It would be an understatement to describe the past 18 months as a time of change in the mortgage and property industries. It would be more accurate to say it has been a time of great upheaval.
During this period, the introduction of Home Information Packs has been one of the most important innovations and their impact has been felt not only by home sellers but also by conveyancers, estate agents, lenders and surveyors. The list goes on and now personal search companies can be added to it.
And as the list of those affected by HIPs grows, so does the controversy surrounding them. Opponents of the packs are targeting government officials for proposing them. HIP supporters are criticising solicitors who refuse to accept the information contained in them and those estate agents who ignore the packs.
The personal search industry has come under attack too. Once content to sit in the background providing searches for home buyers and solicitors, it now finds itself in the firing line.
As with many criticisms doled out in similar circumstances, much of what is being said about the industry consists of ill-informed and anecdotal information from players with vested interests.
I have read that personal search companies are incompetent, that they value keeping their prices low overdoing a thorough job and are threatening to destroy the housing market for everyone.
OK, the last example is an exaggeration but with criticisms so wide of the mark it’s difficult to retain a sense of perspective.
The reality is that more than 90% of personal searches are provided by companies registered under the Search Code, a framework for best practice set up by the Council of Property Search Organisations in 2006 (see box).
In a nutshell, this means searches include up-to-date information, offer accurate reports of the risks associated
with properties, are carried out by trained practitioners and are covered by appropriate insurance.
All of this is monitored by an independent compliance board, which ensures that any company not meeting the required standards is quickly identified and dealt with.
Despite this strong self-regulation, some critics claim that local authority searches are somehow superior. To get to the root of these arguments, we have to look at the history of the personal search industry. Now more than 20 years old, the first personal search firms were prompted by demand from estate agent and conveyancers.
They were frustrated by the slow, inefficient and expensive service provided when they requested information on properties from the local authorities tasked with holding and theoretically organising such data.
By providing a more efficient alternative to local authority searches, the personal search industry quickly in-creased its market share at the expense of councils.
But rather than recognising their clients wanted better service, local authorities responded by restricting personal search companies’ access to pub- lic information.
This led to an Office of Fair Trading investigation in 2005, which resulted in recommendations acknowledging the problem and making clear that councils limiting access to the data amounted to a barrier to competition.
Unfortunately, it took three years for guidelines to be finally put in place, setting in stone the OFT’s recommendation that local authorities have a duty to make all local search data available to personal search firms.
In the meantime, private companies were forced to abide by the rules imposed by councils, however impractical and restrictive.
As the market grew, criticism of a small number of disreputable firms began to damage the reputation of those with higher standards.
CoPSO was keen to establish formal standards of practice to distinguish its members from their less conscientious competitors.
So on September 29 2006, the Search Code was launched.
By setting standards on how searches are conducted, how complaints are handled and how staff are trained, the code provides protection for home buyers and sellers as well as conveyancers and lenders relying on the information included in property search reports.
Appreciating the effect it would have across the property industry, the code was constructed after consultation not only with the search providers that now abide by it but also stakeholders including the Council of Mortgage Lenders, the Law Society and the Council of Licensed Conveyancers.
The code’s key feature is the minimum standards it sets out for searches. They stipulate that searches must be accurate and include all necessary up-to-date information. Similarly, search firms must ensure their staff are trained to compile search reports thoroughly and diligently.
And the code focusses on more than searches. It ensures that when custom-ers are dissatisfied with the service they receive, their complaints are handled promptly and fairly.
Furthermore, all firms registered with the code must have the insurance cover appropriate to their searches.
Registration and compliance with the code is monitored by the indep-endent Property Codes Compliance Board.
The importance of the PCCB’s independence can’t be overstated. Not only does it offer arbitration on complaints, it is also able to consider the performance of personal search providers from a neutral standpoint.
What this means is that any company that can prove it is registered with the Search Code can be trusted to carry out searches to the highest standards. Accusations of missing data or cutting corners are not valid for these companies.
Having an independent body monitoring the standards of search firms holds them up to a level of accountability and scrutiny unmatched by local authorities.
Perhaps it’s time councils faced the same kind of accountability. I’d be interested to see if they would be so bold in their criticisms if they were held accountable by an independent body and experienced the stringent controls placed on the private sector.
The search industry has been quick to support the code.
Companies providing more than 90% of personal searches and 100% of environmental searches are already registered, together with water companies and firms providing mining reports.
More than 90 lenders accept personal searches and about half of them also require search firms to be registered under the code.
But it is not about one-upmanship. It’s about ensuring that customers can choose their search firms knowing the ones that meet the appropriate standards and those that do not.
In a competitive market, this transparency is crucial and more useful to clients than unsubstantiated, ill-informed criticism.
Fiona Hoyle is chairman of the Council of Property Search Organisations
Code lays foundation for good practice
We at CoPSO believe that only search organisations that adhere to prescribed standards should be able to provide searches for HIPs and as part of the home buying process.
In line with other established standard schemes, the Search Code incorporates established pillars of consumer protection. These include a code establishing good practice in the industry, an independent registration and compliance function, low-cost, speedy and accessible consumer complaint procedures involving an independent adjudicator, plus robust insurance cover and competence requirements.
All private search companies are able to sign up to the code, irrespective of size or trade association membership. The cornerstones of the code are commitments including training staff to undertake searches with thoroughness and diligence, the provision of clear search reports setting out the risks associated with properties, dealing promptly with the queries raised on search reports, handling complaints speedily and maintaining appropriate indemnity insurance cover.
The Search Code is drafted with reference to the OFT’s Consumer Codes Approval Scheme. The longer term objective is to seek approval for the code under that scheme.