The case of a letting agent jailed last month underlines the need for industry-wide regulation, the boss of ARLA said yesterday.
Janine Pickett, a Dorset Lettings franchisee, stole £375,000 in rents and deposits.
Almost all of it has been paid back to her victims by ARLA, making the organisation her biggest single creditor.
David Cox, ARLA managing director, said he was hopeful of being able to recoup at least some of the money through a Proceeds of Crime court order.
Pickett, 46, was sentenced to 32 months in jail after Dorchester Crown Court heard that she helped herself to the money between January 2010 and November 2013.
She was an ARLA licensed agent and therefore had Client Money Protection insurance, said Cox.
ARLA itself has repaid missing rent money to landlords, capping the maximum repayment to three months.
Tenants defrauded of their deposits will have been able to get back the money from the Tenancy Deposit Scheme, which will in turn have reclaimed the money from ARLA.
“All told, we have paid to her victims a sum very close to the £375,000 she stole,” Cox told Eye.
“It is certainly one of the largest cases ARLA has dealt with.”
Pickett used the stolen money to buy ponies, a new BMW and go on exotic holidays. She had altered documents, including bank statements and audit records, to cover up what she had done.
Cox said her membership of ARLA was terminated in November 2013 after the franchisor, Barrie George, uncovered discrepancies in her accounts and notified the organisation.
The franchisor then took control of her business and contacted everyone who might have lost money, referring them to ARLA.
Cox said: “This case is a prime example of how things should work: consumers were protected because of CMP, and the agent was brought to justice. It is exactly why ARLA is calling for industry-wide regulation.
“Of course, there will always be some bad eggs, but if agents belong to ARLA we will do our best to ensure they are trading honestly and are not breaking the rules.
“In fact, we have only had 12 cases where claims have been brought against our agents since the ARLA CMP scheme started running in 2007.
“The large majority of cases of dishonest agents concern those outside ARLA and who do not have CMP.”
Cox also criticised the lack of controls which prevent letting agents convicted of fraud returning to the industry.
“Technically, the redress schemes could reject Pickett as a director of a firm because she would not pass the fit and proper person requirement.
“But there would be nothing to stop her getting back into the industry as a lettings manager or negotiator.”
Pickett, who pleaded guilty to a charge of abuse by position back in May, is likely to serve between half and two-thirds of her sentence.
Cox said that although ARLA members are paying slightly more for their CMP premiums this year – £18 – the rises were not directly connected to the case.
Dorset Lettings, which has six businesses within it – three run by Barrie George and three by franchisees – continues to trade.
Mr George said the case had been “a particularly stressful time” for staff, landlords, tenants and suppliers.
how the hell does someone not spot £375,000 missing from their business and if its deposits, the way ARLA work, how is that hidden fro best part of 3 years???
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They know money is missing but it is only once all the discrepancies are totted up that a true balance is ever known. ARLA, RICS and Law Society auditors are regularly duped by agents who produce spread sheet balances that tie in with the physical bank account making it almost impossible to detect missing funds.
Cash adjustment functionality in software and the eagerness of hapless software support staff to adjust balances mean such crimes are simple and almost undetectable.
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Why are we always hearing regulation needed when much regulation is already in place. Deposit laws, CPRs, BPRs. Its not a case of regulation needed. But some regulation updated and more importantly that its educated and policed. All the article is saying is that a ARLA agent abused situations.
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I have to question why ARLA don’t require the accountants of its members to get bank statement directly from the banks, so making it a lot harder for altered bank statements to be used.
However I still tell everyone to only use an agent that is a member of ARLA, if the agent is collecting rents or holding deposits. But the limit of only 3 months cover for landlords is rather short, as an agent can claim a tenant is not paying the rent, and it takes a lot longer than 3 months to get an eviction hearing, and hence proof the tenant did pay the rent.
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Only problem being – all ARLA agents would have to pay higher premiums to cover the thieves.
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Regulation did not stop this crime, she had ticked all the boxes. What other regulation are ARLA expecting would? I've said it before licensing and regulation is not the answer to a dishonest mind set. I bet she was thinking well my clients are protected so I can do as I please until I'm caught! Trevor hit the nail on the head, there is sparse to no proactive policing that is the problem. It's always after the horse has bolted.
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Regulation is only of use if policed and enforced. Surely, making custodial schemes mandatory would mitigate losses and reduce opportunity. Does anyone remember why custodial schemes weren't made compulsory and who fought against it? Just a thought.
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Agreed Eric. I don't specifically remember why they weren't made compulsory in England & Wales, but my gut feeling is that there would have been a huge number of horror stories if it had been, especially with the relatively short notice that was received. If my memory serves me, Scottish agents had around three months to get their deposits together and send them away to the custodial schemes – enough time to fill any gaps/sell up.
We hold approximately 2000 deposits under TDS; I would have no particular issue with moving them all to DPS providing that they made significant investment in their tech and processes in order to make it more efficient to manage – right now, I would need to throw a couple of staff resources at simply managing deposit registration…..
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Yet another marketing opportunity for ARLA – My question is why don't they dip check the landlord and tenants to see if the rent was paid and received? Do they have anyone going round doing spot checks?
Regarding regulation take the banks for example, they are highly regulated and yet they are still capable of bringing the economy to its knees and creating the LIBOR scandal – Regulation is not the answer as you will never stop the thief.
I'm not a member of ARLA or any professional organisation apart from the NLA, but if I had to be, I would definitly go with UKALA which is part of the NLA. My experience with the NLA is exceptional and I beleive the UKALA would be the same. No I'm not anythign to do with NLA just a really happy subscriber!
Unless ARLA want to reduce their overly inflated fees and do something for their money I can't see me being convinced by them.
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