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TODAY'S OTHER NEWS

£100,000 fine for Countrywide over funds controversy

It’s now emerged that Countrywide has to pay a £100,000 fine to the Royal Institution of Chartered Surveyors after breaching guidelines on the protection of tenants’ funds. 

The agency group admitted two charges of breaching RICS’ codes.

One was that £10,093,866 of unidentified client funds in Countrywide’s lettings division - which had remained unclaimed for six years or more - had been diverted from the agency’s client account to its office account. This involved an alleged failure by Countrywide to safeguard its clients’ funds, RICS claimed.

The second was that the firm’s conduct represented “a serious and prolonged disregard to professional obligations set out in RICS’ client money guidance document.”

Now a RICS statement says that the disciplinary panel which considered the charges heard from the RICS itself and from Countrywide, and it was agreed between all parties that a reprimand and fine of £100,000 “was an appropriate and proportionate sanction.”

Full written reasons for the panel’s decision and the respective submissions of the parties will be published later this week, but in the meantime RICS issued a statement from its director of regulation Luay Al-Khatib saying: 

“RICS’ regulation is key to delivering confidence in property and construction services. Consumers need to have trust in professionals, and when property agents do not hold their clients’ money securely it seriously erodes that trust. 

“Today’s hearing shows the importance of RICS’ robust and independent regulation within the property sector and sends a clear message to the sector that failing to observe appropriate standards is not acceptable and has consequences.

“I am pleased that Countrywide has engaged constructively with us and committed to improved controls to preserve the security of client money. We will work closely with them to ensure these are implemented.”

Earlier, Countrywide issued a statement saying: 

“Back in 2008 we started to accumulate many thousands of individual small amounts on client accounts in our lettings businesses, where funds over six years old could not be traced to source. Some would have been rightly Countrywide funds and others small amounts of landlord/tenant sums that could not be traced. It was agreed at the time to move these untraceable amounts to an office account and put in place an indemnity that, should ever a recipient be identified, the amount would be paid across. In reality less than 1% were ever traced after six years. Immediately we paid over the amount due and customers did not suffer any loss.

"After ten years of audits an issue was raised in 2018 that this may not be in accordance with RICS Rules. Countrywide repaid all of the funds that had been transferred from office to unnamed client accounts. Importantly nobody has been disadvantaged but we decided to resolve the RICS matter immediately through a full transfer.” 

  • Andrew Stanton Estate Agency Insights Strategies

    Is it time that Countrywide got rid of its rotten apples.

    Back in August 2018 Himanshu Raja - Chief financial Officer at Countrywide, was until it was voted down to receive £7M of company shares, and Paul Creffield Group GMD was to receive £8M of shares. This was at a time that the scandal of the £10M funds was known to the company, but not disclosed to the shareholders.

    Then in early Spring 2019, Countrywide were fined £215,000 for Anti Money Laundering lapses, and now they have been fined another £100,000 for financial irregularities.

    Given that Mr Creffield is himself fully supportive of RoPA, and a single regulator. Is it not time for him and Himanshu to do the honourable thing?

    Two months ago Mr Creffield when asked about RoPA said, … 'We're really supportive of regulation because we believe it will help create a level playing field with all agents expected to have the same expertise, It'll be good for the consumer too.'

    More worryingly for all parties, including perhaps Baron Best who heads up RoPA is Mr Creffield's further comments regarding RoPA, ' Because of Countrywide's scale, we've been consulted frequently (by RoPA) on proposals during their preparation, and we've conducted some pilot projects.'

    Now if the new regulatory framework that a forthcoming government may back comes into being in the form of RoPA, should some of its architects be coming from Countrywide's top management team. For me they would be the last people I would look to.

    If Paul Creffield advocates root and branch industry regulation - then Countrwide should itself be a beacon of this industry change, at present it is a bonfire of vanities, which given the proximity of November the 5th is very apt. Matches anyone.

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