Jersey’s estate agents will be required to become members of a government-approved redress scheme in future, after politicians gave the plan their backing in a vote today.
Originally put forward by backbencher Deputy Max Andrews, but amended by the Council of Ministers, the proposition was passed by 42 votes in favour, none against, after a debate in which all States Members agreed that some form of estate agent regulation was needed in the island.
There was just one abstention, from the Constable of St. Clement.
"We don't need to over-egg the pudding on this one," Deputy Montfort Tadier said during the debate, acknowledging the general unanimity of the Chamber.
However, several Members did express concern about whether the redress scheme would be UK or Jersey-based.
This decision will bring Jersey in line with the UK, where it has been a mandatory requirement for estate agents to join an approved consumer redress scheme since 1 October 2008.
Deputy Andrews initially lodged a two-part proposition after industry backlash to Environment Minister Jonathan Renouf's "unpopular" decision not to move forward with regulation. He believed the existing Consumer Protection Law was insufficient to protect consumers when dealing with "transactions that are the biggest investments some people will make in their lifetime."
Pictured: Deputy Max Andrews lodged the initial proposition.
However, the Council of Ministers chopped down the first part of the proposition, which would have required estate agents to become members of a "statutory regulatory body", meaning they would be obliged to undertake professional qualifications.
But the second part — that estate agents should register with an "independent redress scheme, approved by the Government of Jersey " — has now passed.
Speaking after the decision, Deputy Andrews said it was "a step in the right direction. The redress scheme is one half of my original proposition, but even since the debate has finished, some of the Council of Ministers can really see that through the stakeholder consultation that will now take place, industry will be given a voice, and they will have the opportunity to articulate their views on why they should be required undertake qualifications as well."
Video: Deputy Max Andrews speaking about his proposition ahead of the debate.
He added that the debate had highlighted the possibly of including letting agents in stakeholder conversations as well and expressed a preference for "an existing redress scheme."
"If you're having to incorporate a redress scheme from scratch there can be an administrative cost to that," he said.
Deputy Andrews reassured islanders that there would be "no cost" to the consumer: "All we are seeing is that estate agents will have to pay a fee to be a member of a redress scheme and have the opportunity to go to a redress scheme and accelerate complaints. Estate agents will have to abide by a code of practice and apply to a number of improved laws."
That followed his comments in the debate that the redress scheme will "support the consumer, protect the consumer, and compensate the consumer, when there has been wrongdoing."
Deputy Andrews cited two main areas of wrongdoing: asymmetric information, when one party in the transaction withholds documentation or information, and insider trading.
"There needs to be a change," he said. "By supporting this proposition, we can can actually allow for estate agents to understand what is required of them with a redress scheme."
He added: "I believe that at some point in the future, there is a need to ensure that estate agents, and all property agents should undertake professional qualifications. We can't over-regulate estate agents by ensuring that they are qualified to undertake that role."
Pictured: Deputy Rob Ward wished for a guarantee that the chosen redress scheme would have "clout" in Jersey.
However, Deputy Rob Ward raised concerns that a UK-based redress scheme would be incompatible with Jersey’s unique housing market and that there would be a cost to consumers.
He said: "When you look at those redress schemes, there is a cost, and the money will be going to the UK, the money will leave the Island, and there’s no reason to say that money won’t be passed onto consumers, because any cost, no matter how small, has to be passed onto consumers."
Deputy Ward was also warned about "over-promising": "There’s no guarantee that it’s a simple process to chase up that redress. It’s a highly convoluted process to get that redress, and then what we’ve done is to make that situation actually worse, by offering something that isn’t particularly real."
He added: "I want to see a step forward in this but what I would like to see are some regulations based in Jersey that actually seem to be working."
"It’s a real shame that we didn’t debate the regulation part of it here and see why it is that people don’t want Jersey-based regulation that is specific to our set-up. It’s very different from the UK." He wanted a guarantee going forward that the chosen redress scheme "has some clout" in Jersey.
Constable David Johnson, who served on the 2021 Economic and International Affairs Scrutiny Panel which found that only 40% of Jersey estate agents had voluntarily become members of a redress scheme, argued for letting agents to be included in the conversation.
That panel, whom Deputy Moz Scott spoke on behalf of, were "generally supportive" of the amended proposition. She added that while there is the goal to "avoid more red tape", there may be some in the market "who shouldn’t actually be there. We have a tight employment market, and if it encourages some displacement and contribution in other areas, that might not be a bad thing."
Constable Mike Jackson also expressed concerns about "unintended consequences". He counselled care: "Let's look to the end user and not cause costs in what is already a difficult market."
Pictured: This widespread support sees a swift U-turn from Deputy Renouf's position in March that he did "not feel it would be proportionate to introduce new regulation specifically for estate agents."
In the debate, the Environment Minister said the proposition was "curious" and the arguments "more nuanced", but was pleased to support the amended proposition which represented a "middle-ground."
He also added that Deputy Andrews's push was "not necessarily responding to an urgent need but we are looking at what is best practice."
Ultimately, he said regulation was a "good thing" because "everyone else does it" and "some estate agents would like it": "It is not too onerous for estate agents, provides an important and useful safety net, and gives reassurance to consumers that there is somewhere to turn to if they do have problems."
"It may be that in the future problems arise which do require further regulation, in which case I will be very happy to support them if based on a clearly-proven need."
Estate agents in Jersey are currently not required to hold any professional qualifications, belong to a professional body, or abide by a code of conduct.
Now that it has passed, there will be a requirement by December 2024 for estate agents to obtain membership of a government-approved independent redress scheme. This will make it an offence for a business conducting estate agency activities not to be a member and participate in an approved redress scheme under the Consumer Protection Law, the penalty for which carries a level three fine (£10,000).
It is undecided whether the legislation will be in the Environment Minister or Economic Development Minister's plan, but Deputy Kirsten Morel said: "it will be somewhere in someone's Ministerial Plan for delivery by 2024."
He added that he would "explore the possibility for a local redress scheme" and that Deputy Andrews's acceptance of the amended proposition made him "breathe a sigh of relief". He said the original proposition leaned towards a heavier touch, "whilst I believe in a lighter touch".
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