This edition throws the spotlight on several compliance issues and the legal requirements for agents to display their redress membership, lettings fees, and disclose whether they have CMP.

We’ve also included an 'Open Letter' from the CMA which featured in the news last week in case anyone missed it – a must-read for members. Please read, share and brief your colleagues accordingly.

Next month will mark the Consumer Rights Act’s one year ‘anniversary’, which saw a new raft of legal requirements come into force for letting agents to better safeguard consumers.

However, new research is emerging from a range of sources which suggests many letting agents are breaching the legislation by failing to fully disclose details of their fees and charges.

The introduction of the Consumer Rights Act last year made it a legal requirement for every lettings agent to disclose their fees and charges on their websites and prominently in all their offices where they deal face to face with customers.

For any letting agents carrying out a last-minute spring clean in their branches, there has never been a better time to review your online and printed literature as one Council in Berkshire recently revealed 90 per cent of the letting agents operating in its area were breaking the law by failing to disclose fees and charges properly, and were at risk of hefty fines.

Many agents have been caught out by disclosing their fees but failing to publish the VAT, or failing to make it clear where other fees may apply (and how those fees are calculated).

Reading Trading Standards Officers carried out spot checks on their local high street as the enforcement powers of this legislation sits with them, and as such they can impose fines of up to &5,000 for any firm that falls short of the fee disclosure requirements.

Find out more
The Committee of Advertising Practice (CAP) issued new guidance on this topic at the end of last year to supplement a range of materials on their website to help agents comply with the law.

The Competition and Markets Authority (CMA) document, ‘Consumer protection law guidance for lettings professionals’, is a must-read for every agent and covers this topic in detail, while their simple two-page ‘Key principles’ document is a great tool to train branch staff and marketing teams.

This month saw the government accept a series of revised clauses on Client Money Protection (CMP) in the Housing and Planning Bill.

The government has now agreed to carry out a full review of the existing transparency legislation and CMP in May 2016.

While there is currently no legal requirement to have CMP, which insures client funds and protects them from unlawful use or fraud, this development is widely regarded as a huge step in the right direction as it gives the government new powers to introduce mandatory CMP in the future.

This news is of huge significance for consumers and agents alike. 2016 might just be the year that CMP finally becomes mandatory. That said, it’s important that members take note of the existing legislation that already makes it a legal requirement for agents to disclose whether or not they have CMP cover.

CMP – are you in breach of the current law?

Did you know? The Consumer Rights Bill made it a legal requirement for every lettings agent in England and Wales to publicise whether or not they are a member of a client money protection scheme. ¹

DCLG published a guidance document in 2015 that clearly stated ‘Letting agents who are not members of a client money protection scheme must make this clear, silence on this subject is a breach of the legislation.’

This is a game-changer for the industry and the DCLG guidance goes on to say ‘this information should be prominently displayed in every office and on the website.’

Enforcement action:
The legal requirement for letting agents to display whether they have CMP cover is enforced by trading standards officers, which can fine the agent a civil penalty of up to &5,000 (payable to the council) for each office where the information is not published. There will also be a fine of up to &5,000 if the information is not published on an agent’s website.

How can I find out more about CMP cover?
CMP cover is available through a number of providers - agents can access cover through their trade association or Lonsdale, which was one of the first insurance brokers to offer CMP cover to agents that do not belong to a trade body.

TPO has an exclusive agreement with Lonsdale, which offers TPO members comprehensive Professional Indemnity Insurance and Client Money Protection. Further information on the PI + CMP scheme can be found by clicking here.

Next steps:
• Check your office and website: are you displaying your CMP cover?
• Disclose your CMP cover: the more you talk about CMP, the more informed landlords and tenants will become so they can scrutinise rival agents that have yet to sign up and are failing to protect client funds.
• Brief colleagues: If a consumer asks, does everyone know if your business has CMP cover? Please make sure your staff are aware that CMP goes beyond deposit protection – it offers additional safeguards and gives landlords with the peace of mind that the rent collected by their agent is protected from fraud and unlawful use. These press articles really highlight the nightmare scenario tenants and landlords can face if their agent does not have CMP cover in place:
o Letting agents jailed for total of seven years after &400,000 thefts
o Letting agency's mystery closure - man arrested
o Rogue letting agent jailed after taking rents, deposits and wages
o Letting agent may be jailed after clients paid rent into personal account
o Letting agent jailed after leaving landlords out of pocket

¹​ Source: ‘Improving the Private Rented Sector and Tackling Bad Practice: A Guide for Local Authorities’ (DCLG, March 2015) 

TPO is urging agents to review a new ‘Open letter' issued by the Competition & Markets Authority (CMA), which concerns the competition law & property portals.

To view a copy of the CMA letter - please click here to download.

TPO has been asked by the CMA to distribute a copy of this letter to ensure member agents are aware that when an estate agent makes a commercial decision about its choice of online property portals, the law requires that it makes that decision without colluding with estate agents that are its competitors.

The CMA letter highlights three important points concerning unlawful activity in this respect, and the consequences for individuals and companies.

A press announcement was also issued by CMA which provides further information and includes quotes from TPO and NFOPP on this issue. Please click here to view a copy.