Last year we reported on weaknesses in the Ombudsman redress system and ARMA regulation. In the case of ARMA the changes introduced after their regulator, former Labour minister MP Sally Keeble, resigned.
After the resignation, ARMA has decided to turn itself into a secondary regulator. Rather than allow leaseholders to initiate a complaint directly, as had happened in the past, ARMA now requires a decision from another regulatory panel before their own complaints procedure comes into play as set out in their annual report here:
https://arma.org.uk/downloader/tt7/2016-2017_ANNUAL_REPORT.pdf
We also reported the minimal fine in a case imposed by one of the three ombudsman schemes who oversee property related matters. Oddly the Ombudsman criticised us for publishing this story, suggesting we did not set out all the facts even though we clearly quoted directly from the Ombudsman’s report and gave a link to their original article.
We criticised the lack of transparency in the schemes: consumers are not allowed to know the details of a complaint, or even against whom it has been made.
These problems seem to be exacerbated by having three Ombudsman schemes in operation. So property managing agents can flit from one to the other in a potential race to the bottom in terms of standards. Agents can even move to another scheme after being expelled from a previous one.
An example of an agent being expelled from one scheme and joining another took place last year:
Moreland Estate Management confirmed to LKP that it was “expelled from Ombudsman Services: Property [OS:P] on 7 July 2017″. However, due to administrative delays, the files were not closed until November 6. The organisation was then able to join The Property Ombudsman scheme (TPOS). Somehow that application was not only accepted it was made on an expedited basis and the company accepted within two days.
The system means consumers have no idea what an agent has done wrong, and whether the issue has been resolved.
The Ombudsman from TPOS scheme explained about the Moreland case:
“In this instance, it was down to OS:P to decide if the remedies had been met and they decided that, as the complaint to them had been superseded by a Tribunal decision, there were no remaining remedy points to be met, and they therefore confirmed to TPO that we are able to accept them into Membership – the firm has voluntarily signed up to the TPO Codes of Practice.”
The Ombudsman went on to explain:
“The 3 redress schemes operate a Memorandum of Understanding, which we regularly review with DCLG (Lettings ) and NTSEAT (Sales). The MoU makes sure that no agent with an award outstanding against them with one redress scheme can be accepted into a different scheme. OS:P, PRS and TPO confer and co-operate accordingly. If an Agent then trades without redress, it is for the Scheme involved to refer the firm to Trading Standards to take action for trading illegally. The Redress Scheme can exercise compliance, but is not the Regulator.
It maybe says something about the system that the Ombudsman advises that its only the DCLG lettings rather than leasehold team who review the schemes.
“Once the award has been met, either in terms of remedies or awards paid, then the Firm is able to take up membership of a redress scheme again, which cannot reasonably be withheld.”
So, if someone does something wrong the ombudsman schemes are allowed to tell each other but your not allowed to know. If they decide someone should be expelled and another scheme accepts them you are not allowed to know why. They decide any penalty which is likley to be small but the name of the company facing a penalty remains confidential.
However, finally the third player in the field “Ombudsman Services” has called time on this failed system. On 6th Feb they said:
“Ombudsman Services (OS) has today announced that it will withdraw from complaints handling in the property sector as it launches a major dialogue with consumers to help tackle an ‘imbalance in power’ in the housing sector.”
Claims will continue to be handled until 6th August this year to allow companies to move to a new scheme. The full statement can be read here:
Chief Ombudsman Lewis Shand Smith said:
“Redress in the housing sector is a really confusing picture for all involved. The patchwork of ADR and ombudsman schemes is a mystery to consumers and therefore is incredibly difficult for them to navigate.”
“Rather than continue to offer a broken solution to a broken market, we are stepping away to listen to what consumers actually want”
“There are models in other sectors that work far better – for instance the single ombudsman model in financial services and the scheme we operate in energy which handles around 40,000 complaints every year.”
“We fully support Sajid Javid regarding the need for a single ombudsman for housing – only then will the housing sector be able to restore trust and ensure that consumers get a much better standard of service.”
LKP fully endorses the view of the Chief Ombudsman that a single ombudsman would be a far better solution for regulation of the sector. Consumers should also know if an agent has done something wrong?
Rather than congratulate itself on how few complaints it now gets, ARMA might give itself a pat on the back for making a system that so few can use.
Even under their old pre ARMA-Q days when ARMA regulation was very light touch they did eventually consider a complaint from Charter Quay. A complaint which would go on months but eventually ARMA did impose its largest fine available at the time. A fine of £2000.
