Communities and Local Government CommitteeWritten evidence submitted by SAFEagent

Executive Summary

1. SAFEagent is a mark or logo denoting firms that protect landlords’ and tenants’ money through client money protection (CMP) schemes. CMP schemes all have a common purpose, namely protection of consumers’ money held by lettings and management agents operating in the private rented sector.

2. SAFEagent’s objective is to offer a single kitemark, to identify those agents who are members of in CMP Schemes and raise awareness of the risks of using an “uninsured” agent.

3. SAFEagent would welcome increased support from Government, to spread its campaign more widely, thus ensuring that landlords and tenants make an informed choice when using a letting agent.

Background

4. SAFEagent is a mark or logo denoting firms that protect landlords’ and tenants’ money through client money protection (CMP) schemes. SAFE is an acronym for SAFE Agents Fully Endorsed.

5. There are several CMP schemes in the sector, operated by the Royal Institution of Chartered Surveyors (RICS) the Association of Residential Lettings Agents (ARLA) the National Association of Estate Agents (NAEA) the Law Society and National Approved Letting Scheme (NALS) to which agents voluntarily belong. The scope of these schemes varies, although they all have a common purpose, namely consumer protection.

6. When selecting an agent, landlords and tenants often make decisions based on cost. However, it is important to ensure at the outset that they ascertain the details of the organisation their agent is regulated by and whether or not they are covered by a CMP scheme.

7. All agents who are part of ARLA/NAEA, the Law Society, NALS and RICS maintain and operate separate designated client accounts, where clients’ money is held completely separate from the operating funds of the firm. If the agent cannot provide consumers with the assurance of knowing they are covered by a CMP scheme, the question that needs to be asked by consumers is “why not”?

8. CMP Schemes recognised by SAFEagent have common minimum standards requiring their firms/members to have professional indemnity insurance, defined accounting standards relating to clients’ money and a customer complaints procedure, offering independent redress for consumers through an ombudsman scheme.

The SAFEagent Campaign

9. There has been a big increase in letting agents absconding with clients’ rent and deposit monies. Although well covered in the trade press, this has not been well publicised in the national or local consumer media. If the agent is not in an insurance scheme to protect clients’ money, neither landlords nor tenants have been able to recover stolen funds.

10. Although the operators of CMP schemes for letting agents, have made strenuous efforts to get the message to consumers (that they should choose an agent who can give them financial protection) it has proved difficult to alert consumers to the risk. Only when it is too late, and consumers find that there is no recourse in the event of fraud, do they realise they should have checked out their agent at the outset.

11. A representative group1 of CEOs of letting agents launched the SAFEagent campaign to raise consumer awareness of this issue. The Campaign’s objective was to offer a single kitemark to identify agents in CMP Schemes and raise awareness of the risks of using an “uninsured” agent.

12. The Steering Group has offered both practical and financial support to launch, publicise and run the campaign and NALS has agreed to co-ordinate and administer it.

13. The Steering Group, as professional and responsible agents, did not want the reputation of all agents to be tarnished by the misdemeanours of unscrupulous operators exploiting consumers.

14. The concept of the SAFEagent mark was created in February 2011. The brand and marketing material was developed, the website designed and the registration processes and systems created. The mark was launched at the end of May 2011. To date, there are around 2,000 registrations from agents operating UK wide.

15. The achievement of the rapid sign up rate has been a combination of various factors:

Recognition by agents that this is a simple effective Campaign, which offers added value to what they get through their CMP scheme operator.

Recognition and early endorsement, by key organisations2 operating in the sector, of the protection the SAFEagent mark can bring to the consumer.

Adoption of the SAFEagent campaign by one of the main lettings blogs www.lettingagenttoday.

Sound back office support.

16. The Group identified at an early stage the need for a sector inclusive, transparent approach as fundamental to the success of the SAFEagent mark.

17. Representatives from the Steering Group have met with key contacts from organisations involved in the private rented sector to promote SAFEagent direct and they welcomed the early public support from Government.

18. Government welcomed SAFEagent as very much as a “from the industry for the industry” approach with the aim of protecting the consumer. The campaign was referred to in the Government’s Housing Strategy for England, published in November 2011:

“Industry has a key role to play in driving up standards and improving consumer awareness. Many consumers, both landlords and tenants do not realise the importance of choosing a lettings agency with client money protection in place. This ensures that their money is safe, if for example the agent goes out of business. The SAFEagent scheme promotes consumer awareness of the issue and helps them to identify agents with protection, through the SAFEagent badge. It shows how much can be achieved quickly and cheaply through simple and effective ideas driven by industry and not Government”.

19. SAFEagent is a campaign and is not a replacement for formal regulation or licensing of agents within the private rented sector. It is a good example of improving standards from within and encouraging inclusivity for the benefit of the consumer and the sector.

20. Agents pay a marketing fee to SAFEagent to use the logo at a cost of £40 per office. Ongoing compliance with SAFEagent’s criteria, ie being part of a CMP scheme, is monitored on an ongoing basis by its administrators.

Encouraging Industry Co-operation for the Benefit of the Consumer

21. SAFEagent has held two Consumer Stakeholder Forums, chaired by Lord Best, with the aim of identifying ways in which the key messages of the campaign can be delivered more widely. An outcome from one of the Forums identified that an early warning system among industry stakeholders, to identify rogue agents, would be helpful. SAFEagent has since established an industry wide group of representatives of organisations involved in operating CMP schemes. This includes insurers and Tenancy Deposit Schemes. The Forum has discussed how they might co-operate to improve consumer awareness of CMP and whether it would be possible to share information, working more closely with Trading Standards and consumer groups for the benefit of the consumer.

22. SAFEagent would welcome increased support from Government to spread the message more widely and ensure that consumers make an informed choice when using a letting agent.

*The SAFEagent Steering Group includes representatives from:

Foxtons
Winkworth
Belvoir Franchising
Northwood Franchising
Sequence
Spicerhaart
Touchstone
Hunters

**The following organisations have offered support to the SAFEagent concept:

The Property Ombudsman Scheme.

The Council of Mortgage Lenders.

The Residential Landlords Association.

Trading Standards Institute.

British Property Federation.

Shelter.

Citizens Advice Bureau.

Commercial Suppliers to the Sector

HomeLet.
CFPwinMan.
Imfuna.

January 2013

1 The SAFEagent Steering Group includes representatives from:
Foxtons;
Winkworth;
Belvoir Franchising;
Northwood Franchising;
Sequence;
Spicerhaart;
Touchstone;
Hunters.

2 The following organisations have offered support to the SAFEagent concept:
The Property Ombudsman Scheme;
The Council of Mortgage Lenders;
The Residential Landlords Association;
Trading Standards Institute;
British Property Federation;
Shelter;
Citizens Advice Bureau.

Prepared 16th July 2013