Material Information Guidance - Is compliance a legal...

In his third and final article in this 3-part series, David Beaumont looks at the legal statues of Material Information Guidance.

As those of you that read my initial article on this will realise, the publication of this guidance was a significant step for trading standards and it’s more than a significant step for agents.

However, already there is significant misunderstanding about what has taken place. Whenever you read anything in the media it is always positive and supportive of the guidance and invariably the report talks about the new obligation or new legal requirement or calls it a change in the law or new legislation.

All of which is misleading. This is guidance; it is not law and there is no change to the law. It is basically trading standards outlining what they believe is material information for property buyers. In fact, both the estate agents and letting agents guidance documents contain this sentence - The contents of this guidance does not constitute legal advice, merely the application of the law as interpreted by the National Trading Standards Estate and Lettings Agency Team; only a court of law can provide certainty.

So agents do not have any statutory obligation to follow the guidance.

Need to prove

I have been asked when this guidance will become law and my thoughts are that it will never happen. It will never become a statutory obligation laid down in regulation. That doesn’t mean there will not be any prosecutions against agents under the Consumer Protection Regulations for omitting material information; however, I also think that this is very unlikely, because such a prosecution would be very risky for trading standards. They would need to prove things that I think would be very difficult.

Having said that, it would be a brave agent that decides to ignore it and continue down what I will call the traditional path when providing property details. Plus, it might be difficult to do this practically, given that it appears the portals are behind the guidance and are apparently changing things to accommodate the provision of this material information on the details they display.

The two ombudsman schemes are also both onboard with this guidance and so through the back door this guidance could well become a nailed on requirement for agents.

Mandate to issue

How, you might ask? Well, consumers make complaints about agents to the citizens advice bureau (CAB) and the majority get passed straight to the ombudsman. It is unusual for trading standards to get involved. The ombudsman schemes have the mandate to issue compensation to consumers up to the value of £25,000, if they think fit. The referrals to them are therefore logical.

It also seems logical now that anyone making a complaint to the CAB will be asked if they were provided with all the material information listed in the guidance and if they were not then the CAB advice could potentially be more about making a claim for that rather than the actual issue they were complaining about.

Most agents will not want the risk of having to pay compensation, thus, making this guidance an obligation through the back door. It would need a brave agent that decided to take the ombudsman schemes to court over their decisions.