Seanad Éireann debate -
Wednesday, 28 May 2003

Vol. 173 No. 5

Auctioneering Profession: Motion.

Mr. Ross

I move:

Seanad Éireann, seeking to ensure trust and confidence in the process of auctioneering, calls on the Government to establish a group, predominantly comprising non-auctioneers, for the special purpose of drawing up a Code of Ethics and Professional Standards applicable to auctioneers in the course of their professional work. Such Code to be implemented by order, regulation or legislation and to include, inter alia:– a requirement that, prior to undertaking any auctioneering transaction auctioneers be required to make a declaration of interest if they themselves, fellow employees or family members have any beneficial interest in the transaction either as vendor or purchaser;

– an entitlement by bidders or their representatives to be present at the opening of all sealed bids;

– a requirement that all properties have a published guide price;

– an insistence that no property be withdrawn in the event that a bid exceeds the guide price;

– a requirement that all auctioneers maintain for inspection by an approved authority a record of all bids and bidders; and

– an appropriate system to facilitate the investigation of complaints by bidders who believe that they have not been fairly treated in the course of an auctioneering transaction.

With the permission of the House, I will speak for ten minutes, followed by Senator O'Toole, who will speak for ten minutes. Is it possible to allow Senator O'Toole to reply to the debate as I will be absent?

An Cathaoirleach

Is that agreed? Agreed.

Mr. Ross

This serious motion, which is long overdue for debate, concerns the auctioneering profession. It is appropriate that it should come so soon after the previous debate on this subject. It concerns the self-regulation of the industry.

What does one need to be in order to be an auctioneer? The answer is that one does not need to be anything. All one needs in order to qualify and practise is to lodge a €12,700 bond in the District Court. Some of the auctioneering bodies insist that they have greater qualifications than this and that they have professional qualifications. However, these are not necessarily required.

I wish to refer to two cases concerning auctioneers which caused me a great deal of grief and which indicate the need for regulation from outside and for greater transparency. Is there any reason a profession such as auctioneering should ever have to handle money? I see no need for it to handle, hold and give money on behalf of its clients and it is extraordinary that it feels the need to do so. Auctioneers take booking deposits from people. In the first case to which I will refer, a vendor was selling his house for a considerable sum of money and a very reputable auctioneer from this country carried out the transaction on this behalf. Without the permission, request or knowledge of the vendor, he took a very large so-called booking deposit from the purchaser, who – as he or she might rightly do – handed it over thinking that it had some sort of legal standing. A large booking deposit – I believe it was £25,000 or £30,000 in this case – has no legal standing at all and gives the purchaser no rights whatsoever. It is taken without permission and without request by the auctioneer and it is held by him normally until the sale is completed.

Why is this money taken by an auctioneer if it has no legal standing whatsoever? It is taken to protect his commission from the vendor, a point which many auctioneers have made to me in the interim. The auctioneer is giving the buyer the impression that he has some sort of right to the purchase, but he has none because it is not a deposit in the legal sense. He is taking money for himself, which he has absolutely no right to hold, and the vendor is not getting the benefit of that money either. In the case in question, it required extreme measures on the part of the vendor to get the auctioneer to hand over the booking deposit to his lawyer. Why should auctioneers give the particularly false impression that booking deposits have some sort of legal standing when that is clearly not the case?

The second case, which came to my notice recently, is more serious and involves what must be a common occurrence. It concerns a highly reputable firm of auctioneers, if there is such a thing, and involved a house that was up for auction in south Dublin. I understand the property was withdrawn. One set of bidders went to the auctioneer to buy it. Bidding, as it normally does, took place behind closed doors, with another set of bidders of whose identity the members of the first group were unaware. They were bidding against each other for a long time. Eventually the auctioneer said that unless they had the money up-front by 5 p.m. that day, the house would go to the other bidder. The house was worth over £500,000. The money was made available by 5 p.m., within two hours of the auctioneer's request. However, the auctioneer stated that matters had become ridiculous and that there would be a process of sealed bids. This was agreed to by those present. The bidders to whom I am referring asked if they could be present at the opening of the sealed bids and were told they could not. They asked if they could have an independent person present and again were refused. When the sealed bids were opened they had submitted the highest bid but the property was sold to the underbidder.

Could someone please tell me what is going on in this extraordinary industry where they do not let anyone see what is happening, they take money they are not entitled to, they give the impression that the people who give them money are entitled to something to which they are not and they sell to the underbidder at the end? This industry is self-regulating and the incident I have described is not an isolated one. It is typical of the practices in this industry.

One only has to look at the numbers of disciplinary actions taken by the bodies involved to realise how little is being done. Let us acknowledge that they are beginning to wake up to the fact that something is happening which is not acceptable and about with there is a great deal of public unease. The industry has been left alone to look after itself and has betrayed public trust for the period during which it has done so.

There is an extraordinary coincidence about guide prices. Guide prices published day after day in the newspapers inevitable come in below the price at which the property is sold. These guide prices are, apparently, set by people who have an expertise in this area. Their only expertise is in continually ensuring that the prices set to give a gullible public a guide are, inevitably, pitched well below the prices at which these houses sell. Why is this? The reason is quite simple. It sucks people in, makes them borrow more and makes them do more valuations and architectural inspections. Inevitably, people are disappointed and spend more money and the property is sold for much more than the guide price, sometimes twice as much. How can valuers make mistakes like that?

I have spoken to auctioneers who have told me, quite openly, that a vendor should pitch the price very low to get a few suckers in. That is how this profession, if that is what it is, behaves. It behaves in a way which continually fools the public and is designed to do so. That is why it needs, at the very least a code of ethics, more likely a supervisory body, and finally regulation from outside. I do not believe in self-regulation for any professional body. I do not believe in it for the stock exchange, for auditors, for lawyers or for anyone else because there is incontrovertible evidence that it has been abused by most of those professions which have had that privilege.

Scaled fees are an abomination. They do not reflect the work done on properties of any sort. The idea that fees should be scaled so that tens of thousands of pounds are paid for very limited, unskilled work by people who, in some cases, have no professional qualifications, whether in valuation or anything else, is one that needs serious examination.

This industry is one about which there are so many bad stories and over which there is so little regulation that there is a case for the Oireachtas to intervene and insist upon better ethics within it.

Mr. O'Toole

I am happy to continue the discussion on this issue. I welcome the Minister of State to the House and I ask him to consider the following reasons for bringing this issue forward.

Last year more than 50,000 new houses were sold in this country. At an average price of €200,000 each that represents €10 billion spent on new houses alone. If one includes the second-hand market one can, at least, double that figure. We are talking about approximately €25 billion worth of transactions which are not regulated in a way other transactions of that type would be.

