Business, Innovation and SkillsWritten evidence submitted by RICS

RICS is the leading organisation of its kind in the world for professionals in property, construction, land and related environmental issues. As an independent and chartered organisation, RICS regulates and maintains the professional standards of over 100,000 qualified members (FRICS, MRICS and AssocRICS) and over 50,000 trainee and student members. It regulates and promotes the work of these property professionals throughout 146 countries and is governed by a Royal Charter approved by Parliament which requires it to act in the public interest.

RICS Regulation monitors, inspects and advises Members and Regulated Firms to uphold our professional, ethical and business standards, as well as against specific schemes. RICS Regulation takes a risk-based approach to monitoring and regulation of its schemes. In line with the Better Regulation principles, our regulatory activities are transparent, proportionate, accountable, consistent and targeted.

RICS has contributed to the following consultations that are linked to the draft Consumer Rights Bill:

The BIS consultation on the supply of goods, services and digital content;

The Law Commission’s (including the Scottish Law Commission) consultation on unfair terms in consumer contracts; and

The BIS consultation on the implantation of the Consumer Rights Directive.

A copy of these responses have been attached to our electronic submission.

Our specific comments outlined below, should be taken in this context.

Overall Content, Structure and Coverage

The proposed draft Consumer Rights Bill appears to be well structured and a sensible approach seems to have been taken. The explanatory notes are clear and are essential reading when looking at the Bill.

It is sensible to try and combine the various pieces of consumer legislation in one place. This will assist everyone—consumers, business, enforcers and other stakeholders. We understand there is a lot going on at the moment regarding consumer legislation, much of it being introduced via the European Union. However, it was explained at a recent BIS roundtable discussion that it was very unlikely that all measures would be captured in the Consumer Rights Bill because of the desire to obtain Parliamentary time for the Bill and the uncertainty regarding the timing of other pieces of legislation, for example, the Consumer Rights Directive. We think this is unfortunate, given one of the main themes behind introducing the Consumer Rights Bill was to consolidate legislation in one place. It would be helpful if further thought could be given about joining up all the various elements on consumer rights.

We also think that if the Consumer Bill is enacted into law then there will be a need to have information and guidance available to raise awareness of the measures and how they will be implemented for consumers but also business and other stakeholders as well. This will assist in helping to achieve the desired status of empowering consumers but also promoting growth through competitive markets. This will probably mean a range of pieces of information or guidance tailored to specific audiences, for example consumers, their advocates, business, in particular, small and medium sized enterprises (SMEs). We think it would be helpful to draw out case studies.

We also think it will be important to highlight how the legislation and measures will operate in England and Wales, Scotland and Northern Ireland respectively.

In the RICS response to the BIS consultation on the supply of goods, services and digital content, we highlighted the contrasting situation of piecemeal legislation around the residential property market.—where estate agents are captured by some legislation but letting agents are not. Since that response RICS, along with other industry organisations, Shelter and Which? have worked with the Government to introduce an amendment to the Enterprise and Regulatory Reform Bill to ensure that lettings agents will have to belong to an independent redress mechanism.

However, RICS and other industry bodies, Shelter and Which? still think there is a long way to go to provide consumers with adequate and consistent protection and rights in the residential property market. The introduction of legislation could help bring into play minimum standard requirements and regulation to sit alongside the proposed redress requirements for all in the residential sector. This approach was also supported by the House of Commons Communities and Local Government Committee in their report looking at The Private Rented Sector published in July 2013.

Goods, Digital Content and Services

It makes sense to align as much as possible the definitions of key terms across the various pieces of legislation and in particular the definitions in the Consumer Rights Directive. It is important that as far as possible there are no loop holes in the definitions. For example, we highlighted in the RICS response on the consultation on this area in October 2012 the issue of intermediaries—where the consumer might not have a contract with the business supplying the goods, services, or digital content to a consumer. We gave the example of residential sales agents acting for a vendor to find prospective buyers for the vendor’s property; or a lettings agent acting for a landlord to find prospective tenants for the landlord’s property. In such circumstances the prospective buyer/tenant may be obtaining a service from the sales/letting agent without signing a contract with them. Again, we recognise that such transactions are covered by the Consumer Protection from Unfair Trading Regulations (CPRs) 2008, and consider that for completeness it is important that a reference to those regulations should be included in the Consumer Rights framework so that consumers are aware of their additional rights in circumstances where they do not enter into a contract with a trader.

Unfair Contract Terms

Again, we would like to make the point that it is key to define or clarify by advice and case studies what is meant by the requirements of transparency and prominence of terms. This will help consumers, their advocates, business and other stakeholders.

Consumer Law

We think that it makes sense to link investigatory powers with the CPRs. Again it will be important to provide guidance to consumers, their advocates, business (in particular SMEs) and other stakeholders as to how investigatory powers will work.

Enforcement Powers

RICS regulates over 150,000 members, including trainees and students in over 146 different countries and we also regulate over 11,000 firms. We do so on the basis of the principles of Better Regulation—transparency, proportionate, accountable, consistent and targeted. We welcome the enhanced enforcement measures but are of the view that the principles of Better Regulation should apply.

Enhanced Consumer Measures

These do seem sensible, again we would emphasise the principles of Better Regulation.

One of the stated aims is to provide more redress for consumers. All firms regulated by RICS are required to have a complaints handling procedure in place and as part of that procedure access to independent redress is key. For consumer clients this is free for them to use, which means an ombudsman scheme. Is there any way that this requirement on redress can be required more generally with regards to businesses providing goods, digital content and services to consumers? The EU Alternative Dispute Resolution (ADR) Directive may help to expand this requirement in terms of consumer contracts and goods, and services etc.

Private Actions in Competition Law

We agree with the aims here. Making it easier and quicker for consumers and business to gain access to redress where there has been an infringement of competition law is a good thing.

We do have questions around what will it cost for consumers and business to use the Competition Appeal Tribunal. Should that be free for consumers and for some businesses, for example, SMEs?

We would like to see professional bodies that have an obligation to protect the public under Royal Charter, such as RICS, to be specifically listed as bodies that could bring actions on behalf of consumers or business. Currently, the explanatory notes only make reference to trade associations, which are very different in terms of purpose and remit to professional bodies.

Concluding Remarks

RICS would welcome the opportunity of continuing engagement as these proposals are finalised.

19 August 2013

Prepared 20th December 2013