Bricks and Mortar (and ADR)

On Tuesday 17thJuly, the APPG for ADR (which CIArb serves as Secretariat) conducted a hugely successful inquiry into the efficacy of housing redress schemes. In front of a packed audience, the Parliamentary panel quizzed representatives from across the sector, including CIArb Director-General Anthony Abrahams, Property Ombudsman Katrine Sporle, and Interim Housing Ombudsman David Connolly.

At the heart of the discussion was a desire to understand the current landscape of redress for housing consumers, and what (if anything) should be done to improve the dispute resolution process.

The hearing was chaired by APPG Chair John Howell MP, who oversaw a panel of colleagues from across Parliament:

John Howell (Chair, APPG for ADR)

Kevin Hollinrake (Chair, APPG for Fair Business Banking)

Yvonne Fovargue (Chair, APPG for Consumer Protection)

Lord Best (Vice-Chair, APPG for Excellence in the Built Environment)

Alberto Costa (Member, APPG for ADR)

Lord Lytton (Member, APPG for Excellence in the Built Environment)

In need of reform?

Dispute resolution for consumers in the housing market is currently a hot topic. In February this year, the Government launched the consultation “Strengthening consumer redress in the housing market”, in which it set out its preference for streamlining redress services. This is something of a departure from previous government policy which stressed the benefits of competition between schemes. Another important dimension to this is the government’s pledge last year to introduce mandatory regulation in the private rented sector (PRS) – something of a holy grail for housing policy given the number of ‘accidental’ landlords who dominate the market.

Meanwhile, there has been increasing debate about the quality of ombudsmen schemes both in the housing market and more widely, with reports from the APPG for Consumer Protection, the APPG for Excellence in the Built Environment and Citizens Advice all calling for reform of one form or another. Criticisms have tended to focus on the lack of real teeth in some parts of the sector, the perception of bias towards businesses, and the complexity of a system whereby many different schemes apply in subtly different parts of a single market.

What should an effective system look like?

The APPG and CIArb undertook this inquiry to clarify these issues and identify clear proposals to improve the system. The first task was to define what an effective redress system should aim to achieve. Anthony Abrahams set out certainty, efficiency and affordability as the core priorities which any redress scheme must seek to balance, whilst Katrine Sporle emphasized independence, fairness, and a clear outcome. Martin Burns from RICS echoed these points, calling for a system that is “simple to use and simple to understand”.

This question of clarity and simplicity arose time and again. One of the major criticisms of the system as currently constituted is that it is simply too complex for consumers to navigate (indeed, it is this concern that lies behind the proposal to bring all schemes within the ambit of a single ‘Housing Ombudsman’ covering the entire sector). At present, there are different schemes for social housing complaints, PRS complaints (where these relate to an agent – landlords are not currently covered), new build home complaints and issues relating to homelessness. The fear is that consumers are simply overwhelmed by the system.

Another important point was raised by Poppy Terry (Shelter) and John Bryant (National Housing Federation). This focused on the difficulties in bringing PRS tenants within any form of effective redress system, partly because landlords aren’t currently mandated to belong to a redress scheme, but also because of the imbalance of bargaining power between the landlord and the tenant, who as Poppy highlighted, may fear losing their home if they raise an issue.

Guaranteeing standards and improving navigation

Three key issues emerged from the session. Firstly, the importance of guaranteeing robust standards across the redress sector. Secondly, the need to simplify the system in a way that makes it easier for consumers to navigate. Finally, the recognition that if consolidation is to be effective, we must guard against creating a monolithic body without the expertise to deal with specialist disputes in nice areas of the market. These priorities are interlinked and must be at the heart of any reformed system.

Anthony Abrahams proposed some form of quality assurance kitemark as a way of reconciling these three objectives. Under such a system, all redress providers would have to meet agreed professional standards in order to operate, meaning they could focus on specialist areas of practice without a competitive ‘race to the bottom’. It would also allow the development of a ‘redress hub’ that could guide consumers to the correct body for their particular dispute.

The APPG for ADR is finalizing its proposals from the session and will be publishing its recommendations after the Summer recess. If you have any questions please contact Lewis Johnston (CIArb Head of Policy) at ljohnston@ciarb.org.

Read the minutes of the housing redress inquiry