When we tabled this motion there was a general view that our purpose was to put the boot into auctioneers. Actioneering groups have, in fact, been supportive of this motion. Senators Coghlan, Ross and I met with Mr. Aodán Ó hÓgáin of the IAVI and, while he did not agree with everything we were saying, he was very supportive of the approach we were taking. I have also had responses from groups such as REMAX, which have encouraged us to do this. The intention is not to have a go at auctioneers but to further professionalise the work they do and to give it an authority to which auctioneers are entitled and which the general public requires with regard to transactions of this size. Buying or selling a house is a transaction which places huge emotional pressures on people.

The Government amendment is a positive one. I would like a reassurance from the Government that the proposed review will not take place in the dark recesses of the Department of Jusice, Equality and Law Reform where we might never find out what is going on. Such a review should be undertaken by a broader group than people within the Department and it should involve the main auctioneering groups as well as consumers and independent people. I ask the Minister of State to make this clear.

Our motion asks for a code of ethics and professional standards applicable to all auctioneers. Some groups already have such a code and I would like to give them the force of regulation and law so that they will have the trust and confidence of the public.

In many cases, auctioneers do not enjoy the trust and confidence of the public. Why is this? Let me make three references. In the course of one of the tribunals we saw one of the highest profile auctioneers in the State, a man of huge reputation, who was not only the auctioneer and agent in charge of selling a property but was also a buyer. He was acting on behalf of an order of nuns who trusted him implicitly because he was a daily Massgoer etc. and they could not believe he would do any wrong. That was a shock to all of us.

Another case involved a couple in County Kildare who had scrimped and saved to put together the deposit on a house at the furthest limit of their financial possibilities with support from family and everyone else. They placed the deposit and organised a loan but when they went back to close the sale they were told the price of the property had been raised. They went to court and won their case and I think we all cheered that day. It was the first time we had seen such a thing happening.

In another court case it emerged that auctioneers did not have the slightest difficulty in sending colleagues into an auction to bump up the prices from the back of the room. If an auction is to be a fair and open procedure, that cannot be allowed to happen. Those are unacceptable practices.

I will balance that by referring to a public decision taken by an auctioneer in County Meath at some stage in the past five years. A firm of auctioneers was dealing with the sale of a large estate, which it had advertised in local and national newspapers. When it had attracted potential buyers, the developers of the property decided to increase the price. The auctioneer said that was not fair, but the developers would not back down. The auctioneer then refused to handle the sale. I refer to Pottertons, the auctioneers in County Meath. I do not know that company, but its gesture has always stuck in my mind as one of high and extraordinary principle.

I say this to provide an element of balance. I would trust fully the auctioneers I know, but there are issues we need to look at. We need a qualification and a course content for auctioneers. There are superb courses in the Dublin Institute of Technology in Bolton Street and other places, which are supported by all the auctioneers I know. We should expect auctioneers in the future to have such a qualification, though we cannot ask those currently practising as auctioneers to obtain it.

We are talking of legal transactions. From the moment the vendor meets the auctioneer or agent, there is a contract in place. There is also protection for vendor, agent and purchaser. Senator Ross has mentioned sealed bids. If there are to be sealed bids for property, then a third party must be present, perhaps some honest broker who would oversee the process. There are times when it might not be appropriate to sell a property to the highest bidder, but people must know why.

I know the difference between a guide price and a reserve price. I have considered how the reserve price might at some point be made known. Whatever the reserve price is, the guide price must be real. If the Minister were selling a house on my behalf and put down the guide price, then that must be a price at which I am prepared to sell. It might be well above the reserve price, but one cannot put a property up for sale with a guide price and then refuse to sell it for that price. If a bid is made above the guide price, the property must be on the market. In terms of a contract, that is reasonable.

There are various points of view involving the different parties to a sale, but there must be certain elements we can all depend on. There must also be a system of investigation, if someone has a complaint. It must be an open investigation. I recognise that the IAVI has good practices in place. I am impressed by what it is doing, but it needs more power and authority, as well as more openness and transparency in how it goes about its work, so that if I make a complaint, I can check that it is being looked at.

All properties should have published guide prices. I recognise such prices need not be the same as the reserve prices. The reserve price might well be below the guide price, but if it is above it, then that is dishonest.

The point is to professionalise the business of auctioneering, to give trust and confidence to people involved in sales transactions, and also to engender proper respect for auctioneers.

Mr. Scanlon

I move amendment No.1:

To delete all words after "Seanad Éireann" and substitute the following:

"– notes that the Auctioneers and House Agents Acts 1947 to 1973 provide a regulatory framework for the manner in which auctioneers and house agents must act in the performance of their professional work;

– recognises that the regular review of the adequacy of regulatory legislation is desirable;

– invites the Minister for Justice, Equality and Law Reform to arrange for a review of the regulatory framework for the auctioneering industry, including an examination of the need for the introduction of a code of ethics and professional standards for the auctioneering profession."

I am a member of the IPAV. It is a pity that Senator Ross has left, because he said that the auctioneering profession is not regulated. All auctioneers and estate agents have to apply annually to renew their licences. It is open to any member of the public to register an objection to the renewal of that licence, provided he or she can support their grounds for objection. To have one's licence renewed, one must advertise in a local or national newspaper and go before a court of law. Anyone who has reason to object to the granting of that licence can make a case, and the licence may be revoked. It is wrong to say the industry is not regulated. I do not know of any profession in this country which has such regulations applied.

All auctioneers must furnish a tax clearance certificate annually, along with a certificate from his or her own accountant to confirm that they have conducted all financial transactions in relation to clients' funds in a proper fashion. Under accountability and transparency procedures, the IPAV appoints external members to its disciplinary committee. Both the IPAV and the IAVI have long recognised that the current legal requirement of a minimum bond of €12,700 is entirely inadequate and unrealistic and have put in place substantial deposit protection funds. The limits of these funds are kept under ongoing review.

While there are no educational requirements for an auctioneer's licence, both the IPAV and the IAVI run a wide range of courses, which are subject to strict examination standards, set and monitored by suitably qualified personnel. An estimated 90% of auctioneers and estate agents are members of one or other of the institutes, although membership is not obligatory in order to run a practice.

All agents have a legal contractual obligation to their clients, the property vendors. They have a duty of care also to potential purchasers. This encompasses obligations not wilfully to give false or misleading information. The IPAV does not support the lowest of price guidelines within 10% or any percentage point as we believe it is an unworkable notion which leads only to confusion and disappointment for the house-hunter. If asked, members will try to be as helpful as possible in giving an estimate of the price region. However, this is often impossible when the property is to be auctioned. We live in a free market economy where the best offer secures the property.

I have been involved in auctions where the best advice has been given, along with a guide price, and yet the guide price has regularly been beaten, for example by €40,000 or €50,000 in the case of a house with a guide price of €150,000. It also happens that guide prices are not reached.

In its recent study of professions for the Competition Authority, Indecon identified five tests for professionals in determining whether or not they are competitive. These involve the entry requirements to a profession, and their possible use to restrict entry to the profession; the existence of free competition between members of the profession; the question of allowing advertising by the profession; the demarcation of the profession's functions in such a way as possibly to restrict the activities of other groups; and the freedom or otherwise of the profession's members to form limited companies of multidisciplinary practices.

