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Ombudsman: is it necessary?

Estate Agents have long been plagued by bad press, almost everybody knows someone who has a horror story regarding dealings with Estate Agents. A new official body is hoping to change this, by attempting to monitor and control what at the moment is an unregulated industry. Estate Agents have recently come under fire by the consumer magazine ‘Which’, who undertook a study of the industry and found a significant number of Estate Agents were breaking the law and using misleading contracts when selling houses.

The ‘Which’ report outlined some of the major problems occurring within the Estate Agent industry. ‘Which’ found that the most significant problem home sellers and buyers faced with Estate Agents is with their contracts. ‘Which’ found a widespread use of complicated and misleading contracts by Estate Agents that included clauses that could be legally unfair to home sellers and buyers. This often left people paying thousands of pounds, even when the agent had done nothing to assist with the sale of their property. The Consumer Association ‘Which’, also uncovered serious breaches in the way that Estate Agents conduct their business. After surveying a number of Estate Agents, ‘Which’ found that only small number of Estate agents confirmed offers made by home buyers in writing to home sellers, as they are legally bound to do. Instead the majority of Estate Agents surveyed only gave this information by phone call, which places the Home Seller on legally difficult ground if they want to contest offers or make a complaint about Estate Agents concerning offers, as they often have no evidence showing that the phone call occurred. This leaves Home Sellers on unstable footing when they feel that their rights have been breached, as they are unable to take the Estate Agent to court without the relevant evidence for their complaint.

‘Which’ also found Estate agent companies who lied to ‘Which’ buyers about a “higher offer that had already been rejected and encouraged the buyer to come back with another offer.” ‘Which’ found that the “higher offer” was complete fabrication by the Estate Agent. This is a serious breach of the law and gets right to the heart of the Estate Agents Act 1979. This fabrication could have led to the buyer paying thousands of pounds more for the property they were interested in making an offer for if they had come back with the “higher offer” the Estate Agent suggested they did. The reason the Estate Agent fabricated this “higher offer” was not so much to benefit the seller as it was to line their own pockets. As Estate Agents work on a commission, receiving a percentage of the price paid for a property they are selling, therefore the more the property sells for the greater their own commission.

The 1979 Estate Agents Act was set in place in order to try to regulate the Estate Agent Industry. However without anybody routinely checking Estate Agents and how they conduct their business, Estate Agents are continually able to get away with creating these fabrications, breaking the law and using misleading contracts. Estate Agents are the ones who have complete power over a sales transaction, as they are the only party to have all the information, due to their superior position of sitting between the buyer and the seller. Therefore, Estate Agents are in a place where they could abuse this power, and as ‘Which’ found they often do.

A new organization has recently been set up in order to help people differentiate the rogues from the honest Estate Agents, called ‘The Ombudsman for Estate Agents (OEA). An ombudsman is an official who investigates complaints against Government Organizations. The Ombudsman for Estate Agents is a scheme that aims to police the Estate Agents’ industry, providing protection for consumer against malpractice within the industry.

The Ombudsman is a voluntary scheme that Estate Agents can join, currently 42% of Estate Agents in England and Wales are signed up to the scheme and it is the only independent redress scheme in existence for Estate Agents. The Ombudsman has set out its own rules and regulations that it requires its members to follow. A spokesman for the OEA issued the following statement :

“Clearly the OEA is good for consumers, but it is also good for the industry. This is proper self-regulation, and should do wonders for the reputation of Estate Agents, because with independent redress, goes a Code of practice, with proper standards, against which to measure the performance of Estate Agents. All good Estate Agents will be able to live by the Code – but the “rogues” will not, and will go to the wall, and good riddance.”

The OEA rigorously enforces its mandatory Code of Practice for the Estate Agents who have signed up to its scheme. The compliance levels and consumer satisfaction are also closely monitored. If consumers have a dispute with a Member Agency, they can refer it to the OEA, who is there to provide a free, fair and speedy review of complaints falling within its Terms of Reference. The OEA is completely independent of its Members Agencies and my try to settle a dispute by coming up with an agreement between you and the Member Agency. If an agreement cannot be reached between you and the Member Agency then the Ombudsman will consider all the relevant factors and make a decision according to what they believe to be fair in all the circumstances. The Ombudsman will not normally consider your complaint until you have complained to the Members Agency itself and have gone through their internal own complaints procedure unsatisfactorily.

The Ombudsman deals with complaints that involve the Members Agency; infringing on your legal rights; not complying with the OEA Code of Practice; has treated you unfairly; or been guilty of maladministration, including inefficiency or undue delay. However, there are certain complaints and situations which the Ombudsman cannot handle, this information is available on the Ombudsman website: www.oea.co.uk

Once the Ombudsman has made a decision they will send it to you and the Member Agency who you have the dispute with. You can then decide whether to accept or reject the Ombudsman’s decision. The Member’s Agency is obliged to pay any compensation up to £25,000 that the Ombudsman awards you the consumer, provided that you accept the payment in full and agree to the final settlement of your complaint. Your legal rights are not affected by the Ombudsman decision, if you reject their decision, it will lapse and you are free to do as you wish, including taking legal action. The Ombudsman is working for the consumer’s benefit as it is there as a body to police Estate Agents. The OEA Council which makes decisions regarding complaints is made up of a majority of non-industry members including leading consumer representatives.

Home buyers and sellers deserve to have an independent and impartial body that can listen to their complaints and offers financial compensation when appropriate. The Ombudsman for Estate Agents provides this service for consumers and aims to regulate the Estate Agent industry. I would urge any home buyer or seller to make sure that the Estate Agent that they are dealing with belongs to the OEA Scheme before they decide to do business with them, as it will give them added protection if things go wrong. The OEA logo can be found on Agent’s windows and stationary if they have signed up to the OEA Scheme. If you are still not sure whether an Estate Agent is part of the scheme you can contact the OEA office for confirmation. The OEA now has more than 900 members with more than 4,500 offices among the 10,600 Estate Agency Offices operating in England and Wales , so it should be simple to find an OEA affiliated Estate Agent in your area.

The OEA can be contacted by the following means:

The Ombudsman for Estate Agents (OEA)

Beckett House
4 Bridge Street
Salisbury
Wiltshire
SP1 2LX
Telephone: +44 (0) 1722 333306
Facsimile: +44 (0) 1722 332296
Website: www.oea.co.uk
E-mail: admin@oea.co.uk