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Estate agents are clutching at straws

Kevin Paterson takes a weekly look at the latest developments in the market and brings you what’s hot and what’s not in the world of mortgages

It was recently announced that the National Association of Estate Agents and the Association of Residential Letting Agents will merge into a single body named the National Federation of Property Professionals.

I find it ironic and a bit of an oxymoron that the words ‘property’ and ‘professionals’ have worked their way into the title, as nothing is further from the truth.

I reported a few weeks back that the government had made clear its intention to essentially regulate estate agents – I am sure this announcement had nothing to do with the government’s stated aim or the fact that the two bodies will shortly become irrelevant and that the only way for them to survive is by consolidating.

The truth is that these two toothless organisations realise that their only way of surviving the imposition of regulation is by combining forces in the hope that they can provide the government with an obvious route to market for its new rules rather than having to reinvent the wheel.

Many years ago I worked for a property services group and had the unenviable task of trying to convince the management that because we were regulated we had to do certain things to ensure we remained compliant, all of which were anathema to the board members.

Stand-up rows ensued which I usually won, mainly due to others’ ignorance. The point is that this highlighted the restrictions we work under. In fact the rules had no impact on the firm in question to such an extent that at least twice a month trading standards officers would interview the principals under caution.

The firm was so used to riding roughshod over the rules that management even saw trading standards officials as irrelevant. This does not bode well for the forthcoming regulation.

In short, the clubs that most estate agents and letting agents belong to – i.e. NAEA and ARLA – are nothing more than logos to stick on headed paper. They seem to offer nothing by way of protection to consumers. The sooner regulation comes in, the better.

On a final note and as a sign of just how out of touch the associations are, in the same week that they announced this merger the NAEA petitioned the Prime Minister, calling for Home Information Packs to be scrapped.

It clearly didn’t realise that HIPs have been watered down to such an extent that they are now completely academic. Now that’s what I call having a finger on the pulse?


Government knows advice is valuable but doesn’t like advisers being paid

Having done its best to remove commission from financial products and blame advisers for every ill to beset mankind from endowment and pensions mis-selling through to consumer debt (and I am sure global warming is next on the list), the government now realises that advice is good.

But if the product does not pay for advice, nobody will – a hurdle the government’s free advice for all initiative seems to have overlooked, unless of course it expects us all as taxpayers to foot the bill.

What is clear from the press releases on the subject is that this initiative is in no way a full personal financial advice service. It focusses on generic advice, which kind of makes a nonsense of using the word ‘advice’ to me.

The idea simply seems like an extension of Citizens Advice Bureaux but with government legitimacy and a reported cost (or budget) of around £50m a year. And this comes as unbiased.com reported that in Q4 last year there were 120,000 requests for independent financial advice, more than 25,000 of which were related to mortgages (the third highest category).

Having spent years trying to dumb down the advice we provide to our clients the government has accepted that advice is good and that regulation works when it comes to protecting consumers. So why is it so against advisers earning a living from it?


Equity release exam will benefit advisers

The Institute of Financial Services School of Finance is to launch a top-up exam for equity release in advance of the regulation of equity release products in April.

Like many people, I assumed the sale and marketing of equity release products was already regulated – anyone could be forgiven for thinking that judging by the way the Financial Services Authority has scrutinised them.

I took CF7, the Chartered Insurance Institute’s lifetime mortgage advice qualification, last year just for the hell of it and I have to tell you it was a joke. I passed but I didn’t even crack the pack of the study material (which was less than three-quarters of an inch thick).

I don’t think for a second that I am an equity release genius, more that the exam is a waste of time. So it was with some relief that I heard of the new exam. Anyone trading off the back of CF7 should tread carefully – it proves nothing.

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Dear Delia

Dear Delia

Nicola recently got divorced. She received a lump sum in the settlement enabling her to satisfy 2,930 of County Court judgements six months ago. She has a 10% deposit and will be buying a property in her sole name. Her previous business as an IT recruitment consultant was dissolved at the time of her break-up but she has now set up another agency in her own name and has been trading for nine months. What options are available?

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