It appears that there has been just one successful prosecution brought under Consumer Protection Regulations (CPRs), but there have been “hundreds or maybe thousands of ex gratia payments.”
Agents Make Ex Gratia Payments to Avoid CPR Prosecutions
Agents made the payments secretly to dissatisfied buyers and tenants, who “wasted time and money pursuing a property only to find out some material fact that they should have been informed about at the outset.”
The payments would have been made to customers on the basis of signing non-disclosure agreements to settle the matter.
The deals avoid the agents going to court and consumers receive direct payment in these agreements, which they do not benefit from if the agent is fined in court.
This was all revealed by compliance expert Michael Day, of consultancy company Integra, who says that agents must take CPRs seriously.
He warns that agents must become “much more vigilant in seeking out and obtaining information than they may have been previously.”1
Failure to disclose a fact about a property that could affect a buyer’s decision – not just on making an offer or to commission a surveyor or conveyancer, but to view a property – could harm agents.
Day supports the Property Ombudsman’s advice, which is to disclose any information, regardless of any doubt.
Agents can be fined up to £5,000 per offence in a magistrates’ court, or an unlimited fine at a crown court. Two-year prison sentences are also possible.