The National Association of Estate Agents is launching a licencing system, presumably for its members.
On the face of it this is good news and well overdue. But when you scratch the surface the proposals lack any value.
The trade body says it wants to licence estate agency branches, meaning that at least one person in the branch will be qualified in residential sales either as a formal qualification or through length of service in the industry.
I don’t think that having one person in a branch with the required qualifications is an effective way of reassuring the public that they are protected.
Many people, including me, have been calling for statutory regulation for some time and this move by the NAEA is a half-hearted attempt to demonstrate that the industry can self-regulate. Sadly, I don’t feel the proposals go anywhere near far enough, not least because the scheme is essentially voluntary.
As one of the largest and most important financial transactions in most people’s lives the lack of regulation means there is no barrier to entry for anyone wishing to set up their own estate agency.
The NAEA’s licencing system will be largely ineffective and only serve to provide the public with a false perception of professional competence. But housing minister Grant Shapps thinks this is great news.
It is interesting that the NAEA sees length of service as effective as a formal academic qualification when, in a complete lack of policy alignment, our own government has stated categorically that experience is an unacceptable element of qualification within the financial services industry in the recent Retail Distribution Review discussions.
So I would suggest that Shapps should probably read up on the RDR before embracing the NAEA’s licencing proposals so warmly.
Financial secretary to the Treasury Mark Hoban in fact went so far as to say that “just because they have been around in the industry a long time is no guarantee of their technical level of advice and quality” in the recent RDR debate.
He even compared financial advisers’ current qualification standards to a shift management qualification at McDonalds.
This is not only disingenuous to those who work in shift management at McDonalds but inappropriate when discussing the long service done by a large number of financial advisers.
Experience should count for something and despite the minister’s comments it is worth noting that the barriers to entry for financial advisers are considerable.
In fact it is so difficult to get in that the average age of advisers has consistently risen in the last 10 years.
When viewed in conjunction with the number of advisers likely to leave the industry when RDR comes into force at the end of 2012, this will probably create a significant shortage of financial advisers and thereby deny many people the advice they need.