Purplebricks – and the case of the regulators who won’t.
This article follows on from related articles
In the last few weeks and almost immediately after their last trading statement, Purplebricks listing numbers showed an incredible number of listing anomalies, with thousands of properties suddenly disappearing from the website over the period of a few hours and days and, a significant number of duplicate and quadruplicate listings with differing unique identifier numbers being identified by individuals and public source data from Zoopla/ Rightmove etc.
It is impossible to say with certainty whether this anomalous activity is innocent or an attempt to manipulate figures although the company have previously admitted to having to ‘audit’ their listings when questioned about re and multiple listings by The Times)
Since my last blog, I have been trying to ascertain why the regulators appear reluctant to do their job. There appears to be an embarrassing game of pass the legislative parcel and a wall of silence between The Property Ombudsman Scheme (TPOS), The National Trading Standards Estate Agency Team (NTSEAT – who oversee the property redress schemes) and the National Association of Estate Agents/ Propertymark (NAEA) who are an estate agency membership organisation and one of the Nationally recognised awarding bodies for the NVQ qualifications in estate agency.
If you want to work as an estate agent in the UK running your own business, even as a franchisee, the law says you must (amongst other things):
- Belong to a recognised Government redress scheme as approved by NTSEAT
- Be registered for Anti Money Laundering with Her Majestys Revenue and Customs (HMRC – Section 1.9)
- Be registered as a Data Controller with The Information Commissioners Office (ICO)**
Failing to comply with numbers two and three are a criminal offence. Failing to be a member of a redress scheme is a civil offence under the 1979 Estate Agents Act.
As previously revealed, Purplebricks PLC failed to register any of their franchisees with an approved redress scheme until June 2016. The Law states that Agents must register with an approved redress scheme, not that consumers must have access to redress however, neither NTSEAT seem keen to take any action despite this apparently clear breach of the 1979 Estate Agents Act and, TPOS were more than happy to take a large number of lucrative registration fees (they are a commercial company, not a government organisation) despite knowing that none of these firms had previously been trading unlawfully and, had no ICO or AML registration.
Now here’s the first very odd bit.
- Purplebricks make it clear that all of their franchisees are self-employed.
- The franchisees are all registered separately at Companies house as independent limited companies (Ltd.)
- The NAEA compliance team (who take advice from Warwickshire Trading Standards as Primary Authority on such matters) regard all these franchisees as self-employed and, to have individual redress, AML and ICO registration
- TPOS require all franchisees to register with them as independent companies (as many legitimate franchise firms do)
- NTSEAT, however, take the formal view that the franchisees are ’employed’ and thus, do not require to be registered for ICO or AML.
NTSEAT, as part of Powys Council, who bid for the taxpayer funded role, initially appeared to be strongly in support of taking action against portal juggling, (rightly) invoking the Fraud Act, Consumer Protection Regulations and Businesss Protection Regulations Act in various press releases and at conferences.
However, after a year with an immense amount of independent data and yet without a single prosecutions and an apparently isolated and unique view on the status of Purplebricks Franchisees (all other franchise firms such as Northwood PLC etc. are all individually registered) it seems that NTSEAT, as part of Powys Coucil do not want to take action against a company that is well-known for flexing expensive litigious muscles.
The NAEA too, are acting rather oddly. Despite having clear rules on membership and transparency etc. they are refusing to answer some rather simple questions or make clear statements about trading legally. They are also very reticent about their relationship with Purplebricks who their MD, Mark Hayward recently publicly praised for their transparency, despite PB PLC being serial offenders on the ASA naughty step and appearing on BBC consumer programs Watchdog, Moneybox and You and Yours for all the wrong reasons.
These were the questions posed to Chris Hamer, CEO of the NAEA. I do not believe they are unreasonable or onerous for a professional body to answer.
• Will you please confirm that, NAEA Propertymark, nor any of its subsidiaries received payment from Purplebricks (other than normal membership fees) for any engagements since trading as a private limited company or since as a PLC?
• Will Propertymark please confirm that all current Purplebricks franchisee members have AML, ICO etc. or lawfully held these when their membership was renewed and will be required to have these on renewal?
• Do Propertymark confirm or deny that one or more Purplebricks franchise members have been expelled or had their memberships terminated for noncompliance with AML, redress or ICO non-compliance?
• Given that non-compliance in these matters is a criminal offence, were the appropriate organisations (HMRC/ ICO/ TPOS) Warwickshire TSOs’ and NTSEAT informed and what action resulted? If not, please explain why not?
• Will Propertymark please confirm that it will adhere to any ruling or statement made by Warwickshire Trading Standards on estate agency/ related legislation as its primary authority?
• Will Propertymark make a formal public statement reiterating the position and advice of its own compliance team, that of HMRC, TPOS etc. that any individual trading as a PPD of a business, including franchisees, must have AML or ICO and, that not doing so, is a criminal offence as defined and, call on Warwickshire Primary Authority to investigate and take action against individuals and companies that are currently trading as a PPD, registered with a redress scheme but not registered with ICO or HMRC?
• In the alternate, will the board formally put on record that it agrees with the above statement or, a formal explanation of why it does not.
• Please confirm who at Purplebricks PLC is the member listed with Propertymark as the PPD for that company as I wish to bring a formal and serious complaint against that company.
This was the latest response from the NAEA to those questions
Thank you for your email and for that of 29 November in regard to which I apologise for my lack of acknowledgment.
You expressed the view in that 29 November email that I had responded to an earlier email (that of 23 November) in a careful and brief manner. I had indeed carefully considered the points you raised together with the questions you asked and determined that a brief response was, for me, the right approach.
I have not changed that view and it follows therefore that I have nothing further to add to my previous responses over the past few months or your email of 11 December.
The current situation:
- TPOS state that they cannot receive complaints regarding a member from another firm (only a consumer). They remain aware that PB PLC franchisees have, in the main, no ICO or AML and had no redress pre June 2016.
- NTSEAT have recently stated that, contrary to previous statements and promises to police the industry and protect consumers, they are now only able and willing to deal with matters pertaining to the 1979 Estate Agents Act and that all other matters must be addressed to HMRC and ICO.
- There is currently an ongoing correspondence between myself, the ICO and Purplebricks PLC that I am not at liberty to publish at this time. I am, however, able to state that Purplebricks’ own manual makes it clear that each franchisee, is self-employed, may employ other sub-franchisees and employees and, that it has its own customers and, that, as stated above, all other PLC property firms that I have checked and am aware of who operate a franchise model, all hold individual ICO registration, AML registration and redress etc.
*Estate agency businesses must comply with the Regulations. They must not carry out estate agency work if they are not registered with HMRC.
**If you handle personal data, you may need to register as a data controller with the Information Commissioner’s Office. Registration is a statutory requirement and every organisation that processes personal information must register with the ICO, unless they are exempt. Failure to register is a criminal offence.