OFT guidance on property sales: compliance with the CPRs and BPRs

1. OFT guidance on property sales: compliance with the CPRs and BPRs Ian Potter FRICS FARLA (Hon) Managing Director ARLA

2. CPRs/BPRs guidance on property sales • What we will cover • Introduction to the OFT guidance • CPRs breaches: effects tests and key concepts • CPRs breaches: some examples • CPRs: misleading omissions and 'material information‘ • The BPRs • Complying with the regulations: some suggestions • Q&As

3. CPRs/BPRs guidance on property sales • The guidance is on • the Consumer Protection from Unfair Trading Regulations 2008 (CPRs), and • the Business Protection from Misleading Advertising Regulations 2008 (BPRs) • It is aimed at ‘property sales businesses’ • e.g. estate agents, buyers' agents, internet property retailers, property auctioneers, property developers that market and sell their own developments, and companies that buy up 'below market value' property as an investment opportunity

4. CPRs/BPRs guidance on property sales • The guidance sets out • an overview of the regulations and the key concepts • examples of the kinds of unfair trading practices specific to property sales that may breach the regulations • steps that property sales businesses may wish to take to help them comply with the law • what happens if businesses don’t comply with the regulations

5. CPRs/BPRs guidance on property sales CPRs breaches Misleading actions Misleading omissions Aggressive practices Banned practices Lack of professional diligence

6. CPRs/BPRs guidance on property sales The effects ‘tests’ CPRs breaches Misleading actions Misleading omissions Aggressive practices Banned practices Lack of professional diligence But only where they cause, or are likely to cause, the average consumer to take a different transactional decision

7. CPRs/BPRs guidance on property sales The effects ‘tests’ CPRs breaches Misleading actions Misleading omissions Aggressive practices Banned practices Lack of professional diligence But only where they cause, or are likely to cause, the average consumer to take a different transactional decision But only where it materially distorts, or is likely to materially distort, the economic behaviour of the average consumer

8. CPRs/BPRs guidance on property sales • Key CPRs concepts • ‘consumer’ • ‘commercial practice’ • ’transactional decision‘ • ‘average consumer’

9. CPRs/BPRs guidance on property sales An individual who is acting for purposes outside their business So, providing they are acting for purposes outside their business, would include: Client  Prospective client  Actual buyer  Prospective buyer  Potential viewer  • Key CPRs concepts • ‘consumer’ • ‘commercial practice’ • ‘transactional decision’ • ‘average consumer’

10. CPRs/BPRs guidance on property sales • Basically, the whole range of your business activities that may affect consumers • For example, when you: • - advertise your services • offer pre-agreement advice to a client • describe property for sale • negotiate and make sales • handle complaints about your conduct • Key CPRs concepts • ‘consumer’ • ‘commercial practice’ • ‘transactional decision’ • ‘average consumer’

11. CPRs/BPRs guidance on property sales Not just the decision whether or not to buy or sell Includes the seller’s decisions to sign or extend an agreement with you, accept an offer, or sell their property Includes the buyer’s decisions to view a property, take up an offer of services, instruct a conveyancer or surveyor, or buy a property • Key CPRs concepts • ‘consumer’ • ‘commercial practice’ • ‘transactional decision’ • ‘average consumer’

12. CPRs/BPRs guidance on property sales Not necessarily an actual consumer you have dealt with or are dealing with. Not a statistically average consumer either Rather, someone who is reasonably well-informed, reasonably observant and circumspect Allowance for vulnerable and targeted groups • Key CPRs concepts • ‘consumer’ • ‘commercial practice’ • ‘transactional decision‘ • ’average consumer’

13. CPRs/BPRs guidance on property sales CPRs breaches Misleading actions Misleading omissions Aggressive practices Banned practices Lack of professional diligence For example Leading a potential client to believe that you have buyers lined up for their sort of property when this is not true Misdescribing the main characteristics of property that you are marketing

14. CPRs/BPRs guidance on property sales CPRs breaches Misleading actions Misleading omissions Aggressive practices Banned practices Lack of professional diligence For example Failing to adequately draw to a prospective client's attention unusual or surprising terms in your terms and conditions Failing to disclose key information about the property to prospective viewers

