I am honoured to have been asked by the Minister for Justice and Equality, Deputy Alan Shatter, to be chairperson of the Property Services Regulatory Authority. I thank members for the invitation to come before the joint committee. It is a privilege for me to be here. Although an eleven page submission has been circulated to the committee on my behalf, they will be delighted to hear that I do not intend to refer to it in great detail. I will, perhaps, provide a synopsis and then deal with questions members may wish to pose. They will be pleased to know that I intend to skip the part at the beginning of the submission which relates to me.
I am a solicitor and have been practising for more years than I am prepared to admit. I am a former president of the Law Society of Ireland and the Dublin Solicitors Bar Association. When I was a member of the council of the Law Society of Ireland, I chaired the various regulatory committees of the society. Currently, I am a member of the disciplinary tribunal. I have always had an interest in professional regulation of one kind or another. I am, therefore, very pleased to have been asked to chair the Property Services Regulatory Authority.
As members are aware, the authority is an entirely new entity. It has been established for the purpose of controlling and regulating property service providers, including auctioneers, estate agents, letting agents and management agents. The legislation which underpins the authority is unique in Europe. We are, therefore, at the forefront in this regard. For the first time, we will have effective regulation of the industry.
As members probably know, the previous system of regulation was governed by the Auctioneers and House Agents Acts 1947 to 1973. This system provided for the licensing of service providers and no more. It was outdated, inappropriate and extremely inadequate in the context of current market conditions. There was no official supervisory or disciplinary mechanism in place to govern the profession; neither was there a consumer redress system in place.
A review group was established in 2005 and charged with making recommendations to the then Minister. The group included representatives of the auctioneering profession, consumers, the farming sector, the co-operative sector, the Competition Authority, the Law Society of Ireland and relevant Departments. The review group recommended the setting up of the authority to achieve the following: transparency in the licensing of service providers; to implement a complaints handling and redress system for consumers; to enhance the competence of service providers; to monitor the standards in the provision of services; to provide greater protection for clients' money; and to promote a code of ethics for service providers. The Government of the day accepted the review group's recommendation and the Act was signed into law at the end of 2011. Pending the enactment of the legislation, an implementation team, of which I was honoured to be a member, was established to advise on practical matters relating to the establishment of the authority and to prepare for the new regulatory system. Since then extensive work has been done by the implementation team and we are now at a point where the Act can be brought into operation with minimal delay.
The authority's headquarters has been established in Navan, County Meath. A chief executive, Tom Lynch, has been appointed on foot of a competition run by the Civil Service commissioners and staff have also been appointed.
A vast number of advisory and regulatory documents and regulations have been prepared, which will fall to be made under the Act before the new regime can be implemented. Those regulations include those which specify the classes of licence and licence fees. There will be schemes for education and training to qualify as auctioneers. A compensation fund will be established to protect clients' money and to make sure that any client whose money has been wrongly taken by a service provider will be compensated. There will be rules for keeping and preserving client accounts and provisions for professional indemnity insurance to be held by every property service provider. Codes of practice have been drawn up in consultation with consumer and industry representative bodies and a guide for users of services has also been drawn up. I have one of them with me and they are readily available.
Extensive work has been done on setting up IT systems. A register of licensed auctioneers and estate agents has been established with the assistance of the Revenue Commissioners. This register is a list of all auctioneers and house agents licensed under the auctioneers Acts up to date. Once the authority takes over, this will be updated and expanded to include all new licensees and, in particular, management agents who will also come to be licensed under this new legislation.
I would like to pay tribute to Tom Lynch and the staff for the work that they have done during the past number of years. Essentially, the work they have done in the interim has ensured that now that this legislation has been passed the authority can hit the ground running.
