Newsroom

OFT secures binding undertakings from letting agent

46/05    15 March 2005

The proprietor of an estate agency and lettings business has undertaken to comply with the law and deal fairly with consumers following action by the OFT.

Darren Russell, who carried on a business under the name Homes Direct, has undertaken not to act in breach of contracts for the supply of lettings and property management services by failing to pay over money, including rent or tenants' security deposits, held or received on behalf of consumers within a reasonable time or at all.

The OFT can seek a court order against a trader who breaks an undertaking. Failure to obey a court order could be found to be a contempt of court, which could lead to a fine or imprisonment.

Mr Russell has agreed that, in future, he will not:

• fail to pay over money held or received on behalf of consumers in the time agreed or within a reasonable time
• use or enforce unfair contract terms which allow him too wide a discretion to incur costs which the consumer must reimburse
• will not publish misleading advertisements that convey the false impression that his business is a 'company' when it is not
• will not carry on business in Great Britain under a name which includes the word 'Group' without the written approval of the Secretary of State for Trade and Industry.

Mr Russell has fully cooperated with the OFT's investigation.

The OFT took action following complaints by landlords and tenants and information provided by officers at Tower Hamlets, City of Manchester, Rochdale, Trafford and Lancashire trading standards services.

Sir John Vickers, OFT Chairman said:

'Consumers who are renting or letting their homes must have confidence that the agents will fulfil their obligations and act within the law. The OFT and its enforcement partners in the trading standards service will continue to work together for consumers and will take action where appropriate.'

NOTES

1. The OFT sought undertakings under Part 8 of the Enterprise Act 2002 which came into force on 20 June 2003. The Enterprise Act improves consumer protection by giving enforcers strengthened powers to obtain court orders or undertakings against traders that breach a range of consumer legislation; controlling activities such as misleading advertising, misleading price indications, lotteries, sale of goods and services, underage sales, estate agency, misleading health claims, trade descriptions, mock auctions, timeshare, unfair terms in consumer contracts, doorstep selling, distance selling, package travel and consumer credit.

2. For the purposes of Part 8 of the Enterprise Act 2002, an act done or omission made by a person in the course of business in breach of a contract for the supply of goods or services to a consumer and which harms the collective interests of consumers in the UK, is a domestic infringement.

3. Under section 2 of the Business Names Act 1985, it is an offence for a person to carry on business in Great Britain under a name which includes any word or expression specified in the Company and Business Names Regulations 1981, including the word 'Group', without the written approval of the Secretary of State.

4. The publication of a misleading advertisement (within the meaning of regulation 2(2) of the Control of Misleading Advertisements Regulations 1988 'the CMARs'), which harms the collective interests of consumers, is a Community infringement. Regulation 2(2) of the CMARs provides that an advertisement is misleading if, in any way, including its presentation, it deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and if, by reason of its deceptive nature, it is likely to affect their economic behaviour or, for those reasons, injures or is likely to injure a competitor of the person whose interests the advertisement seeks to promote. For the purposes of the CMARs, an 'advertisement' is defined as any form of representation which is made in connection with a trade, business, craft or profession in order to promote the supply or transfer of goods or services, immovable property, rights or obligations.

5. The Unfair Terms in Consumer Contracts Regulations 1999 apply a test of fairness, with certain exceptions, to terms which have not been individually negotiated in contracts concluded between a consumer and a person who is acting for purposes relating to his trade, business or profession. An unfair term is one which, contrary to the requirement of good faith, causes a significant imbalance in the parties' rights and obligations arising under the contract to the detriment of the consumer. The OFT considers a standard term in a consumer contract which allows the business too wide a discretion to demand payment of costs to be unfair.

Back to:2005