OFT Evaluation of Foxtons Case Finds Positive Benefits for Consumers
Letting agents industry warned to check their small print or risk enforcement action.
The OFT is warning the letting agents sector to check that their terms and conditions are fair and transparent as it publishes an evaluation of its consumer enforcement case against Foxtons for breaching the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs).
In February 2010, the OFT secured an enforcement order from the High Court when it ruled that Foxtons' renewal commission terms were not transparent, which led to Foxtons amending some of their letting agreement terms.
The evaluation finds that the OFT intervention has resulted in positive benefits for consumer landlords that use Foxtons, with an estimated annual benefit of at least £4.4 million.
However, the OFT is embarking on further engagement and awareness-raising as the evaluation report found that some consumer landlords and letting agents remain unaware of the High Court ruling and its implications for the sector, with similar potentially unfair terms still appearing in some contracts.
The OFT has written to a number of letting agents and their industry associations pointing this out and has invited a number of agents to an event this autumn that will focus on the need for transparency of contract terms, including the need to highlight terms which relate to charges.
Amelia Fletcher, OFT Chief Economist, said:
'This research clearly demonstrates that there has been an immediate financial benefit for consumers from our intervention, and also evidence of knock on benefits from making this market more competitive. However, there is evidence of continuing poor practice by some letting agents, which need to go further to make their contracts transparent and fair. We will be engaging with business over the coming months to raise awareness and compliance with the law.
'This evaluation report complements some of the work already identified in the OFT's market study into consumer contracts which warned businesses that consumer contracts must be clear and contain no unwelcome surprises buried in the small print. Transparent business practices build trust in markets, allowing people to shop around to find the best deal, thereby stimulating effective competition and strengthening innovation and growth.'
The evaluation was conducted in-house by the OFT’s evaluation team as part of the OFT’s commitment to evaluating the impact of its work for external accountability and internal management purposes.
The report draws upon independent surveys of letting agents and consumer landlords have undertaken by IFF Research.
It has been independently reviewed by Professor Stephen Davies of the University of East Anglia.
The evaluation report can be downloaded from the Foxtons' case page.
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