From any reasonable perspective, auctioneering passes all five tests to determine whether a particular profession is competitive or not. The service given to prospective buyers and tenants by auctioneers is very much taken for granted, despite the enormous commitment involved in terms of professional time, travel and effort. While percentage fees have dropped dramatically, the buying and selling public still expect, and by and large receive, a first-class service.

The claim that the auctioneering sector lacks competition is inconsistent with what is happening. When instructions are sought or given, it is now normal that four or five auctioneering firms will be invited to tender for business, and fee rates fully reflect this fact. I can think of no other profession that fails to charge for the time it spends on aborted work.

Auctioneering is the very essence of a consumer driven profession. In recent years it has been open season on auctioneers' fees with current fee percentages being merely a fraction of those prevailing in the early 1990s, while the percentage taken by the auctioneers who actually sell properties has been falling. With regard to sealed bids, I agree with Senator Ross that if an auction is by private tender, the bidders or their representatives should be allowed to attend the opening of the tenders.

Mr. Coghlan

I welcome the Minister of State. I, too, must declare an interest in that some of my business background is in auctioneering and I continue to hold a licence, even though I am more of a silent partner and consultant in the business. However, I am honoured to be a member of the IPAV and wish to declare that interest also.

A journalist, writing in one of last Sunday's newspapers with regard to this motion, stated auctioneers were up there with politicians and journalists as favourite targets for abuse.

Mr. O'Toole

And trade union leaders.

Mr. Coghlan

The Senator is well covered.

Mr. Norris

And university Senators.

Mr. Dooley

It is a dual mandate.

Mr. Coghlan

Entry into the profession of auctioneer or house agent is governed by statute, namely, the Auctioneers and House Agents Acts 1947 to 1973. A whole body of case law governs auctioneers in the conduct of their business. They must, like any other citizen, operate within the law and do. There may be a few rogue auctioneers but not as many as there are such solicitors or members of other professions, as the statistics will prove.

Mr. O'Toole

Who can argue?

Mr. Coghlan

I agree with Senator Ross and, particularly, Senator O'Toole when they argue for protection for all. If there is a shortfall and if something further needs to be done, nobody will object to it. I certainly do not. If there is a shortfall in trust and confidence, we must overcome it. Other matters such as valuations are not an exact science. While things can go wrong, I suggest this is not deliberate.

Many problems arise because the public does not generally understand the relationship between the auctioneer and vendor and that between the auctioneer and prospective buyer. Auctioneers' contractual obligations are to their employers, the vendors. While they have a duty of care to prospective buyers, auctioneers are engaged on behalf of the vendor, not the buyer. They have a duty of care to the vendor in the first instance and a legal obligation to maximise the price for him or her.

The motion – perhaps unwittingly, as I do not think this was the intention of Senators Ross and O'Toole – suggests that all auctioneers are dishonest and untrustworthy, or that may have been the impression given. However, it is a generalisation contradicted by the record of the auctioneering profession in the protection of clients' funds. This contrasts markedly with the record of numerous other professions, although I will not go down that road.

It is entirely the vendor's privilege to decide whether, to whom and for how much he or she should his or her property. Rights regarding property are guaranteed by the Constitution. The auctioneering bodies, the IAVI and the IAPV, have for many years been seeking increased regulatory control over the issuing of licences, the raising of minimum educational qualifications and the minimum number of years' experience before the issuance of an auctioneering licence to an individual, an issue the Government may wish to address.

As Senator Scanlon said, the IAVI and the IAPV have codes of practice, ethics and standards in place which already require disclosure of the personal interests of their members. Rule 13 of the IAVI – I am not sure which rule it is in regard to the IAPV – states one must declare one's interests when one is dealing in property on one's own behalf.

The motion is perhaps confusing because no attempt is made to distinguish between an auctioneer and a house agent, who can have different functions legally. There is a body of case law extant to show that their functions can be distinct at times.

There also seems to be a difference in regard to guide and reserve prices. Senator O'Toole referred to this and is not confused about it in any way. A guide price is simply the opinion of an auctioneer or auctioneering company as to what it is reasonable to assume a property may fetch on the open market. The reserve price is the price below which the vendor will not sell. It is an absolute right to set this reserve, irrespective of what the auctioneer may guide. This should be remembered. Auctioneers are subject to instructions like solicitors and other professions, and may often be over-ruled. I am sure Senator Scanlon has experienced this, as I have.

It is a condition of the codes of conduct of both the IAVI and the IAPV that members act properly and in compliance with the law in all instances. While both bodies would not be opposed to a requirement that every property should have a guide price, it will not necessarily sell at that price and there could be pitfalls if it becomes mandatory. The bodies would be opposed to legislation which compelled vendors to sell once a bid above the guide price had been received. If this became law, vendors would, in effect, choose guide prices which far exceeded any conceivable price to ensure they could not undersell. The effect of this on property prices would unquestionably be inflationary. It would also significantly reduce the number of properties coming on the market. Furthermore, such a practice would tend to mitigate against auctions, the most transparent form of sale. Transparency is, apparently, what the Senators are seeking, to which I have no objection. I could tell the House some interesting stories, which I told to Senators O'Toole and Ross yesterday, about what can occur.

It would be common and best practice for agents to record bids received and from whom. This does happen. While this information will be protected by the Data Protection (Amendment) Act 2003, it could be accessed in the future by a third party provided consent can be obtained under the Act. Both auctioneering bodies would have no difficulty in principle with such a proposal.

Regarding complaints, to which the motion refers, they should be referred to the appropriate body and then investigated. The IAVI and the IAPV have a proud record of investigation of complaints and would welcome referral of any complaints any of their members would have. I encourage Senators, if they have any complaints, to bring them to the professional body, of which the auctioneer in question is a member. I guarantee, as did the president of one of the bodies yesterday, that such complaints would be investigated.

Ms Ormonde

I welcome the Minister of State and the motion. I am delighted that it gave me food for thought. I did not prepare a written contribution to the debate because I wish to speak about my experience in this area. Most auctioneers I know are sincere and do their work magnificently. I have no difficulty with them. However, there is no doubt that there is a perception that some have not performed in recent years to the standard required by the two organisations dealing with the profession.

I have considered the relevant legislation which dates back to 1947 and was updated by the 1973 Act. It has not been tidied up since then. I welcome the recognition in the amendment that a regular review of the auctioneering industry's regulatory framework is desirable. There is no doubt about that since we only have to look during the years of the Celtic tiger at the large number of housing developments. As a county councillor, I became aware of the practice of the phased release of new developments in order to increase the prices. I felt that was not correct.

Constituents have often told me that an auctioneer would state there would be no development next to the house they were interested in purchasing. That is how it might stand in a development plan at the time, but in the next one there might be changes. The auctioneer is not in the position to claim there will be no such developments. However, because a house is on the market, naturally the auctioneer wants to get a quick sale. It is only in these types of cases that I would question them. In the majority of cases there are no difficulties.

