10 July 2007

REINZ seeks workable reform with greater consumer protection

“Legislative reform that provides a workable industry environment and greater consumer protection is at the heart of the changes the Real Estate Institute is seeking to achieve through the review of the Real Estate Agents Act,” Institute National President Murray Cleland said today.

Mr Cleland made the comment at the release of the Institute’s formal submission to the Consultation Document (issued by the Ministry of Justice on 29 May) outlining the Government’s preferred options for reform.

“The Institute supports the majority of the reforms that the Government is promoting including:
• The establishment of a new independent Real Estate Agents Authority;
• Transfer to the Authority of responsibility for disciplinary and complaints procedures;
• Extension of the range of remedies and sanctions available;
• Increasing the maximum fine (the Institute is recommending raising it to $30,000, as for lawyers and conveyancers);
• Raising entry standards to the industry and ensuring that standards remain high by instituting a requirement for compulsory continuing professional development; and
• Extending the rules relating to disclosure of conflicts of interest.

“The Institute considers that these are all good moves and that they will lift public confidence in the industry’s integrity,” Mr Cleland said.

However, he said the Institute was concerned that the Government’s proposals regarding coverage did not go far enough and would leave the public vulnerable.

“If regulation is to be effective, it will need to cover all persons engaged in real estate who pose a potential risk to consumers, including property managers, letting and leasing agents and companies which charge a “marketing” fee rather than a commission for the sale of property.

“The Government is not currently proposing to bring these groups into the new regulatory regime on the same basis as real estate agents and salespeople. Yet one in five complaints to the Institute concerns letting, leasing and property management, and there is no difference in principle between charging marketing fees and charging commissions.

“The Institute will be pushing to ensure that the new legislation protects the consumer across the full spectrum of the property market,” Mr Cleland said.

He said the Institute had consulted its members widely in the preparation of its submission and that it represented a broad industry view.

“There is a general recognition that discipline and enforcement are best transferred to an independent body. The Institute acknowledges that additional costs will be incurred in establishing the new Authority and is concerned that these are kept in check and that the industry is consulted on any levies or fees that may be imposed.

“In addition, the membership also feels that the industry should continue to be responsible for the setting of educational and industry standards and for the provision of consumer information. Independence has never been an issue in relation to these functions and as there will be additional costs associated with transferring them to the Authority; costs which may well end up being borne by the consumer,” Mr Cleland said.

He said the other large area of concern was with the proposal to remove the industry’s right to employ independent contractors.

“The ramifications of salespeople being employees rather than independent contractors would be serious for the industry:
for workers - the removal of flexibility and freedom of work that an independent contractor enjoys;
for licensees - higher labour and compliance costs and difficulty in attracting salespeople; and
for the consumer – reduced levels of service and possible transference of increased agency costs.

“For all of these reasons, the Institute will argue strongly for retention of the status quo in relation to the industry’s employment arrangements,” Mr Cleland said.

He also announced that the Institute was rewriting its Code of Ethics and Rules of Practice and, in doing so, would select the best elements of the Australian and United States models.

“This is in line with the recommendations from consumers advocate David Russell whom the Institute commissioned to review these areas and to inject a stronger consumer focus,” Mr Cleland said.

The Institute’s full submission is available on the website www.reinz.co.nz/news

ENDS

© Scoop Media