As a student of the 1980’s I spent a lot of time protesting on London’s streets. It didn’t matter if it was against apartheid, student loan cuts or the Milk Snatcher in chief, Margaret Thatcher, there were always chants that went with these rowdy gatherings. Two, four, six, eight, regulate, regulate
Whether it was “Maggie, Maggie, Maggie, Out, Out, Out” or “No ifs, no buts, stop the education cuts”, the best were simple and easy to remember.
Those fond memories came back to me when recently reading the chants of “Regulate, Regulate, Regulate” from those demanding change to the house buying and selling process. Whether it’s reining in unruly agents, ending the huge fees charged by management companies, or even the latest fad of comparing different regulators with each other, this drumbeat is the background music to the property industry at the moment.
There’s a problem though.
I’m struggling to find where regulation successfully addresses issues rather than business owners sorting them out.
Great failures of our time
First things first – I know a little about regulators – as the business owner working with two of them for years, I have to ensure my company is compliant. However, that by itself does not mean I am delivering a good service and it certainly doesn’t stop things from going wrong in the first place.
Which is where the misunderstanding lies.
After all, this year 28 electricity suppliers went bust affecting over 4 million customers. In fairness to their regulator, Ofgem, they did make sure they were moved to different suppliers, but stable doors and horses spring to mind.
Remembering 2008 ( or just watch The Big Short instead ) those same doors were being slammed shut by the Financial Services Authority long after the financial scandal had ruined millions of people’s lives.
Finally, last year, it took the Solicitors Regulation Authority nearly two years to strike off a junior lawyer after she left a briefcase containing legal documents on a train.
And that’s the thing.
Regulators are not the golden bullet to stop problems happening but too often there to give judgement afterwards, so why will extending their reach solve problems?
Putting it another way, it’s like asking the police to shut down a rowdy club, but what they should have done is put a bouncer on the door in the first place.
You see the problem.
My new regulators
As it’s Christmas, which even in these uncertain times, is a magically positive time of year, I was wondering if we could suspend reality for a moment. What if regulators could actually stop bad things happening in the house buying and selling process, who would be in my top five? These were my thoughts.
This Yuletide-sounding regulator will put an end to one of the most painful aspects of the process – those who over-promise and under-deliver. Unusually, this free-wheeling new office will target both agents and lawyers, barring those agents who tell clients “your lawyer has reported so you’re ready to exchange” or those lawyers who “guarantee exchange in four weeks” from working in the industry.
Sometimes the abbreviations used by regulators make it difficult to recognise what they do, but this one’s easy. Its role is straightforward – to stop companies being setup whose only purpose is bribing agents and brokers to pass work to an undisclosed conveyancer in return for huge referral fees and tickets to the Premier League match of their choice. ( Please note. Cash equivalent refunds for tickets to games cancelled due to Covid are not available.)
This regulator has the significant challenge of eliminating what some call the Pot Noodle of the conveyancing business – that last-minute desperate measure when there are no other decent food options available. We’re talking about the much resented, “oh it’s not a problem, we can sort this out on the day”, simultaneous exchange and completion. These last minute fiendishly stressful activities need to be banned once and for all. Of course, to achieve that, we’ve got to make sure everyone in the chain has got their act together earlier, which will require a truly superhuman effort from all those in this new office.
The main challenge facing this office, responsible for eliminating “salami slicing” of lawyers’ fees, will be recruitment. Successful candidates must possess advanced forensic skills to spot sneaky hidden fees and outstanding eyesight to be able to read the extremely small small-print used by so many law firms. They’ll need to know that completing within 7 days of exchange is not an “expedited completion” so charging £200 is cheeky at best, or that “acting for a lender” on a sale means getting a redemption statement and sending money at the end, so charging £300 is a bit of a stretch.
This regulator is last on the list and for good reason. They have an incredibly difficult challenge ahead of them which will take an extraordinary amount of tenacity and sheer grit. They will be responsible for ensuring that any law firm who repeatedly force their staff to print emails and send letters by post will no longer be able to trade. Given that a recent back-of-a-fag-packet study showed that 99.63% of property lawyers are still doing this, this regulator really does have their work cut out.
But the reality is
Further regulation of the property industry is not the solution that many think it is.
Reducing poor practices and improving delivery will not be addressed by more regulation, but by ensuring the public vote with their feet with their choice of supplier and agents have a huge role to play in this.
Let’s hope that 2022 brings a more commercial approach to change and let’s leave the chanting to the students on street demonstrations.
Peter Ambrose is founder of conveyancing specialist The Partnership: https://propertyindustryeye.com/two-four-six-eight-regulate-regulate/