That is one little example, like that which we see with politicians – one bad mistake by a politician and we are all bad. One bad mistake gives the impression that auctioneers are not up to standard. I have read the code of ethics of the IAVI and the IPAV and noted they have laid down stringent regulations. I checked the entry requirements for the educational course and it is validated. There are high professional standards built in with their qualifications.

Another phrase that comes to mind is "Dutch auction". An auctioneer informs a potential buyer that there is an offer of €125,000 for a property; if the potential buyer can beat that, the property is his. He returns with a new offer but the auctioneer gives yet another price, such as €140,000. That type of practice erodes trust and confidence in auctioneers.

Consumers will welcome this discussion, as will those auctioneers who have welcomed the move to adhere to professional standards. Another issue centres around conflicts of interests. When county councillors discuss the development plan – most declare their interests, but there are some who do not – there can be a conflict. That is another grey area. The regulations should take into account those kinds of issues when the code of practice is reviewed.

We are airing the points that have created unease among the public. We endorse the code of ethics and we hope the IAVI and IPAV will address these matters. Most auctioneers do their work well. However, there is gazumping, phased release of developments pushing up prices, and the occasional Dutch auction where people are not sure they are getting the right price. These issues worry me and the public.

Auctioneers cannot give accurate information as to whether there will be a development in an area. They do not know and should not presume to tell any potential purchaser that such developments will or will not occur. I suggest that potential purchasers should telephone their local councillor or planning department. This would prevent claims by purchasers that they bought their house because the auctioneer assured them there would be no more developments in that area. When there are new developments, it always creates objections. If the industry was more transparent and informed people of the potential for other development, there would be no such problems. These are the areas that the auctioneering code of ethics should take into account.

I welcome the motion and the putting in place of a review of the regulatory framework to improve standards within the auctioneering profession.

Mr. Ryan

It never ceases to amaze me that people who proclaim their commitment to the market economy and the competition model of economic efficiency always seem to be late when it comes to the most important part of competition policy – that there should be perfect knowledge to both participants in an economic transaction, yet we spend years explaining why this is a bad idea. We have a medical profession which believes it is a bad idea to have tabulated fees people can look at.

We have a motion and amendment before the House. I prefer the motion. It is astonishing, after the last six years of the most spectacular property boom, that the Government is asking us to set up a review to examine whether there is a need for the introduction of a code of ethics and professional standards in auctioneering.

I took it for granted that any profession accepted the need for a code of ethics and professional standards. In my profession we have a code of ethics, as we have one in this House. The Minister of State, Deputy Tony O'Malley, as a pharmacist, has a code of ethics. The medical profession has a well developed code of ethics. It might hard to believe, but the Law Society has one. Six years into the most lucrative time in the history of the property industry, the Government is asking me to agree to an examination of whether auctioneers need a code of ethics. Even if they were saints, they still would need a code of ethics.

The public needs to know by what standards people operate. This is where consumer legislation in the broader sense is so important. Individual consumers by definition do not have perfect information. If the consumers do not have this, then there is no perfect competition. If there is no perfect competition, someone is left with an unfair advantage or disadvantage. Any half decent economist will state that once perfect competition is moved away from, their models do not work. The whole thing becomes skewed and goes in different directions than intended. That is why we need external regulation of all these areas.

I am a great believer that the more information made public about how people do their business, the more the consumer is empowered. Whether it be engineers, politicians, pharmacists, auctioneers or whatever, the more the public knows, the stronger the position the consumer and the more likely it is that people will operate to decent standards. One hears those anecdotes about people could not get an honest answer as to the size of the second room in an apartment they were buying in Dublin, the response of the auctioneer being if that person did not want it, there were dozens of others who did. If we allow market forces to prevent people from getting the rudimentary information to permit them to make so-called rational decisions, we will actually be forcing them into making irrational economic decisions.

The motion refers to a requirement that, prior to undertaking any auctioneering transaction, auctioneers be required to make a declaration of interest. I look forward to the Minister telling me whether the current position is that they do not do so. I could, for example, become involved in dealing with an auctioneer whose family has an interest in the property he or she is trying to sell me and he or she is not obliged to declare that. In such instances, we are moving away from true competition and a fair market. The only purpose markets serve – I say this as a long-standing member of the left – is to make the position of buyers and sellers operate in reasonable equilibrium and distortions such as that to which I refer serve no purpose. We might as well get rid of it entirely.

The motion refers to sealed bids. I do not know enough about sealed bids but the suggestion in respect of them that is contained in the motion appears perfectly reasonable.

The motion also calls for a requirement that all properties should have a published guide price. I am astonished that, not just in terms of houses but also the pages of used car advertisements, one does not have to put a price on a second-hand car. I am at a loss to know why, in a consumer-focused market economy, one cannot know in advance the demanded price for something so that one can be in a position to bargain. Why that information can be withheld is beyond me.

Another requirement mentioned in the motion is that all auctioneers should maintain for inspection, by an approved authority, a record of all bids and bidders. The inspection by an approved authority is only included because most people are not convinced that auctioneers have an honest and verifiable record. Perhaps they are wrong, but we need to develop some way of ensuring, independently, that the process of bidding is fair and that it is not loaded against the consumer in favour of the vendor. That is what this matter is about. It is not about interfering in the sale, it is about ensuring that the sale of property operates according to the conditions that make for a functioning market economy. One of the conditions to which I refer is information.

The motion also refers to an appropriate system to facilitate the investigation of complaints by bidders who believe that they have not been fairly treated. Is it not extraordinary that, after a six-year property boom, there apparently is no appropriate system to facilitate the investigation of complaints? In what world are we living? That is what astonishes me about this matter.

There is a question I would like somebody who is more closely associated with the auctioneering profession than me to answer. How can an auctioneer lose money? What risk is involved in auctioneering? Auctioneers do not buy property and then sell it; they facilitate transactions. Unless an auctioneer takes options – which most of them do not have to do – I do not understand how he or she can lose money. The vendor must pay for all the advertising. There is a guaranteed percentage of the price and, therefore, the auctioneer has a vested interest in manipulating the price to maximise his or her return. That is understandable and it is part of a functioning market economy. It is, however, an astonishing commentary on our unwillingness to allow genuine markets in a range of areas that a motion of this nature is only being discussed at the end of six years during which the auctioneering profession, among others, has cleaned up. It has done so not because of its diligence, efficiency or innovation, but simply because it happened to be in place at the right time. It is not good that people are rewarded just because they happen to be in a particular position, rather than as a result of something they do that merits that reward.

Mr. Dooley

I join colleagues in welcoming the Minister. There has been much discussion in recent months about affording the House an opportunity to discuss the regulation of the auctioneering business. For that reason, I welcome this debate which can help to clear up some of the misnomers that exist and allow us to examine further the areas that require investigation.

