Mortgages  

Garnier calls for FCA regulation of estate agents

A leading Tory MP has backed Financial Adviser’s campaign against rogue estate agents and has called for their sales to be regulated by the Financial Conduct Authority.

Mark Garnier, MP for Wyre Forest and a member of the Treasury select committee, said estate agents should fall under the scope of the City regulator because of the large amount of money involved when buying a property.

He said it was “incredible” that the industry was not covered by any formal supervision, adding: “The single biggest and most important financial transaction anyone makes in their life is most likely to be the buying of their home.

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“It is where they will spend their life, bring up their family and, in repaying their mortgage, where they will accumulate a huge proportion of their lifetime capital savings. So it is incredible that estate agents do not fall under any formal regulation or supervision.

“Given that participants in markets, such as stocks and shares, are regulated it seems reasonable that the scope of the conduct regulator should be extended to cover the property market.”

On Tuesday Martin Wheatley, chief executive of the FCA, dismissed taking over regulation of the sector saying resources were too “stretched”.

Trevor Mealham, chief executive officer of the Independent Network of Estate Agents, admitted that sales and lettings in the UK had become a “mess” and that prospective buyers needed to be educated about their rights.

However he said regulation offered by the Office of Fair Trading allowed consumers and “good” agents to take action against “cowboys” in the sector.

James Town, adviser for Essex-based Scott Goodbourn, said: “Many estate agents have the aim of getting all the business surrounding a property purchase sewn up. They generate greater revenue by offering both mortgage advice and legal services but I think this often proves to be a more expensive route for the consumer.”

Financial Adviser has previously reported on widespread claims from advisers thart some leading estate agents are holding prospective homeowners hostage by demanding proof of deposits held and account details in a potential breach of the Data Protection Act.

Although estate agents have to obey the 1979 Act, which according to the Office of Fair Trading provides a regulated environment for the industry, estate agents do not have a dedicated regulator in the way that pensions or financial services have.