However, it also made the then Managing Director of Peverel, Lee Middleburgh, have to write to all ARMA agents on 4th January 2010. The letter sought to apologise for their failures in handing information over the new agents when sites left Peverels management while pointing out the improved structures, standards banking and accounting agreements now being used by Peverel.
There seems some doubt the new ARMA regulation system would be able to consider the same complaint from Charter Quay.
If the sector continues to delude itself that the vast bulk of consumers are happy with the service provided and that less than 20 have complaints every year we still have a long way to go. We need to move on from too many many companies still in the British Layland phase of thinking where the customer rather than a poor product is somehow to blame.
Related posts:
The Property Ombudsman fines agent for selling house as ‘virtually freehold’. (Don’t worry ARMA members: it was only £200)
Why has it taken so long to regulate the leasehold sector?
LKP tells BBC that property managers can’t regulate themselves. It needs government
Sajid Javid has thought about leasehold property management and does not like what he sees …
Sector announces new building safety test for leasehold blocks to ‘keep the high-rise property market flowing’
Pinsent Masons believes ban on ‘almost all’ new leasehold houses to have retrospective effect
ARMA have made it much more difficult for a leaseholder to make a complaint, by not only insisting on all the hoops a leaseholder has to go through before applying to ARMA they now will not handle complaints that are over 24 months old. This must come as a relief to firstport Retirement (ARMA’s newest member) who still have not fully repaid money they used resident service charge funds for as part of their price fixing scandal? And of course it helps spare the blushes of ARMA executive member, Sue Petri(Firstport)
I note ARMA’s accounts appear to show a substantial loss. Net value has fallen from £604,434 down to £421,699. Mention was made of a provision being made in respect of legal action being taken by a member firm of ARMA (which was settled in June 2017. Has anyone from ARMA any comment on this?
After all, how can anyone have confidence in the probity of a “regulator” if they have involved themselves in secretive conduct?
I notice that ARMA appointed a new Business Manager last month with the aim of increasing membership.
It did not take long to accept FP Retirement, I wonder if he was aware of events over the past 10/15 years.
Although ARMA encourage leaseholders to choose one of their members, there is nothing they will do to assist with a leaseholders complaint.
Before ARMA take any action there are numerous hoops a leasehold complainant has to jump through. In the case of a Retirement complex complainant this process could easily out live them. Or wear them down to submission.
And the end result is only likely to be a warning letter or slap on the wrist for the offending company.
I have asked ARMA to explain ( preferably on their website) the reasons for accepting FirstPort Retirement. The news appears to be kept under wraps.
If we are not told we can only assume it was to collect more membership fees.
“… numerous hoops a leaseholder complainant has to jump through …” My impression is that ARMA regulation is/was and always will be a smokescreen for bad practice by its members and a total indictment of self-regulation by the leasehold sector.
My case against Rendall Rittner for failure to observe regulatory compliance over accounting for service charge (whilst acting as managing agent on the Mill Quay estate) came before ARMA’s in-house regulatory panel, The panel members included Mr Rendall. After some delay my complaint transferred to the newly constituted ARMA-Q and there were further delays as a result of the system being bedded in (I was told).
Many months later I approached the then DG Michelle Banks for an update on progress only to find that the matter had supposedly been decided many months prior to my enquiry.
The regulator’s decision had gone against me, as I learned when I eventually received a copy. The reason the regulator gave: he said the case against RR’s property manager Simon van Houten for fraud had already been decided by the courts and there was no further need to investigate.
The regulator had managed to conflate my complaint which was entirely focussed on RR’s failure to account for service charge with the concurrent court action against its dishonest property manager van Houten who, until his arrest had, most pertinently, been involved as property manager at MIll Quay.
It would have been van Houten’s responsibility to ensure that our flat management accounts were prepared in accordance with the law, the lease and industry good practice outlined by RICS and the accountants’ bodies ACCA and ICAEW. But that would be to ask poacher to turn gamekeeper on himself.
To my mind, the decision showed that the leasehold sector cannot be trusted to self regulate.
STRICT REGULATION FOR MANAGING AGENTS IS REQUIRED WITHOUT DELAY.
It is my belief that a very large minority ( perhaps majority) of Managing Agents raison d’ etre is to fleece the leaseholder by methods most foul.
These dishonest individuals must be regulated ,prosecuted and Incarcerated if found to have committed Fraud or any other form thievery against innocent hardworking leaseholders.
Their days are numbered and I for one will campaign until their venality and nefariousness is brought to an end. So there!!
I agree with you, Kim though I don’t think the aim is to fleece leaseholders, per se, but to make as much dosh as possible in the time available looking perhaps to an early retirement; or the opportunity, mid-career, to swan around Africa on the back of an assured steady income from leasehold property management, doing high-profile work in the name of charity before returning home to make a promo video on the subject for The Daily Telegraph Business website.
