Last year we reported on weaknesses in the Ombudsman redress system and ARMA regulation. In the case of ARMA the changes introduced after their regulator, former Labour minister MP Sally Keeble, resigned.
After the resignation, ARMA has decided to turn itself into a secondary regulator. Rather than allow leaseholders to initiate a complaint directly, as had happened in the past, ARMA now requires a decision from another regulatory panel before their own complaints procedure comes into play as set out in their annual report here:
We also reported the minimal fine in a case imposed by one of the three ombudsman schemes who oversee property related matters. Oddly the Ombudsman criticised us for publishing this story, suggesting we did not set out all the facts even though we clearly quoted directly from the Ombudsman’s report and gave a link to their original article.
We criticised the lack of transparency in the schemes: consumers are not allowed to know the details of a complaint, or even against whom it has been made.
These problems seem to be exacerbated by having three Ombudsman schemes in operation. So property managing agents can flit from one to the other in a potential race to the bottom in terms of standards. Agents can even move to another scheme after being expelled from a previous one.
An example of an agent being expelled from one scheme and joining another took place last year:
Moreland Estate Management confirmed to LKP that it was “expelled from Ombudsman Services: Property [OS:P] on 7 July 2017″. However, due to administrative delays, the files were not closed until November 6. The organisation was then able to join The Property Ombudsman scheme (TPOS). Somehow that application was not only accepted it was made on an expedited basis and the company accepted within two days.
The system means consumers have no idea what an agent has done wrong, and whether the issue has been resolved.
The Ombudsman from TPOS scheme explained about the Moreland case:
“In this instance, it was down to OS:P to decide if the remedies had been met and they decided that, as the complaint to them had been superseded by a Tribunal decision, there were no remaining remedy points to be met, and they therefore confirmed to TPO that we are able to accept them into Membership – the firm has voluntarily signed up to the TPO Codes of Practice.”
The Ombudsman went on to explain:
“The 3 redress schemes operate a Memorandum of Understanding, which we regularly review with DCLG (Lettings ) and NTSEAT (Sales). The MoU makes sure that no agent with an award outstanding against them with one redress scheme can be accepted into a different scheme. OS:P, PRS and TPO confer and co-operate accordingly. If an Agent then trades without redress, it is for the Scheme involved to refer the firm to Trading Standards to take action for trading illegally. The Redress Scheme can exercise compliance, but is not the Regulator.
It maybe says something about the system that the Ombudsman advises that its only the DCLG lettings rather than leasehold team who review the schemes.
“Once the award has been met, either in terms of remedies or awards paid, then the Firm is able to take up membership of a redress scheme again, which cannot reasonably be withheld.”
So, if someone does something wrong the ombudsman schemes are allowed to tell each other but your not allowed to know. If they decide someone should be expelled and another scheme accepts them you are not allowed to know why. They decide any penalty which is likley to be small but the name of the company facing a penalty remains confidential.
However, finally the third player in the field “Ombudsman Services” has called time on this failed system. On 6th Feb they said:
“Ombudsman Services (OS) has today announced that it will withdraw from complaints handling in the property sector as it launches a major dialogue with consumers to help tackle an ‘imbalance in power’ in the housing sector.”
Claims will continue to be handled until 6th August this year to allow companies to move to a new scheme. The full statement can be read here:
Chief Ombudsman Lewis Shand Smith said:
“Redress in the housing sector is a really confusing picture for all involved. The patchwork of ADR and ombudsman schemes is a mystery to consumers and therefore is incredibly difficult for them to navigate.”
“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.”
LKP fully endorses the view of the Chief Ombudsman that a single ombudsman would be a far better solution for regulation of the sector. Consumers should also know if an agent has done something wrong?
Rather than congratulate itself on how few complaints it now gets, ARMA might give itself a pat on the back for making a system that so few can use.
Even under their old pre ARMA-Q days when ARMA regulation was very light touch they did eventually consider a complaint from Charter Quay. A complaint which would go on months but eventually ARMA did impose its largest fine available at the time. A fine of £2000.
However, it also made the then Managing Director of Peverel, Lee Middleburgh, have to write to all ARMA agents on 4th January 2010. The letter sought to apologise for their failures in handing information over the new agents when sites left Peverels management while pointing out the improved structures, standards banking and accounting agreements now being used by Peverel.
There seems some doubt the new ARMA regulation system would be able to consider the same complaint from Charter Quay.
If the sector continues to delude itself that the vast bulk of consumers are happy with the service provided and that less than 20 have complaints every year we still have a long way to go. We need to move on from too many many companies still in the British Layland phase of thinking where the customer rather than a poor product is somehow to blame.