My Lords, Amendment 81D would require letting agents to have appropriate client money protection in place, which in itself would mean that they would need to have established client account audits and proper procedures. About £2.7 billion is held by letting agents at any one time, so this would be a rather important consumer protection.
Finally, Amendment 81C would extend the existing consumer protection measures for estate agents to letting agents. Most importantly, it would empower the CMA to close letting or managing agents that have
acted improperly. It would therefore stop the present, rather stupid situation in which an estate agent banned today can set up as a letting agent tomorrow. This was something that the CLG Select Committee recommended. It wanted letting and managing agents to be subject to the same regulation as estate agents, and that is what this amendment would do.
I know that Ministers have suggested that there is in effect a sort of back-door banning at the moment, in that now that every letting agent must be a member of a redress scheme and if a poorly performing letting agent was turned down by all three recognised schemes, that would effectively debar the letting agent from operating. However, this misses two important facts. One is that the three redress schemes, though they will co-operate by not taking on an agent debarred by another of the three, can only act on complaints brought to them by landlords or tenants. As we know, many people dissatisfied with the service never complain. So these redress schemes only see the tip of the iceberg, as both the two established ones acknowledge. The third one is really yet to get going. So the intelligence for their veto on a business is pretty minimal. They do not have access to information from the police, trading standards or insolvency practitioners, so they are working on a tiny aspect of the whole scene.
There is a second problem. The state is effectively contracting out this enforcement to three private companies with no requirement that they abide by the regulator’s code, are properly qualified for this role or have ever been authorised to be front-line enforcers. They have been authorised by the CLG simply as adjudicators, not as law enforcement officers. Yet without this amendment they are the only organisations able to stop a rogue letting agent from trading. I beg to move.