Unfortunately, this race to the bottom to coin the Brexit secretary’s phrase, unchecked, does result in leaseholders being fleeced – just like we holders of insurance policies, bank deposits and retirement pensions – the individual at the end of the line carries the can for the rookie behaviour of big business.
Self-regulation is intended to transfer the cost from the tax payer to private companies. But, as we see, it isn’t working across the board from insurance, to banking. pension funds nor, indeed, leasehold management. Hence, the growing number of public enquiries – and at what cost to the tax payer?
Organisations like LKP provide a welcome safety valve. But they have to earn a living, too. IMO we are fighting to stand still. OK, get the government to abolish ground rents, not forgetting the social dimension of family and other charitable trusts linked to ground rent income, and inevitable brouhaha that will ensure if these are abolished.
So we get that job done. What next? Do we really think that the ground rent owners together with their lawyers and accountants aren’t, even now, plotting some alternative source of income to be derived from leasehold management?
Rather than providing a brake on their acquisitive tendencies, such initiatives provide renewed vigour. Nor is it particularly challenging, just move the goal-posts – something akin to running a football league without referees, or if that’s not possible, then make sure they are wearing blindfolds.
Then we have the popular idea that Commonhold would benefit leaseholders by giving them greater control. But they already have that control, don’t they, through the mechanism of leaseholder directors who sit on the flat management boards?
One could try to redress the problem of having FMC boards comprising mostly, or entirely buy-to-let leaseholders – who may or may not speak English, such is the magnet for overseas investors in the UK property market. You’d think common sense and natural selection would prevail but the managing agents have already got that one sorted. If they don’t like you they get rid of you – even if it means filing your resignation at CH without telling you, which happened to me.
Leasehold management will always be one step ahead. That includes not only the managing agents, their lawyers for whom professional integrity means telling their clients what they want to hear, but all the other hangers-on completing for a slice of the action in the form of members’ organisations, quasi government regulatory bodies only too willing to admit into ‘associate’ membership any Tom, Dick or Harriet willing to pay their fees, spurious online ‘awards’, commercial roadshows and all the other malarky associated with leasehold management. A bit like prison, the offenders get together, indoctrinate each other and swop hot tips.
Then again, if a regulatory body like RICS can come a cropper as it reportedly has, what chance for the individual leaseholder? I read that a disciplinary hearing against a member was successfully quashed by a smart lawyer who noted that the panel comprised two members when there should have been three. Thus, some 80-odd previous hearings against members were subsequently quashed. Presumably, the members involved are still at large, free to ply their trade.
Talking of hearings, the RICS disciplinary panel will hear evidence in the case of associate member Warwick Property Management at 0930 tomorrow morning, Wednesday 21st, London HQ.
Strange? A requirement of ARMA-Q is that the managing agent should have a management contract for each individual development. Ask Firstport for a copy of the management contract (or even what date does the contract start and run to?) and they tell you “It is commercially sensitive information” and decline to answer!
What says Sue Petri, the ARMA executive officer?
That is very true! Contracts on how to fleece leaseholders are ‘confidential’. I asked for them in a tribunal setting and was ignored by the judge, who pretty much ignored me on all points actually.
Accounts showing where our money goes and how our buildings are managed as well as contracts, should public information for all to see and compare. I do realise that would make fleecing a lot more difficult, though still not impossible.
I find you comment re Moreland Estates very interesting as I am encountering problems with their management technique to say the least and will more than like taking them to Tribunal shortly. Having read the previous cases against them I would say that TPOS should have had some concerns as they seem to regularly ignore basic legislation and then ingore the Tribunals request for information. I will get hold of a copy of their code of practice as that might be of use.
HELLO FELLOW ACTIVISTS.. DEFAMATION/ HARASSMENT CASE UPDATE!!!!!!!!!!!
1. On 12 th February there will be a telephone “ Listing hearing”.
2. I have cleared my diary from early March to June as this is the window for the 2 day Hearing.
3. I have engaged a Barrister to represent me for the 2 day hearing( These girls and boys don’t come cheap but I I believe the claimant should pay )
4. I have not found a case where a managing agent has sued a client..( googled)
5. I am aware that “ Stonehaven “ ( were they involved with Peverel “? ) who I believe is/was involved aResidential property company? sued a newspaper for “Defamation “ slander” wotever and lost heavily……..
6. This case brought against me could be a test case and of course could go either way………However I shall defend my case with boldness. Thankfully I am not a vulnerable, easily cowed ,naive leaseholder. Also I have the trump card card of “ EVIDENCE”.
