Focus on: Ombudsmen Service withdrawal

Ombudsman Service’s decision to withdraw from the property sector has sparked intense discussion, speculation and uncertainty among property professionals.

Of the 8,000 firms catered for by Ombudsman Services’ property division, the vast majority – around 6,500 – are affiliated to the Royal Institute for Chartered Surveyors (RICS).

With their intention to cease providing services for the property sector on August 6, this leaves the likes of surveyors, estate agent and letting agents on the lookout for alternative providers of ADR (alternative dispute resolution).

The RICS has pledged to help its members find new avenues of redress and said in a statement on their website: “ We are disappointed that Ombudsman Services are removing themselves from property. While we agree with them that the UK residential property market is fragmented, it is important to ensure that consumers continue to have access to redress during a transition to any potential future system.”

While efforts will go into overdrive in the coming weeks and months to ensure companies have the proper mechanism for redress, the task of replicating the services previously supplied by Ombudsman Services is anything but straightforward.

Indeed, one of the reasons Ombudsman Services cites for pulling out of the property sector is that it is becoming increasingly fragmented. It is therefore clear that a one-size-fits-all arbitration services is proving elusive.

What might suit letting agents may not be a fit for quantity surveyors and the whole process was beginning to confuse consumers and make it more difficult for the system to work for the purposes it is intended. That is certainly the claim made by Ombudsmen Services, whose head Lewis Shand Smith told the website Property Industry Eye that they no longer wanted to provide “a broken solution to a broken market”

He said: “Redress in the housing sector is a really confusing picture for all involved. The patchwork of ADR [alternative dispute resolution] and ombudsman schemes is a mystery to consumers and therefore is incredibly difficult for them to navigate.

“We are ceasing what we’re currently doing in the housing sector in a professional and planned way, because we believe it is not adding value.

“Rather than continue to offer a broken solution to a broken market, we are stepping away to listen to what consumers actually want.”

RICS is currently exploring alternatives and have been consulting with other arbitration providers. They will recommend approved providers to their members, but it is worth bearing in mind that not all will fit the needs of all the different areas of the property sector.

In the meantime, it is worth review your own company’s complaints and arbitration procedures to work out exactly what you require from a redress provider.

This should be done well in advance of the August 6 deadline to ensure a seamless transition.

Government will also be heavily consulted as to the best way forward for the property sector as a whole, with RICS working closely with them to make sure that whatever future arrangements are put in place are fit for purpose.

It is thought the Government’s preferred option is a single redress provider for the property sector with a single regulator overseeing everything.

The Property Ombudsman (TPO) looks in prime position to assume the role of single social housing ombudsman. However, what use this would be to others in the diverse property sector is one of the many questions which need answered.

Certainly, TPO’s own recent findings flag up the necessity of arbitration mechanisms within the housing industry. TPO figures show that complaints received by them rose by 3% in the last year, resulting in increased awards to consumers totalling £1.36 million.

The majority of complaints related to lettings, with the number of cases brought split almost equally between landlords (49%) and tenants (45%).

The model of one omdbudsman and one regulator, with Propertymark said to be vying for the latter, was favoured by previous Housing Minister Sajid Jarvid, who has since moved to the Home Office. His successor at housing James Brokenshire is expected to toe the same line, although has not yet made his position clear.

Uncertainty at this stage is far from ideal, with three separate bodies involved in redress in the property sector – the aforementioned Ombudsman Services and The Property Ombudsman, as well as Property Redress Scheme.

And although Ombudsman Services has announced their intention to pull out of property, there has already been speculation that they will return in some form.

Ironically, the Property Redress Scheme came about when the Government wanted to see more competition in property redress. Reverting to a model in which a single provider handles a wide range of issues does seem like a backwards step.

At the end of the day, consumers will vote with their feet but providing choice is the best way to ensure all strands of a fragmented sector have their needs met.