I agree with some elements of the motion brought forward, but the amendment we propose is a much better way to deal with the issue. There are some elements of what Senators O'Toole and Ross said that I find acceptable. The difficulty – Senator Coghlan alluded to it earlier – is that the overall thrust of the motion and the way it is phrased appears to suggest that auctioneers in general are somewhat untrustworthy or dishonest. That is the thrust of the motion, although it may not be the intention of the Senators. As a number of people said, however, the record contradicts it.

One only need consider the position of some of the other professional bodies. A previous speaker stated that many other professional bodies face a greater level of indictment in terms of the actions of their members. Despite the fact that there are some bad apples in the auctioneering industry, it is widely accepted that there have not been the same difficulties as those which occurred in the banking, stock broking, insurance and many other sectors. I would welcome a debate on those professions because they are highly regulated. In many cases they are covered by defining legislation, but problems consistently arise.

The cornerstone of this debate is about the auctioneer and the customer. As far as I am concerned, the customer is the vendor and he or she engages the auctioneer to carry out the action, namely, the sale of the property, on his or her behalf. However, that point appears to have been missed by some Members on the other side of the House. There is a duty of care on the part of the purchaser in terms of the actions of the auctioneer, but the real duty of care must lie with the vendor because he or she engages the auctioneer and, in effect, pays the bill. There is a legal obligation on the auctioneer to maximise the price for his or her customer. That point should be noted. It is everybody's right to ensure that they obtain the maximum price for that which they wish to sell.

We live in a democracy. People have a constitutional right to own property and they also obviously have a right to sell property to whomever they like and at whatever price they decide. That does not necessarily mean – this is where some of the confusion arises – that we have to sell to the highest bidder. There are many reasons somebody might decide not to sell to the highest bidder, one of which might be a concern on the vendor's part about the purchaser's capacity to pay for the property. For example, the perspective purchaser may have to dispose of another asset or property in advance of buying the property in question. If I was the vendor in a situation like that, I would prefer to deal with the person whose bid might have been a little lower but who would be in a position to pay immediately. This would allow me to proceed with whatever I propose to do in terms of the disposal of the property. We cannot lose sight of our constitutional requirement to sell the property for whatever price and to whom we so wish.

A case could be made for suggesting that the entry level criteria should be strengthened. That issue has been raised by Senator Ross on a number of occasions, but Senator Scanlon was clear in highlighting the fact that auctioneers have to go before the courts. Unlike those in other professions, auctioneers are obliged to go before the courts on an annual basis and, at that stage, objections can be made to their holding licences. That is a strong point and it is worth reiterating.

Auctioneers are service providers – in that context, they are no different from anybody else in the service sector – and their reputation precedes them. It is their reputation that will allow them to continue to trade. There is no doubt that the dodgy elements within the auctioneering trade do not survive because if they do not represent their customers properly or achieve the best price for their properties, they will not continue to attract business. Only those who employ best practice attract business. Some Members on the other side of the House seem to believe that best practice should relate to the purchaser. However, the purchaser is not the central element; it is the vendor who engages the auctioneer and, hopefully, the auctioneer will ensure, on their behalf, that they obtain the best price.

Given that only the fittest will survive in such circumstances, I am not concerned about over-regulation. This is obviously related to the reputation of auctioneers. As Senator Scanlon pointed out, some 90% are members of professional bodies. The code of ethics operated by both professional bodies provides the required level of security and insurance that the highest standards are achieved, as required by Members on the other side.

Any review must concentrate on the vendor and the protection of his or her rights which are more important in this context than the rights of the purchaser. We must ensure the person paying for the service is protected at all times. The level of self-regulation in the auctioneering industry works and we should continue along the lines of self-regulation.

It is unfair to treat auctioneers in isolation. There have been greater problems in other professions. Any review that may be established would need to examine all professional bodies. Perhaps a committee of the Oireachtas would be a suitable forum for addressing codes of practice and ethics applied by all professional bodies.

Recently I read an article by Senator Ross in one of the Sunday newspapers which addressed the issue of stockbroking firms, an area with which the Senator, who comes from a stockbroking background, will be familiar. In it he questioned the independence of stockbroking companies, particularly in the Irish market, because in many cases stockbrokers advising clients to purchase or continue to purchase certain stock also worked for large firms. The Senator made the valid point that stockbrokers rarely advised clients to sell stock in particular companies and questioned whether one could give credence to any information emerging from such companies. There are some parallels here which need to be examined.

The Enron scandal which occurred about two years ago was largely brought about because certain companies have consultancy and audit functions. In effect, two departments within a large consultancy firm organised trade-offs to protect a company in which they both had a fundamental interest. Nobody is suggesting this is also happening in the auctioneering industry. In fact, the contrary argument is made, namely, that auctioneers concentrate on the person who owns the property, which can only be good given that this is the person they are paid to represent. It is always open to someone who wishes to purchase a property to engage an auctioneer to facilitate his or interests. In such circumstances, the auctioneer will act in the best interests of the person who has engaged them, that is, the purchaser.

As I stated, some elements of the motion are acceptable. The proposed requirement that auctioneers make a declaration of interest before each transaction, while welcome, is already part of the code of the two professional bodies. One might as well have another auction if one gets into the level of detail contained in the proposed requirement on the opening of sealed bids. If those who have made sealed bids are seated around a table when the bids are opened, the arguments that would follow would result in another auction.

Mr. O'Toole

I do not accept that. The rules must state the bids are final and no further auction will take place.

Mr. Dooley

The fundamental element in respect of the proposal is that it would regulate matters beyond the necessity to protect the rights of the person selling.

Mr. O'Toole

One cannot have the auctioneer come in—

Mr. Dooley

The Senator will have an opportunity to respond in due course. He correctly pointed out that involving a third party, such as a peace commissioner or commissioner of oaths, to ensure the process was handled correctly was probably a better approach. As the majority of sealed bids are opened in the presence of a solicitor, there is already a level of cover.

The proposed requirement to publish the guide price is crazy, as is the proposed requirement that no property should be withdrawn in the event that a bid exceeds the guide price. Giving legal force to such a requirement would call into question the constitutional rights of vendors in terms of their ability to determine the price for which they sell their property and the person to whom they sell it. It would also result in the demise of the auction process. Many people would not attend auctions if such a regulation was introduced. We all believe auctions provide a relatively transparent mechanism in the current environment. While they may not be ideal in terms of protecting the purchaser, they offer considerable openness and transparency. I support the amendment.

Mr. Bannon

I wish to share time with Senator Terry.

An Leas-Chathaoirleach

Is that agreed? Agreed.

