Client Money Protection Schemes for Property Agents (Approval and Designation of Schemes) Regulations 2018 — House of Lords, 2018-06-13
Topic: Housing
John Warren Shipley (Liberal Democrats, Centre to centre-left): My Lords, I should declare my vice-presidency of the Local Government Association. I agree entirely with what the noble Lord, Lord Best, said, and in particular that we need to clean up the world of private lettings. As he rightly pointed out, this is one measure among a number that the Government are introducing and they are entirely welcome I welcome this draft statutory instrument. It has been a while in its gestation and of course it will be a further nine months, understandably so, before it finally comes into force. It is a very welcome addition to the measures to protect private tenants and landlords that the Government have been introducing. Client money protection schemes are an essential element of consumer protection, be the consumers tenants or landlords. We have to remember that some 4.7 million households are in the private rented sector, and the protection given to tenants and landlords alike means that all parties can have confidence that their money is secure. It is important to remember the scale of the sums of money involved: letting agents currently hold around £2.7 billion in client funds. Today, some 60% of lettings agents are members of a scheme when it is not mandatory to be so, which suggests that the behaviour of many lettings agents need not be a cause for concern. It is with the other 40% that there is a potential for problems, and this scheme will certainly help to extend the required consumer protection Like the Minister, I recognise the excellent work undertaken by the noble Baroness, Lady Hayter, and my noble friend Lord Palmer of Childs Hill, who co-chaired a working group to assess how a scheme might work. This statutory instrument is much the better for their work. Their conclusion that a mandatory scheme is needed if money is to be handled is the right one This takes me to the same issue that the noble Lord, Lord Best, has addressed of local authority enforcement. Local authorities will be responsible for enforcement, as they are for the enforcement of many similar reforms being or shortly to be introduced by the Government. Might the Government examine ways of improving publicity around this statutory instrument? Non-compliance can bring a civil penalty of up to £30,000, which can be retained by a local authority. Therefore, there should be no financial or resource reason for local authorities failing to undertake proper enforcement —except that there is, I think, an impediment to enforcement relating to a lack of understanding of the powers under the law by council officers. I am trying to be very specific about this issue: enforcement will work only if the officers undertaking that enforcement understand what their powers are and have the confidence to undertake them. I wonder whether the Government, perhaps in conjunction with the Local Government Association, might consider ways in which knowledge of the law can be spread further. In the end, Parliament may pass legislation that then fails to be implemented as it might be but, given the extent of the private rented sector these days, it is clearly important that government legislation is implemented. The test of the success of this statutory instrument will be on local authorities taking up the powers that they have, which could well be self-financing.