The functions of the authority under the Act are listed in the Act. Essentially, they are as follows: to provide a comprehensive licensing system to cover all property service providers; to specify and enforce standards to include education and training standards; to establish a system of investigation of licensees and other persons providing services; to establish a system of investigation and adjudication of complaints made against property services providers; to provide for minimal levels of professional indemnity insurance and a compensation fund; and to establish and maintain a residential property price register and commercial leases database. There will be codes of practice, which have already been adopted, some of which will be developed as we proceed. The authority will also be the State competent authority for dealing with money laundering.
The key priorities of the authority at this point are: to introduce the new licensing system immediately and with a little delay as possible; to establish a complaints investigation and redress system to ensure that if a consumer or a customer has a complaint, there is a system whereby that complaint can be investigated and dealt with; to prescribe and set up new procedures for property service providers to deal with clients' money; to have new mandatory contracts which will set out clearly what the property services providers undertake to do and that those contracts will be in writing; to establish the compensation fund; and to establish the residential property price register and commercial leases database.
I do not propose to go through all of those in detail. The qualifications will be prescribed by regulation. Many of these will have to be dealt with by regulation and, as we are a brand new authority, the authority will have to consider and consult as to what is proper in all the circumstances. There will be a professional indemnity insurance requirement and a compensation fund requirement. Each applicant for a licence will have to pay a specified sum of money into the compensation fund before such a licence is granted. There is an obligation under the Act to ensure that at the end of a four-year period there will be a minimum of €2 million in that compensation fund.
In regard to tax clearance issues, it is important to note that the company or partnership which is to be licensed will also be required to be tax compliant and all directors of the company concerned or partners in the partnership concerned must supply tax clearance certificates.
Each property service provider will be required to be licensed. This does not only refer to the company but each person who is providing services will be required to hold a licence. In the same way as a driver's licence entitles a driver to do a number of different functions, one licence may authorise a property service provider to provide a number of different functions.
There are stringent sanctions in the Act. Any legislation or regulation, in particular, is only as good as the sanctions which apply in the event that the regulation is not complied with. The Act makes it an offence for any person not licensed to either provide a property service or hold themselves out, as it were, as providing one. There are provisions for payments of a fine, not exceeding €5,000 or 12 months imprisonment, for minor offences and more serious offences are liable to more stringent fines.
The client's account is important given that for the first time service providers will have to hold clients' money in separate client accounts. The authority will make regulations in regard to the type of bank accounts which may be opened and the circumstances in which moneys other than client moneys can be paid into a client account. Proper accounting records must be available at the end of each year, to be provided and inspected in the meantime by the authority.
The authority has already had discussions with representatives of the industry and with consumer interests on the regulations. Much of what has been achieved has happened by consensus. Very wide consultation has taken place with the representative bodies and with consumer organisations. Much of what has been achieved in respect of the code of ethics and the users' guides, that code of practice, has been achieved by consensus. Therefore much of this work has already been done.
In regard to the management agents, for the first time these will come to be regulated as well. There will be a property service providers contract, which each management agent will have to enter into, and it is a very comprehensive document which has already been drafted. That will essentially set out for the first time precisely what the property management agents undertake to do. They will have to identify who their clients are and they will have to have a written contract. That contract will have to be signed by both parties so that there can be no ambivalence as to what exactly it is they do.
It is Government policy and a Government priority that the establishment of a residential property prices register will be set up. These databases will provide details of the addresses of all properties sold or leased within the State, the dates of such sales and the consideration. A good deal of work has already been done on this. Much of the core data has already been provided by the Revenue Commissioner and this data will be used for establishing the registers. There are ongoing discussions with the Revenue Commissioners with a view to ensuring the registers can be introduced without delay following the establishment of the authority.
I refer briefly to the important provision in the new Act that the authority must levy fees on service providers to ensure it is self-financing. The aim is to ensure that the costs of running the authority are fully met from the fee income generated and that these costs will not be borne by the taxpayer.
I am sorry, Chairman, if this is a bit of a whistle-stop tour. I will be happy to answer any questions.
