A disciplinary investigation by the Royal Institution of Chartered Surveyors has blown the lid on the infamous fee-fixing cartel scandal involving estate agents at Burnham on Sea in Somerset.
The agents at the heart of the scandal were Greenslade Taylor Hunt, Gary Berryman Estate Agents, Abbott and Frost Estate Agents, Annagram Estates, Saxons PS, West Coast Property Services.
The Competitions and Markets Authority imposed fines totalling £370,084 on some of the agents involved in this cartel. One other was not fined as it was the first to confess its participation in the cartel under the CMA’s leniency policy and cooperated with the CMA’s investigation.
The RICS probe, which published its findings this week, claims emails between the agencies complained about fees in the area being pushed down to between 1.0 and 1.25 per cent, and that the cartel proposed to raise them to 1.5 per cent at least.
The investigation reveals that members of the cartel met at Greenslade Taylor Hunt’s local branch in December 2013. Following further meetings, a particularly incriminating email was sent between agents in February 2014 stating:
“Further to our meeting yesterday, I am as promised emailing everyone to confirm the agreement we reached with regards to minimum fees that we will be charging, which I outline below:
Sole Agency: from 1.5% plus VAT with a minimum fee of £1,500 for properties up to £100,000 and £2,000 for properties over £100,000
Multiple Agency: from 2% plus VAT
Joint Agency: from 2% plus VAT
We will also be looking to enforce a minimum fee on repossessions and corporate clients of £2,000 and if they don’t like it, we will refuse the instruction!!!! (sic)
[...] As requested each company will take it in turns each month to play ‘policeman/problem solver’, which I would propose we each do in the following months:
February: Gary Berryman
March: Abbott & Frost
May: CJ Hole [Annagram]
June: West Coast
July: Greenslades [GTH]
I would also like to propose Wednesday 7th May at 1pm at Greenslades [GTH] offices as a ‘review’ meeting.”
One of the leading lights in the scandal is Jeremy Bell, a partner at Greenslade Taylor Hunt and now expelled from RICS as a result of the investigation.
RICS says Bell is paying his share of the CMA penalty - some £170,000 - out of his own funds; he is also reported to be paying a £1,000 penalty levied by NAEA PropertyMark.
One email quotes Bell as stating during the cartel's discussions: “I felt this was a meeting of common minds and went remarkably well … I’m confident this will work; everyone has stock and nobody is new to the town wanting to build stock from scratch.”
In one part of its findings towards the end of the report, RICS says: "The [disciplinary] Panel made appropriate allowances for the passage of time and the inherent stress involved in giving evidence but overall found Mr Bell’s evidence to be unconvincing and unreliable. At times the evidence which he gave appeared to be deliberately vague in response to the perceived difficulty in answering the questions in a manner consistent with his case; at other times, he appeared to have deluded himself into believing his own version of events."
The full details of the investigation are on the RICS website here.