Mr. Bannon

I welcome the Minister of State. It is important I declare my interests. I am an auctioneer and farmer and have extensive experience in the auctioneering business. Auctioneering is a varied and interesting career. The profession has changed dramatically over the past decade. The era when anybody could call himself or herself an auctioneer is long gone. To become an auctioneer nowadays one must have successfully completed a property related course and a period of work experience, even before one can apply to the courts to obtain a licence. As Senator Scanlon stated, the licensing system for auctioneers requires that an application for renewal of one's licence be made each year. When applying to the courts, one must instruct a solicitor to place a public notice in newspapers informing the public of a person or company's intention to acquire a licence. One must also have a security bond and tax clearance certificate and satisfy the court that one has attained the appropriate academic standards to conduct an auctioneering business.

If a member of the public has an objection to a person or company acquiring a licence on the grounds of incompetence, dishonesty, wrongdoing or for other reasons, he or she has the right to object to the application when it comes before the courts. The general public receives notification of an application well in advance as the notice must appear in a newspaper six weeks before the court date. What other profession is more transparent?

Like every profession, auctioneering has a few rotten apples who can give the business a bad name. Other Senators have mentioned professions which have acquired a bad name through the actions of a few cowboys. Auctioneering may not be different but 95% of those involved are decent, honest people who take pride in their profession.

I do not condone practices recently brought to our notice by which some auctioneers deliberately breach codes of ethics and conduct by wilfully underestimating the guide prices of properties advertised for auction or fail to divulge the square footage of properties they are selling or the size of rooms. This trend is wrong and must be condemned. Legislation must be introduced to rectify this problem and make the system more transparent. This is what society demands of professions and the auctioneering profession is no different from others. We already have codes of conduct and ethics.

Other issues which upset people are the high cost of advertising and commission charges. Such costs should be discussed and agreed before the owner puts the property on the market. Auctioneering is a highly competitive business and, like others, auctioneers will do deals. However, similar to solicitors they will provide in writing the costs of conducting business on behalf of a client.

There is a notion that auctioneers receive generous discounts from newspapers for advertising. While I am not aware that this practice is widespread, I am aware that some property newspapers tout for business over the telephone and pretend to give generous deals. They then place a second advertisement without the auctioneer's or owner's consent and invoice for same. This is a new practice which should be addressed in any new legislation.

I support proposals to update the guidelines and put a code of ethics in place for the profession. This is important to protect the public and ensure there is no room for wrongdoing or dishonesty in the profession. It will also protect honest auctioneers who conduct their business with integrity.

Ms Terry

I thank Senator Bannon for sharing time with me.

I fully support the motion. I found it difficult to believe we did not already have a code of ethics in place for auctioneers. It is essential we have one. Whether dealing with a vendor or buyer, it is important that auctioneers operate to the highest standards as they are dealing with people investing in or selling a property worth a lot of money.

It is only a few auctioneers who behave in a disgraceful manner. It is particularly disgraceful at this time when so many young people are trying to buy their first property. We hear stories day after day regarding people who, having viewed a house in a new housing estate, particularly in Dublin where prices are extremely high, put down a deposit to secure a house. Some weeks later they may get a telephone call to say their deposit may have to be returned or that a mistake was made and the wrong price was given or the particular house on which they made a deposit was priced differently. One way or another the people concerned find themselves in a situation where they cannot afford to buy the house.

It is a serious matter that an auctioneer would lead people astray in this manner. Obviously, the builder, in association with the auctioneer, is trying to get the best price. Just a few weeks after accepting a deposit they feel they can get a higher price because of the huge demand. This practice is wrong and unfair. We must put measures in place to ensure it does not happen.

Another issue with which we must deal concerns auctioneers' advertisements. Their advertising leaves a lot to be desired in terms of accuracy. Sometimes they advertise a house as adjacent to local facilities which do not even exist. The plans may state local schools or shops will be provided in the future. People buy houses without knowing the school or shop may not be provided for a further five years. Auctioneers should be obliged to provide accurate information for those purchasing properties.

Minister of State at the Department of Justice, Equality and Law Reform (Mr. O'Dea)

I begin my contribution to the debate by expressing the regrets of my colleague, the Minister for Justice, Equality and Law Reform, Deputy Michael McDowell, at the fact that he is unable to be with us this evening due to other important commitments.

Mr. O'Toole

We have a better man altogether.

Mr. O'Dea

I thank the Senator. His confidence is touching. The Minister has asked me to thank him and the Independent Senators for raising this important issue and giving me an opportunity to update the House in relation to the matter.

I am sure most Senators will agree that, as a nation, we have a keen interest in property ownership. The fact that Ireland enjoys one of the highest home-ownership ratios in the world is no mere accident. We have always had a strong connection with the land and owning our own homes. This has something to do with our history. The desire for property ownership has always burned brightly within us. Anybody who doubts that the flame still burns today, as it did in times past, need look no further than at current newspaper supplements, devoted entirely to property related matters, read avidly by thousands every week.

The developments we see countrywide, in the residential, office, retail and industrial markets have to a large degree been fuelled by our growing economy. Tangible benefits have been achieved on foot of this strong economic background. Mortgage rates have never been lower and economic growth has been excellent. These factors, combined with strong levels of customer confidence and rising incomes, have strengthened consumer demand and created the impetus behind what has been happening in the property market.

Buying and/or selling houses or land is probably the largest single business transaction for most of us. The institutes representing auctioneers and valuers have sought to ensure such transactions are carried out effectively and efficiently. It is of the utmost importance that consumers are protected in these transactions. To the credit of auctioneers and valuers, they have striven to ensure they are in a position to provide a first rate, professional service for those who call on them. The Minister agrees, however, that important affairs affecting property should be handled using the highest standards of professionalism and competence.

In so far as legislation is concerned, Senators will be aware that the existing legislation, the Auctioneers and House Agents Acts, 1947 to 1973, provides a regulatory framework for the manner in which auctioneers and house agents must act in the performance of their professional work. Its provisions are wide-ranging and there are specific provisions in regard to how moneys are to be handled on behalf of clients and the fees charged, etc.

Auctioneers must apply annually to the District Court for a certificate of qualification. It is open to any member of the public to object to the annual renewal of any auctioneers licence if he or she has grounds for so doing. This condition appears to act as a deterrent to malpractice by individual auctioneers.

The Minister notes that in the recent report by Peter Bacon & Associates – An Economic Assessment of Recent House Price Developments – reference is made to the practice of phased releasing of new developments to ratchet up prices, to the return of booking deposits in a small number of well publicised instances and subsequent gazumping of prices and to instances of aggressive staged payments, through which consumers may have paid the majority of the purchase price before completion of the houses being bought.

The report goes on to state:

It is to be stressed that it is not considered that these other practices [that is, the practices referred to in the report] are widespread, but the impression, and it is no more than that, is that they are increasing, to the detriment of consumers. However, if the market was not in disequilibrium in relation to supply, demand and prices in the first instance it would make such practices ineffective.

Therefore, one has to look at the various players in the housing market and the factors or reasons that lead to the pricing of houses and property, not just the regulation of auctioneers in isolation.