7. I ask my fellow campaigners to please CLEAR THEIR DIARIES for March – June 2018 . Pack yer sarnies at get ye to the County Court London RCJ..
Master E, your support as a possible witness has been noted and I shall discuss the possibility with my counsel.
C’mon folks, turn up, tune in and SPREAD THE WORD!!! You may even be familiar with the claimaint. Who knows?. It’s an open court so you are at liberty to relay all the proceedings.
Just think how Delicious that might be.
To clarify/ correct my previous comment.
1, I believe it was Mcarthy and Stone that launched a disastrous High Court action against the Daily Telegraph.
2. “ The problem with litigation is that you never know what might come out of the woodwork”.
You should copy the statement about broken market by Chief Ombudsman at front of this report and read it out in Court if it helps you..
Thanks Ollie.
KIm, I am very happy to help.
To defend an action against defamation you would have to demonstrate that any statement you made was factual or you had reasonable grounds to believe it to be factual.
Any statement was expressed as an opinion not a fact.
The claimant’s reputation is so bad that no statement true or false could possibly further damage them..
If you ever have had a chance to look at the About Peverel(Firstport) or the former Peverel Action website and read what has been posted on it, you may wonder as to why none of the published comments have ever been challenged by Peverel/Firstport? (check with the editor to confirm that this is indeed the case?) And if I am right on this that would indicate that Peverel/Firstport do not believe any of the comments posted have defamed them? It may give some context to your case?
Dear Michael
Thank you. I shall be in touch after direction from counsel. I will ask LKP/ About Peverel for your details.
I note one of the judges for the forthcoming ARMA Awards Ceremony is Nicolette Granite an executive officer of the Ombudsman Services Property..
No aspersions on her probity whatsoever, but is she an appropriate person to be a judge at the same time that The Ombudsman Services Property is leaving the property sector?
Master E I truly believe that we are in “ Alice in wonderland territory “;I shall refrain from saying “ Orf with their heads’s”. Ooops , I didn’t refrain….
Oh dear…….
I fully understand the reasoning behind the ARMA awards. of course the “spin” will be “It helps to drive up standards” the reality is that is a way of increasing earnings for ARMA.
My problem with the awards ceremony is the potential for a “conflict of interest”
Suppose that a property management company took two tables at £2,000 each. They then sponsored an award , thus contributing a great deal of finance to ARMA.
Now let us suppose a complaint was made against the property management company (possibly for price fixing or maybe for failing to disclose management contracts?)
How on earth could ARMA judge any case? How could they find a company guilty who are going to be a major sponsor of the evening? Imagine the announcement “Ladies and Gentlemen unfortunately our major sponsor cannot be here tonight as they have been expelled”
What I cannot understand about FirstPort Retirement being awarded full ARMA membership is the fact that is has been kept under wraps and not publicised.
The only place I have seen it mentioned is on the LKP website.
Nothing on the ARMA website, Twitter or Facebook, the FP website, News on the Block or Flat Living magazines.
I have asked ARMA if they can explain their reasons for the award, but with no success. I feel that we are entitled to this information, not least the FP residents and especially those who suffered from the price fixing.
It may be a good move with FP Retirement now coming under the “control” of the ARMA regulations, perhaps they have now agreed to fully compensate for past deeds.
If this is the case then ARMA need to tell us, otherwise we may think the worst. And that is with ARMA being short of funds they are prepared to lower their standards to achieve more funding.
Michael,
It was announced on the Firstport website. You may have missed it among all the Mickey Mouse awards they are “celebrating?”
Oddly Firstport’s news website makes no mention of their fine for Health & Safety breaches which resulted in the fatal fire at Gibson Court?
Yes I have now found it on the FP website, but there and on LKP appear to be the only places mentioned.
I notice that the FP Chief Executive says since their restructuring FP has significantly changed the way it conducts its business and now has higher levels of customer satisfaction. I assume they mean the residents. And that they must now conform with ARMA high standards and Consumer Charter.
Lets hope this happens, and if not ARMA take action on any future transgressions and not ignore them as has happened in the past.
Of course this policy should apply to all ARMA members, not just FP.
As I understand it ARMA allow up to two years for associate members to advance to full membership. Run by the former Peverel Politburo how many years has it been since Freemont Property Managers became associate members?
According to the About Peverel website, Sue Petri (managing director of Firstport Bespoke) has departed from the company.
It seems that Sue Petri’s name has also been taken off the ARMA website.
And this at the same time that Firstport Retirement were admitted to ARMA?
Very odd?