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Ombudsman quits property sector saying housing market is ‘broken’

KREMER NS

Ombudsman Services is to quit the property sector, saying it no longer wants to officiate arbitration services as “a broken solution to a broken market”.

The service has over 8,000 member businesses – not branches – in total, with the overwhelming number being 6,500 RICS firms.

Its withdrawal leaves just two organisations offering redress to the public who have complaints against sales and lettings agents.

But there may be more to the Ombudsman Services departure than meets the eye, with a power play to come – and EYE has asked about exactly that.

For example, it could leave the coast clearer for The Property Ombudsman to become the single housing ombudsman; or be seen as a pre-emptive strike, with the organisation saying it is ceasing what it is “currently doing”.

Or it could be be seen as move by the RICS to become either the single industry regulator, or single ombudsman, with Propertymark’s NAEA and RLA known to be pursuing the role of single regulator.

The model of one regulator and one Ombudsman covering both social and private sectors is the one the Government now says it wants and there is to be a consultation.

Last night, a spokesperson for Ombudsman Services confirmed our suspicions that the heavily RICS-backed Ombudsman Services expects to relaunch.

The spokesperson said: “Ombudsman Services will come back into the housing and property market as quickly as we can – once we feel that action is being taken to make the system for redress less confusing and more transparent.

“It’s an urgent priority that this sector is sorted out as it touches every adult in Britain, from home owners to social housing tenants, private renters and buyers.”

Headed by chief ombudsman Lewis Shand Smith, Ombudsman Services says it will start work as soon as possible with consumers, charities, property professionals and others to help develop a new model for redress in housing “to rebalance power in the sector”.

In a statement, it says it will put its report around the creation of a single housing ombudsman to the Ministry for Housing, Communities and Local Government this spring.

Meanwhile, Ombudsman Services says it will begin a managed withdrawal from the schemes it runs for agents, surveyors and managing agents. It plans to exit altogether by August 6.

The organisation made clear its support for the plans Secretary of State Sajid Javid has outlined for an effective regulator supported by a single ombudsman across the whole housing sector.

Ombudsman Services said it wants to understand from the public about the service they want, and to understand key ‘pain points’ for renters and buyers.

Shand Smith said: “Redress in the housing sector is a really confusing picture for all involved. The patchwork of ADR [alternative dispute resolution] and ombudsman schemes is a mystery to consumers and therefore is incredibly difficult for them to navigate.

“We are ceasing what we’re currently doing in the housing sector in a professional and planned way, because we believe it is not adding value.

“Rather than continue to offer a broken solution to a broken market, we are stepping away to listen to what consumers actually want.

“There are models in other sectors that work far better – for instance the single ombudsman model in financial services and the scheme we operate in energy which handles around 40,000 complaints every year.

“We fully support Sajid Javid regarding the need for a single ombudsman for housing – only then will the housing sector be able to restore trust and ensure that consumers get a much better standard of service.

“Housing is one of the biggest issues we face as a nation, and a fair, balanced, redress system will make sure that it serves the whole of society. We want to work to develop a model that works for everyone.”

More details will be announced next month.

Ombudsman Services: Property is one of three approved redress schemes for the private residential property sector. The oldest is the Property Ombudsman, which is the largest and can trace its roots back to the early nineties, and is the de facto organisation for almost all NAEA and ARLA members.

The third, and newest, is the Property Redress Scheme, launched when the Government said it wanted more choice in the market when it made redress compulsory for letting agents.

It has since done what can only be described as a U-turn and of course the PRS cannot be ruled out as a contender for housing’s single ombudsman.

Ombudsman Services: Property came into being after TPO, and not only provides redress services for the RICS but members of NALS, ARMA and UKALA, as well as some individual firms.

Isobel Thomson, CEO of NALS, said: “In light of the Government’s announcement to consult on a single housing ombudsman providing ease of access for property related consumer complaints, NALS understands the decision Ombudsman Services: Property has taken to withdraw from the current redress set-up and look to the future.

“Ombudsman Services have performed well for NALS firms, providing an excellent service at the most cost-effective rate of membership of any of the existing schemes. We look forward to engaging in discussions with them as they evolve their offering to suit a new consumer protection regime.

Practical arrangements for NALS firms will follow from both Ombudsman Services and NALS.”

Katrine Sporle, ombudsman at TPO, said: “I am sorry to be losing our close working relationship with Ombudsman Services to raise standards in the property industry.

“However, I look forward to continued collaborative thinking with Lewis on the wider issues of the role and purpose of the Ombudsman going forward.”

Property is just one area for which Ombudsman Services provides redress. The others are communications and energy.

Commentators say that an entirely new body could become the single housing ombudsman. Established bodies that could be front-runners include the TPO.

In social housing, there is the Housing Ombudsman Scheme, and the Local Government and Social Care Ombudsman, both of which can consider complaints from local authority tenants, plus the Regulator for Social Housing.

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Source:: Ombudsman quits property sector saying housing market is ‘broken’