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Overhaul for real estate industry ASSOCIATE Justice Minister Clayton Cosgrove has announced a full overhaul of the legislation governing real estate agents, citing the need for better accountability and transparency within the sector plus an independent complaints system, in order to protect consumers.The overhaul of the Real Estates Agents Act 1976 will deal with the current discipline procedures and general regulation of real estate activity, including whether compulsory membership of the Real Estate Institute of New Zealand (REINZ) is still appropriate, and if all facets of licensing should be independent of the industry. Mr Cosgrove said there have been major concerns raised by the public and real estate agents themselves about how the industry deals with complaints and discipline matters, and it is time for all aspects of the industry to be scrutinised. "The REINZ is the gatekeeper for complaints and it decides how complaints are handled. However, most complaints are handled in-house and are seldom brought before the Real Estate Agents' Licensing Board, which can impose more serious penalties " he said. "Basically it is a closed shop, and that is not good enough given that we are talking about what is for many New Zealanders' their greatest asset - their home." Mr Cosgrove said under the current Act the Licensing Board has the ability to impose serious penalties for misconduct, including suspending or cancelling registration of agents and salespeople, but only when cases are referred by REINZ, the industry's regulator, which seldom does this. "If cases are not referred up to the Licensing Board by the REINZ, the most likely outcome is a small fine or reprimand against the member. The freedom to self-regulate granted by the current legislation is now perceived as industry protectionism rather than consumer protection." Mr Cosgrove noted that for example, in 2004 the REINZ received 132 complaints but none were referred to the Licensing Board, and in 2005 only seven of the 163 complaints it received were referred to the Board. Other concerns raised by the Minister include long delays in processing complaints, and allegations of poor quality investigations. Last year Mr Cosgrove invited the industry to come up with proposals for open, transparent and independent complaints and discipline procedures, but he said the results were disappointing. "The best the industry could do was to leave regulation in its own hands," he said. "Buying or selling property is the biggest transaction most people will make, and they need to have confidence that, if they feel they have been ripped off, they can get something done about it. The current system cannot provide that." As a result Mr Cosgrove instructed the Ministry of Justice to develop a range of legislative and non-legislative options to protect consumers and decent ethical real estate agents from the sharks in the industry. The overhaul is a result of that advice. Mr Cosgrove said he anticipates that any new regulatory regime would be funded by the industry so it did not become a burden upon consumers or taxpayers. The full details of the government's proposed reforms will be released for public comment this month with a reform Bill to clean up the industry introduced to the House this year. |
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