Dec

Code needed to stop agents mis-selling ‘zero deposit’ schemes, says industry figure

admin

An alternative deposit firm has called for a code of conduct to stop estate agents mis-selling ‘zero deposit’ schemes.

The schemes vary but typically involve payment of a fee equivalent to about a week’s rent instead of a standard security deposit and is non-refundable, with tenants remaining liable for damages at the end of their tenancy.

Letting agents can earn commission of up to 30% for everyone they refer and an Observer investigation uncovered evidence of pressure-selling tactics by some firms in England, including cases where people were told they had to sign up as a condition of securing a tenancy.

Sam Reynolds (pictured), chief executive of regulated insurance provider Zero Deposit, says enough is enough. “We have long warned of the risks of certain unregulated alternatives, and we are seeing that in practice, in terms of pressure selling, unfair pricing and punitive charges at the end of tenancy,” he adds.

Zero Deposit says a deposit replacement code of conduct would seek to cover the adoption of FCA regulation across the industry, ensuring that firms treat customers fairly, and act with integrity, skill, care and diligence, and manage conflicts of interest.

Guidance

It would also cover comprehensive and appropriate protections for the tenant and landlord – specific to deposit replacement – and provide positive support and guidance for letting agency partners.

The code would include a commitment to a vetting and checking approach, where deposit replacement providers review and assess the actions of letting agency partners, as well as minimum standards for recovery action, in line with existing FCA requirements, including the protection of vulnerable customers.

View Full Article: Code needed to stop agents mis-selling ‘zero deposit’ schemes, says industry figure