15. CPRs/BPRs guidance on property sales CPRs breaches Misleading actions Misleading omissions Aggressive practices Banned practices Lack of professional diligence For example Applying undue pressure on a consumer to use associated services, for example to take out a mortgage through your in-house mortgage advisor or to use a particular firm of solicitors or licensed conveyancers

16. CPRs/BPRs guidance on property sales CPRs breaches Misleading actions Misleading omissions Aggressive practices Banned practices Lack of professional diligence For example Displaying the logo of an ombudsman, trade body or enforcer when not authorised to do so, or claiming falsely to be a member of a professional body or an approved redress scheme

17. CPRs/BPRs guidance on property sales CPRs breaches Misleading actions Misleading omissions Aggressive practices Banned practices Lack of professional diligence For example Training staff to use scripts and/or techniques that are intended to mislead consumers Not carrying out reasonable checks on the accuracy and truthfulness of information that you use in marketing

18. CPRs/BPRs guidance on property sales Misleading omissions i.e. information you have • left out • hidden • not made clear or • not given in good time But not any information, only ‘material information’

19. CPRs/BPRs guidance on property sales Material information means the information ‘which the average consumer needs according to the context to take an informed transactional decision’ Misleading omissions i.e. information you have • left out • hidden • not made clear or • not given in good time But not any information, only ‘material information’

20. CPRs/BPRs guidance on property sales Limitations of the way the commercial practice is communicated (e.g. there’s not much space in a newspaper advert) Features and circumstances of your commercial practice, including what is expected of you (given your services) Factual context (e.g. what you actually know) Misleading omissions Material information which the average consumer needs according to the context to take an informed transactional decision

21. CPRs/BPRs guidance on property sales BPRs breaches Misleading marketing Unfair comparisons

22. CPRs/BPRs guidance on property sales The benchmark ‘test’ BPRs breaches Misleading marketing Unfair comparisons • Where it deceives, or is likely to deceive, the businesses its addresses or reaches AND, as a result: • affects their economic behaviour, or • injures a competitor

23. CPRs/BPRs guidance on property sales A set of conditions that must be met and which permit comparative advertising BPRs breaches Misleading marketing Unfair comparisons

24. CPRs/BPRs guidance on property sales • Steps that will help you to comply (1) • If you treat your consumers, business customers and competitors fairly, you are unlikely to breach the regulations • Read our guidance:  consider how the regulations apply to you  if necessary, make changes to your practices  ensure that your staff understand the regulations and comply with them • For further advice, contact your local authority TSS, your professional body, or seek independent legal advice

25. CPRs/BPRs guidance on property sales • Steps that will help you to comply (2) • Take care gathering and presenting the information that you will use to advertise your services and market property • Have systems and safeguards in place to ensure that your marketing information is accurate, balanced and does not leave out material facts • When you see or hear something that puts you on notice that there might be a problem, take appropriate steps to establish the facts – e.g. ask questions, carry out own checks and/or consult official sources

26. CPRs/BPRs guidance on property sales • Steps that will help you to comply (3) • Act promptly to correct or update marketing and to pass on information whenever new facts become available • Where you’ve exhausted the steps you can reasonably be expected to take, be open about any remaining gaps in your knowledge • Avoid pressurising your consumers to act quickly to put in an offer, raise their price, skip the survey and finalise the sale and/or exchange contracts

27. Contrary information Secluded garden Peaceful area Views of surrounding countryside Off-street parking

28. Conditions statements Immaculate Recently decorated Central heating Refurbished

29. False impressions Interest in the property Exaggerated feedback Cash buyer False offers

30. Acting aggressively Persistency Pressurising to act quickly Pursuing commission Intimidation

31. Breach of professional diligence Falsely listing properties as sold Leaving properties on website Failure to provide details on EPC/Green Deal

32. Systems and safeguards Audit trails Staff training Contemporaneous notes Checks Due diligence

33. Q&A