know that consumers want a regulator in the sector. In fact, many consumers think there already is a regulator. We often receive feedback from consumers that The Property Ombudsman (TPO) should close an agency down or stop an individual agent from operating. Those powers are obviously beyond the realms of a redress provider, but for many consumers, they expect TPO to act as a regulator and express frustration that there are not stronger powers where things go wrong.
We therefore welcome the government’s commitment to introduce independent regulation of property agents which is a significant moment for consumers and for the property industry. However, if the reforms are going to make a meaningful difference to consumers, regulation and independent redress will need to work hand in hand.
Consumers should not need to understand the technical distinction between an Ombudsman and a regulator before they know where to turn for help. What our experience tells us is that the system needs to be designed around their experience, with clear routes between complaint handling, redress and regulatory action.
That means avoiding unnecessary duplication, but it also means ensuring information can move effectively between the different parts of the system.
At TPO, our role gives us distinct visibility not only of complaints which ultimately become formal disputes, but of the much broader range of issues consumers raise before they reach that stage.
Our Initial Enquiries function captures information about the questions and problems consumers have, before making a complaint. That provides a much wider picture of what is happening across the marketplace than could be gained simply by looking at complaint outcomes.
It can show what consumers are confused about, where particular practices are repeatedly generating concern and where problems may be developing before they become established patterns of formal complaints.
TPO is the only agency redress provider to collect this breadth of data, providing a valuable source of industry intelligence as the new regulatory framework develops. Used effectively, this data can do more than provide a retrospective picture of problems; it can act as an early warning system, identifying emerging patterns and risks across the market and enabling regulators to target guidance, scrutiny and intervention where they are most needed.
The government has said the future regulator will be able to establish codes of practice. As those details are developed, there is an opportunity to ensure the new framework benefits from the evidence and intelligence we hold, thereby avoiding creating parallel systems which do not speak to one another. In that way, the regulatory system will develop to reflect what consumers are concerned about rather than making assumptions about where things go wrong.
An Ombudsman deciding an individual dispute is different from a regulator considering whether a business remains fit to operate. However, repeated findings of similar failings can reveal wider issues with standards within a business. We also identify shortcomings that go beyond the individual dispute – sometimes matters that do not form part of the dispute at all. Serious concerns can be referred to National Trading Standards, but where they do not meet that threshold, valuable intelligence can be lost.
This highlights the wider opportunity for a closer relationship between redress and regulation. A single Ombudsman working alongside a single regulator would provide a clearer framework for agents and consumers, support consistent standards and, crucially, prevent intelligence from being fragmented across different organisations. It would allow emerging risks and poor practice to be identified earlier and enable regulators to focus guidance and scrutiny where they are most needed.
The announcement is the beginning of a process rather than the end. The Government has confirmed the principle of independent regulation, licensing and qualifications, but further detail on the structure and operation of the regime is still to come.
That creates an opportunity to build a system which makes sense from the consumer’s point of view from the outset.
If regulation sets clear standards, redress provides an accessible route when things go wrong and the evidence generated through complaints informs regulatory priorities, the result should be a stronger property sector for consumers and responsible businesses alike.
That should now be the objective as the detail of this important reform takes shape.
Lesley Horton is the chief ombudsman for The Property Ombudsman (TPO).
Comments (1)
Owning the Name Is Not the Same as Owning the Solution
Lesley Horton’s article on regulation and redress makes a fair case. Read it carefully, though, and it is also a pitch.
There are currently two approved redress schemes for property agents. The call for “a single Ombudsman working alongside a single regulator” is a bid to be that one. TPO has a strong hand. It has the data, and it has the name.
The name matters more than people think. Lesley admits that many consumers believe there is already a regulator, and that they expect TPO to close agencies down. That is not because TPO has those powers. It is because “The Property Ombudsman” sounds like the official body for property. Owning the most apposite name in the sector is a branding advantage. It is not evidence of the best solution for agents or consumers.
The data has a limit too. Every enquiry TPO records begins after something has already gone wrong. A confused buyer. A failed sale. A consumer out of pocket. Collecting that earlier in the process gives a better rear-view mirror. It is not an early warning system.
The real early warning sits at the point of instruction. Was the material information complete and accurate when the property went to market? Neither redress nor the regulator sees that today. A single Ombudsman alongside a single regulator would still not see it.
Regulation on its own will not fix this. Regulation sets a floor. Agents meet it grudgingly and at minimum cost. Compulsory registration, licensing fees and codes of practice all land on the agent as overhead. If the only thing an agent gets for registering is permission to keep trading, registration is not raising standards. It is an unnecessary tax.
Then there is the question of who pays. Under the current model, the overwhelming majority of good agents fund the scheme for the fewer than 1 per cent who cause the problems. The agent who does everything right pays the same subscription as the agent who generates complaint after complaint. That is not redress. It is a levy on good behaviour.
We have had a better model before. The old third redress scheme charged on the complaint. The agent who caused the problem funded its resolution. Good agents paid little. Rogues paid for what they did. It was the fairest structure the sector has had, and if it were in my power, that is what I would bring back.
Commerce changes behaviour. Give an agent £150 more per memorandum of sale for getting it right at instruction, and compliance stops being a cost and becomes revenue. Agents chase revenue. They do not chase codes of practice.
Put the two together and the system pays for itself in the right direction. Good agents are rewarded for compliance. Rogues pay for their failures. Nobody is taxed for the sins of others.
That changes the data as well. A system that rewards compliance produces better information, earlier, volunteered rather than compelled. It prevents complaints rather than counting them. The consumer benefits before anything goes wrong, not months afterwards through a dispute process.
Nobody messages me on a Sunday to ask about a code of practice. Put cash in an agent’s pocket and the notification pings. “Hello Robert. Tell me more.”
Regulation tells agents what they must do. Commerce makes them want to. If the government wants this reform to work, it should reward the agents who get it right and make the rogues pay for their own mess. Not charge everyone for the privilege of trading.