Monday, February 16, 2009

Scotland’s property management Factors ‘a bit crooked’ but OFT allows continued self regulation as consumers suffer

Property management in Scotland seems to have the same problems as most other professions & industries .. its a bit crooked .. and there are plenty of crooked agents around unfortunately.

The OFT however, feels for now, the industry can still self regulate .. a bad decision …

The Herald reports :

Factor market ‘not working well’ … but it can still police itself

GERRY BRAIDEN February 12 2009

Scotland's property management industry will be allowed to police itself even though "the market is not working well for consumers", the Office of Fair Trading has recommended.

Factors will only face the threat of a statutory scheme which could see them barred from operating if self-regulation fails, the OFT added.

Following a six-month landmark investigation into the factoring sector the OFT is also recommending the development of an advice and mediation service by the Scottish Government, which will be available to both owners and managing agents to help overcome the legal complexities in disputes and prevent the breakdown of arrangements.

Last month it unveiled its findings, which showed that almost half of flat owners believe their factors are not effective in getting things done, while one-third rated their service as poor value for money.

But while the recommendations published today have been welcomed by the industry housing campaigners have been left bitterly disappointed.

One leading figure has branded the recommendations "a shambles" and accused the OFT of telling the public "to trust dodgy companies to regulate themselves".

Prominent housing lawyer Mike Dailly, who has worked on a parliamentary bill to tighten the factoring industry, said: "This shows that our regulators, who let us down with the banking meltdown, are letting us down again.

"Does anyone really believe bad factors are going to start being nice if we ask them nicely? The OFT's conclusions are utterly incompatible with their finding that two-thirds of people who complained about their factor remained dissatisfied with them. That remarkable statistic blows any idea of voluntary self-regulation out of the water."

A particularly Scottish industry, factors manage common shared property such as roofs, staircases and gardens within tenements and other residential properties with a shared commonplace.

Around 135,000 Scottish households rely on property management companies.

The OFT's study also looked at land maintenance companies which maintain open spaces, typically on new housing developments.

It found that while the majority of people were happy with their property manager, around one in five said they were not.

Two-thirds of consumers who had made a complaint about their management firm were dissatisfied with the way their complaint was handled, while many people do not understand their complex legal rights and are unsure about the standard of service they should expect.

It also found there was limited scope for redress when things go wrong, and as owners rarely switch their property manager there is little evidence of active competition between factoring firms to attract business.

Key recommendations include an "early implementation of a Scottish Government promoted self-regulatory scheme, with an independent complaints redress mechanism, to ensure better accountability of property managers for their standards".

The OFT's recommendations have now been submitted to the Scottish Government which has agreed to respond within 90 days.

John Fingleton, OFT chief executive, said: "This is a market that is not working well for many homeowners in Scotland.

"People often have little or no understanding about their rights, households rarely switch factors, suppliers do not seem to be actively competing with each other and the options for consumers when things go wrong are very limited.

"The OFT's recommendations for change should be to the benefit of many Scottish consumers."

The OFT insisted that failure to recommend statutory powers, which many had hoped would include a registration scheme which could see companies struck off because of poor practices and operators required to prove they were "fit and proper", was not a "cop out" as the issue was more complex.

It also said it expected agencies north of the border to keep it up to speed with how any code was progressing while insisting it still had the "stick" of regulation in reserve should that fail.

Glasgow MSP Patricia Ferguson, the architect of the factors bill introduced to Scottish Parliament requiring property management companies to be registered, was scathing about the recommendations.

She said:"All the evidence shows that the majority of people who complain about their factor are unhappy with the outcome, the OFT offers them nothing. I will press on with my Bill and I hope that within the next year we will, finally, have a remedy on the statute book that will actually help people."

Consumer Focus Scotland, which in its previous guise as the Scottish Consumer Council, prompted the investigation, said factors were "drinking in the last chance saloon".

Jennifer Wallace, senior policy advocate at CFS, said: "The patience of consumers is wearing thin. If the industry does not develop self-regulation including an independent complaint system then we will, with the support of the OFT, move to external regulation of the market."

Property Managers Association Scotland Limited welcomed the recommendations, saying it already had a code of practice and supported the Scottish Government's intention to introduce accreditation of property managers in Scotland.

A spokesman said: "PMAS recognises that a simple system of dispute resolution would be advantageous to managers and clients. PMAS had proposed such a mechanism in its evidence on the Reform of the Law of the Tenement but the Scottish Government disregarded this suggestion when the Tenements (Scotland) Act was passed and left disputes to be resolved in the Sheriff Courts."

A Scottish Government spokesman said: "The property management services available to Scottish homeowners have been a matter of concern to the Scottish Government over recent years and we welcome this independent study by the OFT.

"Plans are already under way to develop an industry-led accreditation scheme for property managers. It will build on the OFT's evidence and recommendations and will include an independent complaints redress mechanism. We will consider the most effective way of ensuring advice and mediation services are available where they are needed."

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