Most auctioneers, because they are members of the two largest auctioneering bodies, the Irish Auctioneers and Valuers Institute or the Institute of Professional Auctioneers and Valuers, are obliged by their membership of these bodies to comply with conditions of membership. Both bodies have disciplinary committees which deal with complaints from members of the public in relation to auctioneers or valuers. The Minister understands the auctioneering institutes do expel and fine members, order the return of part or all of the fees charged/or outlay, or impose other penalties where these actions are deemed warranted. He also understands both the IAVI and the IPAV, the two main auctioneering organisations, have adopted a code of conduct for their members.

It is also worth mentioning that neither the Minister nor his Department has received any level of complaints in regard to auctioneering practices or procedures from the public or organisations. However, he accepts that a regular review of the adequacy of regulatory legislation is desirable. He has asked me to inform the House that, in this regard, he intends to arrange for a review of the regulatory framework for the auctioneering industry. This review will include an examination of the need for the introduction of a code of ethics and professional standards for the profession.

The review of any profession is, however, a matter which requires the utmost care and consideration and other parties which have an obvious interest in the role of the auctioneering profession will need to be involved. Discussions will be needed with the profession and all interested parties to clarify the issues involved. At the same time, the Minister would also be mindful that any reform of the profession should not introduce a level of red tape or bureaucracy for the sake of it. The Minister considers that any regulatory control to be imposed on the profession should improve matters rather than disimprove matters for all concerned. I have noted the points made by Senators during the debate and will bring them to the Minister's attention.

Mr. Norris

I welcome the Minister of the State. I compliment him on his gift of prophecy because he indicated that he has taken note of all the things Senators have said. Some of us have not said much so far, but I am sure what we say will be noted.

People have declared an interest in this matter by stating that they are auctioneers. I am not an auctioneer, but I am part of the "descendancy". My grandfather inherited three incumbent farms, which he had to return to operation. He did a little bit of everything – he ran a post office, he engaged in auctioneering and his name was a byword for honesty and good humour. There are plenty of good, decent auctioneers and I have spoken at meetings on their behalf. I have at home a small brass gavel, an auctioneer's hammer, which they presented to me because I made them laugh. However, I accept that there are problems in this area.

I welcome the Minister of State's comment that the Government will consider introducing further regulation. That is excellent, honest and open and a clear vindication of Senators O'Toole and Ross for tabling this motion. We have received an acknowledgement from the Minister of State. Good contributions were made on the other side of the House, including that of Senator Ormonde who, like me, thinks the majority of auctioneers are decent honourable people. However, she gave some instances of gazumping in the marketplace and of people floating houses at a particular price. In such circumstances, the situation usually becomes similar to that with air fares, where there is suddenly only one return seat to London priced at 99p while all the rest cost £199, plus half an ounce travel allowance. Such things may not happen that often in the auctioneering business. Concern about the fact that they do occur, however, was sufficient to cause the Government to introduce a review, which I welcome.

Guide prices are a complete nonsense. They are used as bait. I love the supplements on Thursday in The Irish Times and on Wednesday or Friday in the Irish Independent because they cater to my snooping instincts. I am able to look at other people's houses to see what they are like and how much they cost. It is terrific fun. However, sometimes the guide price for magnificent houses is set at next to nothing. We all know it is bait to get the nincompoops in so that there will be a big auction and people will bid. We all know that there have been instances where auctioneers have introduced people in the back of the room to bid a property up. That is a bad practice.

Let us consider solicitors and the fees they charge. If a person gets a mortgage when he or she is buying a house, an extensive search is done which costs a huge amount of money. That search should be done for all time and it should be stamped on the deeds that they have been investigated by a reputable solicitor. If a person gets one, two or three mortgages from the same mortgage company on the same property after it has been bought, the solicitors will charge on each occasion they are obliged to go through the motions of the same search. That is theft and it should be stopped. I ask the Minister of State to take note of that.

I looked at the rules of conduct of Irish auctioneers and those of British auctioneers, which are five times as extensive. They cover material in considerable detail. We should look at that as a model while we are investigating the possibility of introducing some form of regulation. I am not impressed by the fact that one must advertise in a newspaper – well, break my heart. They have educational courses, but people do not have to take examinations. How many of us would take examinations if we did not have to do so? I would not volunteer. That is complete nonsense. A person must put a notice in the newspaper and apply to the District Court for a licence. He or she may take an examination if he or she desperately wants to, but he or she does not have to possess any qualifications or training. However, he or she must not be bankrupt.

In the rules of conduct of the British auctioneers, there is a clear and detailed duty to maintain separate and internal accounts. Rule seven in the British model does not seem to have a parallel in the Irish rules of conduct. It states:

A member shall not seek business by methods which are oppressive or involve dishonesty, deceit, or misrepresentation. Members shall not use any business term, name or initials which could cause confusion between their own business and that of the Association.

The note attached to the rule goes on to state that:

It is considered oppressive to seek business by methods designed to take unfair advantage of the age, condition, infirmity, ignorance or bereavement of a prospective client or by any course of action which amounts to harassment. Members are not permitted to use any cheat or subterfuge to obtain business.

I am not alleging that any auctioneer in this country would engage in such behaviour. However, when I was 20 years of age I was faced with having to sell the family home. I went to a reputable auctioneering house. The person who was sent out was genteel – I knew his family – but it was his first day in the business and he was told he would learn the business on the job. In other words, he was learning at my expense. I still know him and he is still a decent fellow. He did not have any training. I showed that house to the people. I knew what to do and I had to do it, but it was awkward. I was bereaved because my mother had just died and that was the reason we had to flog the house. There was no bid at the auction and there were mistakes in the advertising. I was encouraged and harassed to sell it to someone afterwards who bid a good deal under the market value. I raised the price of the house by refusing to sell it. The person to whom it was sold was a solicitor who did business with that firm. I cannot say that there was anything wrong with that; it may have just been a series of coincidences. However, I was a vulnerable young person and I did not feel that I was protected.

I have, on the other hand, had extremely good experiences of other auctioneers and their professionalism. Clients should be made clearly aware of the fact that when they put a house up for sale, in many instances the auctioneer will charge a scaled fee, which is quite large. However, they will exclude from that advertising costs, photography and other incidentals. That is fair enough as long as the client realises it.

There are occasions when houses are put on the market by auctioneering firms but when they are not sold. In such instances, the vendor may eventually be approached by someone and they may agree to sell it. One must be careful and question whether the auctioneering firm, which has failed to sell the house, should be entitled to reap the benefit of the vendor's capacity to sell the house on his or her own behalf. I raise a question mark about that because it does happen.

I compliment my colleagues on tabling this motion. They were right to do so. The Minister of State has indicated they were right because he has taken careful note of what they said and he is taking some degree of action. I do not believe that the intention of my colleagues was to vilify the auctioneering trade. I have suggested that there were some occasions when I had doubts, but they may be unjustified. I have met a great number of thoroughly decent auctioneers. Enough was said by the Government side and by those on this side of the House, including the Independents, for the Minister of State to take this action, which fully justifies the tabling of the motion by the university Members.

