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This could have happened 39 years ago: Power to make qualifications mandatory exist under 1979 Act

Land Insight to 17 April NS

A professional with experience in both financial services and property has warned that the baby could be chucked out with the bath water if agents need professional qualifications to practise.

Meanwhile, agents are asking why it has taken so long for ministers to announce mandatory qualifications when they could have been brought in 39 years ago under existing legislation.

Rob Clifford, commercial director at property specialist SDL and CEO of Century 21 UK, said yesterday that good agents should not have to quit because they are not natural exam-passers.

He said: “There are many very good estate agents out there who are not professionally qualified or vastly experienced, but are actually doing a brilliant job.

“It shouldn’t be about driving these people out of the industry.

“Instead, we should be focusing on the ‘men of straw’ who can’t afford to run a competent business or compensate consumers who suffer failure. These are the ones who need to go.”

Clifford, whose CV includes stints at West Bromwich Building Society and Virgin Money, said: “It’s been 18 years since regulation and mandatory qualifications for mortgage advisers were introduced, so it’s certainly not before time.

“This is the last such industry with no barriers to entry and we’ve been left in a situation where an unqualified carpet fitter or a van driver can trade as an estate agent without evidencing competence.

“I’m not surprised many have been left wondering what on earth has taken so long to get to this position where the Government is finally taking it seriously.”

However, he cautioned: “It will be interesting to see if this [regulation of estate agents] goes in the same direction as mortgage regulations, which started with a mandatory qualification and then moved on to professional indemnity insurance, the Ombudsman and eventually full statutory regulation.”

Meanwhile, a number of readers were yesterday commenting on the fact that the Government already has long-standing powers to enact minimum standards of entry on agents.

All successive governments have needed to do for the last 39 years is lay a Statutory Instrument before Parliament.

However, it appears that the current government preferred to go the route of headlines suggesting bold new reform of the industry.

Industry consultant and compliance expert Mike Day said: “Section 22 has never been implemented and lettings agents remain outside the definition of estate agents, hence they are not under the same money laundering rules as estate agents.”

He said: “No government in the last 39 years has ever sought to implement Section 22, as they have preferred competition over competency as a benchmark. Many of us do not agree.

“The problem with introducing any licensing or requirement on agents is that you almost certainly have to allow those already inside the tent to stay in, whilst simply stopping new entrants who fail to qualify. This has always been seen as anti-competitive.”

Day said it was also unclear who would need to be qualified – for example, part-time negotiators or business owners. He said if business owners had be qualified, theoretically they might be forced to shut up shop.

But he said: “I just can’t see it happening.”

Never enacted: this is what Section 22 of the Estate Agents Act 1979 says:

Standards of competence.

(1)The Secretary of State may by regulations made by statutory instrument make provision for ensuring that persons engaged in estate agency work satisfy minimum standards of competence.

(2)If the Secretary of State exercises his power to make regulations under subsection (1) above, he shall in the regulations prescribe a degree of practical experience which is to be taken as evidence of competence and, without prejudice to the generality of subsection (1) above, the regulations may, in addition,—

(a)prescribe professional or academic qualifications which shall also be taken to be evidence of competence;

(b)designate any body of persons as a body which may itself specify professional qualifications the holding of which is to be taken as evidence of competence;

(c)make provision for and in connection with the establishment of a body having power to examine and inquire into the competence of persons engaged or professing to engage in estate agency work; and

(d)delegate to a body established as mentioned in paragraph (c) above powers of the Secretary of State with respect to the matters referred to in paragraph (a) above;

and any reference in the following provisions of this section to a person who has attained the required standard of competence is a reference to a person who has that degree of practical experience which, in accordance with the regulations, is to be taken as evidence of competence or, where the regulations so provide, holds such qualifications or otherwise fulfils such conditions as, in accordance with the regulations, are to be taken to be evidence of competence.

(3)After the day appointed for the coming into force of this subsection,—

(a)no individual may engage in estate agency work on his own account unless he has attained the required standard of competence;

(b)no member of a partnership may engage in estate agency work on the partnership’s behalf unless such number of the partners as may be prescribed have attained the required standard of competence; and

(c)no body corporate or unincorporated association may engage in estate agency work unless such numbers and descriptions of the officers, members or employees as may be prescribed have attained the required standard of competence;

and any person who contravenes this subsection shall be liable on conviction, on indictment or on summary conviction to a fine which, on summary conviction, shall not exceed the statutory maximum.

(4)In subsection (3) above “prescribed” means prescribed by the Secretary of State by order made by statutory instrument, which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(5)No regulations shall be made under this section unless a draft of them has been laid before Parliament and approved by a resolution of each House.

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Source:: This could have happened 39 years ago: Power to make qualifications mandatory exist under 1979 Act