Mr. Moylan

As one who has dealt on many occasions with auctioneers, I have found them to be straight and decent. Perhaps they fooled me at times, but I was unaware of that. The Minister of State said that a regular review of the adequacy of regulatory legislation is desirable. Perhaps that has happened as a result of the motion tabled here this evening. The Minister of State said he intends to arrange a review of the regulatory framework for the auctioneering industry. That will be worthwhile. He also said that the review will include the examination of the need for the introduction of a code of ethics and professional standards for the auctioneering profession. That is a response to the motion and to the amendment.

I agree with Senator Scanlon's comments about licensing and the opportunity people have, if they so wish, to complain about an auctioneer if he or she is not carrying out his or her functions in a proper manner. Auctioneers are often blamed in the wrong in cases where property developers, who make substantial profits, fail to complete estates. People tend to point the finger at the auctioneer from whom they bought the property.

Auctioneers also conduct business at livestock marts. It was often the case when the mart had finished that people said the auctioneer had taken money from their pockets because of the number of people around the sales ring. "Who bought that? John Rafter," was a great saying to describe this activity, indicating that the bidder had paid a price as high as the roof of the premises. That was common knowledge, but in general auctioneers have done a good job. I have been involved in a number of property cases involving widows and others and they were dealt with fairly by auctioneers. The people involved went back to the auctioneers on many occasions to find out where they stood.

There has been a significant run on property over the past three or four years. Property sold itself without the need for much advertising. However, prior to that, auctioneers had to work hard to make a sale. The motion is worthwhile as the auctioneering business has become professional. Given the volume of property that has been sold in recent times, many auctioneers have made a great deal of money. They have worked hard and the profession employs a significant number of people.

I have always found auctioneers to be upright and straight. I accept a number of the points sincerely made about certain auctioneers who did not conduct their business properly. Unfortunately, the same can be said about every profession. Even in our profession, the finger has been pointed at certain public representatives but every one of us has been tarred with the same brush.

I welcome the Minister of State's comments, which represent a move in the right direction. Perhaps it is the first step and I look forward to improvements in this sector. I support the amendment.

Mr. O'Toole

I thank all those who contributed to the debate. Senator Scanlon referred to the need for competition and I welcome his agreement regarding the presence of a disinterested individual at the opening of bids. I wrote the motion and reread it to ensure it did not give the impression that auctioneers were dishonest or otherwise. I made changes to the wording to achieve that and I am sorry that Senators Coghlan and Dooley got the wrong impression. My intention was to generate debate and get people together to investigate and develop codes of practice and ethics in the same way as when I represented teachers.

The Minister of State and Senator Ormonde addressed the question of the release of new house to the market in stages to keep prices up. That is an appalling practice and it is interesting that the Minister of State picked up on that part of the Bacon report. It meant prices were maintained artificially high.

Senator Ryan made the case for a code of ethics. A number of Senators mentioned the leading auctioneering company that refused to supply potential buyers with the dimensions of an apartment it was selling. Another company wanted a member of my family to put down a deposit on an apartment from the plans. The company had the plans but could one imagine supplying plans without including the dimensions?

Senator Moylan pointed out that many of the auctioneers with whom we deal are above suspicion and it is important that we do not engage in scaremongering. Senator Dooley and others referred to the issue of guide prices, reserve prices and sealed bids. I accept sealed bids cannot be used if when they are opened the auction commences again. The property should be sold on the basis of the conditions laid down beforehand or else a public auction should take place. However, the use of sealed bids eliminates phoney bids, which is important.

A reserve is the price below which a vendor will not sell while a guide price is one which an auctioneer places in an advertisement. I accept Senator Coghlan's point that an auctioneer in various transactions acts as an auctioneer or as an agent. However, for example, an auctioneer and a vendor could agree a property should be sold for not less than €200,000 and the auctioneer might say he or she will not achieve that and there is no point in selling. Alternatively, the auctioneer might say it is worth more than that and a guide price of €250,000 should be put on the property. Once the guide price is established, one should not be able to say one will not sell when the guide price is achieved, otherwise incorrect and unfair advertising has been used.

Senator Bannon mentioned a code of ethics and I accept that both the auctioneering representative groups and a number of companies have adopted such codes. Senator Norris outlined the dangers of gazumping. He also referred to repeat conveyancing, an issue which I pursued recently at the national agreement talks and which should be pursued through the Competition Authority. Houses have been sold three times in ten years but, in a number of cases, the same conveyancing procedure was followed each time by the same firm of solicitors for the same financial institution at the same cost. That is all wrong and it is pumping up prices.

I thank the Minster for his contribution and I appreciate the thought he gave this matter following the two conversations we had over the past few days. I welcome a number of his points. I agree with him that this industry must remain competitive, the finger should not be pointed at auctioneers and too much red tape should not be reduced. He accepted the need for a review, which will include an examination of the need for the introduction of a code of ethics and professional standards and said they should be extended outside the auctioneering profession. He stated, "Discussions will be needed with the profession and with all the interested parties to clarify the issues." That relates closely to what I have sought.

I would like the review to include discussions and consultations with people other than auctioneers because that is important. The auctioneering representative groups should bring forward their own code of ethics and there should be statutory regulation to implement it. The disciplinary group would have to include a majority of people who were not auctioneers and auctioneers would not have a difficulty with that. It would draw up the code following consultation. Although its implementation and the judgment on it would include auctioneers, it would also include others. While this might be jumping the gun somewhat, that is what I would ultimately like to achieve.

Mr. Coghlan

I am sure that would be acceptable.

Mr. O'Toole

In no contribution did I hear anything that would go against this. Certainly, those who declared an interest as being auctioneers were very open and welcoming about how the issue might be approached. I would like to do it in this way and be supportive. I will be prepared to accept the amendment if the Minister of State can assure me those carrying out the review will include more than officials from the Department of Justice, Equality and Law Reform. They should include the people outlined here, representatives from the Department of Justice, Equality and Law Reform, auctioneers and their two bodies, and others. They will produce a report and it will be up to the Minister to decide if it represents the way forward. It should be a very useful exercise, from which auctioneers would have most to gain initially.

As I said, we are talking about transactions valued at up to €25 billion and probably far more on an annual basis. It is huge money and needs some form of transparency, openness and regulation. I ask the Minister of State to confirm his position on this.

Mr. O'Dea

The review will not be conducted exclusively, or otherwise, by officials from the Department of Justice, Equality and Law Reform nor will it be conducted exclusively by members of the auctioneering profession. It will be a representative body. We will also consider the possibility of imposing a deadline by which the body should report, as such reviews can drag on forever.

Mr. O'Toole

In that case I accept the amendment. I thank the Minister of State and his advisers for being so open and positive. It represents a good night's work.

Amendment agreed to.

Motion, as amended, agreed to.