DECISION
On considering the written representations on behalf of the Appellants and the Respondents, the Tribunal determines that the appeal is allowed in part and I reduce the Penalty from £2,500 to £2,000 to be paid within 10 working day of this Judgment.
REASONS
Introduction:
- The Appellants are the corporate vehicle for an estate agency business in Enfield and have invited the tribunal to quash the financial penalty imposed by the London Borough of Enfield Council in respect of the breach of the Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme) Regulations 2019 ("CMPSR"). The Respondent opposes the Appeal in its entirety.
The Law:
- Regulation4(c)of the CMPSR requires a property agent to publish a copy of its client money protection certificate on its website.
Regulation 5 of the CMPSR – Local Authority duty to enforce the requirement under Regulation 4 of the CMPSR.
The Schedule to the CMPSR – Mandatory information that must be included in the Notice of Intent and Final Notice.
Background:
- The Appellant's website was initially inspected by the Respondent on 30 April 2024. The Appellant's website showed that they were engaging in letting agency work and had failed to comply with the above requirements, it did not: a) Publish a copy of their client money protection certificate on their website contrary to regulation 4 CMPSR.
Financial penalties:
- As a result of the above stated breach, a Notice of Intent was served on the Appellant on 21 June 2024 and sent by first class post. The notice stated that the Respondent intended to impose a financial penalty of £5000 for failing to publish their CMP certificate on their website.
- The Respondent received representations from the Appellant in emails on 5, and 11 July 2024. The Respondent considered these representations, and the penalty was reduced to £2,500 for a breach of regulation 4 of CMPSR for failing to publish their CMP certificate on their website.
- The factors considered by the Respondent when reducing the penalties are set out in the letters accompanying the Final Notices and included in the hearing papers.
The Appeal:
- The Appellant invites the tribunal to quash the penalties. The Appellant makes the following submissions:
(a) The Appellant states that they have always been a member of a client money protection scheme (CMP), specifically Safeagents, from before it was a mandatory requirement on 1 April 2019.
(b) The Appellant acknowledges that the certificate was not published on their website at the relevant time. He therefore contacted their web developers to ask why their certificate was not published on their website who told him it was down to a technical glitch. The breach was immediately rectified, and the certificate was subsequently published on their website following on from the Notice of Intent (NOI) being served.
(c) The Appellant states that the certificate has always been displayed in their office and enclosed a photo showing the certificate on display.
(d) They have stated that the website mentions the fact that they are a member of a governing body and that they have CMP in place.
(e) The Appellant is a member of The Property Ombudsman scheme for redress, and they have a complaints procedure in place and have always done everything by the book and in compliance with the law.
(f) They have further stated that they are a small struggling business, and the penalty would have a serious impact on them.
(g) They have also stated that they did not receive any warnings prior to receiving the letter and Notice of Intent.
(h) The Appellant is requesting that no penalty is imposed upon them for what they feel is a minor technical error and the fact they acted immediately after receiving the Notice of Intent. Furthermore, they state that they never intended to mislead anyone and strive to give all their clients the best protection possible.
- Finally, the Appellant states that the documentation was always in place, just not on their 'new' website.
Response/ Grounds of opposition
- In response to the above points, the Respondent notes the following:
a) The Appellant does not deny being in breach of the CMPSR.
b) The Appellant is a professional entity and is expected to be aware of and to comply with all requirements imposed on it by law.
c) The Appellant has stated that the breach was due to a technical error; the requirements are not new, the CMPSR came into force on 1 April 2019. however, they have not provided any evidence showing that the certificate was previously published on their website. Furthermore, it is for property agents to ensure that the required information is published. Furthermore, they state their website is new, but they have not provided any evidence that the certificate was published on the 'old' website. Having checked the Wayback machine (https://web.archive.org/), in March 2023, it appears that no CMP certificate was published. The Appellant's CMP certificate is currently a hyperlink on the Safeagents logo. On checking the Wayback machine, this logo is not on their homepage. On the fees page, they have their relevant fees, and they state that they are a member of a CMP scheme; however, there is no evidence that a CMP certificate has previously been published on their old or new website.
d) There is currently no evidence to suggest that the amount of the financial penalties will have a serious detrimental effect on the Appellant. No financial information such as bank statements or accounts were submitted to the Council as part of their representations.
e) The Appellant has stated that their website mentions the fact that they are a member of a governing body and that they have CMP in place. Section 83(6) of the Consumer Rights Act 2015 makes it a requirement for all agents to publish, with their list of fees, a statement that they are a member of a CMP scheme and giving the name of that scheme. This is a separate requirement in a separate piece of legislation. If the Appellant didn't have this statement, then this could have incurred an additional penalty of £5,000. Legally section 83(6) and regulation 4(c) are two separate breaches and carry two separate penalties. Furthermore, the statutory guidance to the CMPSR highlights the fact that Trading Standards can issue separate penalties for breaching both pieces of legislation.
- Publishing the certificate on the agent's website gives consumers confidence that their money is protected. The Respondent's officer has regularly found property agents whose CMP cover has expired, and they have continued to display the schemes logos on their websites and state that they are a member of a CMP scheme. It should not be up to landlords and tenants to search for and confirm with six different CMP schemes that an agent has valid CMP cover. Furthermore, having used the member searches for the different CMP schemes continuously over five years, they are not always straightforward, and vary from scheme to scheme. Regulation (4)(c) of the CMPSR is in force to ensure compliance and should be interpreted and the levels of penalties enforced in the same way that section 83(6) is enforced.
- The Appellant has stated that they had published their CMP certificate in their office. Again, this is a separate requirement in the legislation. Regulation 4(b) states that agents must display the certificate (i) at each of the agent's premises in England at which the agent deals face-to-face with persons using or proposing to use the agent's services as a property agent and (ii) the certificate must be displayed where it is likely to be seen by such persons. Therefore, the legislation makes it clear that the certificate needs to be displayed in the office and published on an agent's website.
- The Appellant also states that they did not receive any warnings from the Council, solely the Notice of Intent. The Respondent is not required to provide warnings to businesses in respect of compliance with their own obligations.
- In relation to this breach, the reasons for imposing this penalty are set out in the cover letter sent to the Appellant with the Final Notice.
Response from the Council:
- The Respondent has taken into account the fact that Appellant acted quickly in rectifying the breach and uploading their valid CMP certificate to their website.
- The Final penalty issued, is in line with penalties issued in other boroughs across London and is in line with numerous First Tier decisions.
- There is no requirement in the legislation for the breach to be intentional.
- Simply rectifying a breach following on from a Notice of Intent being served does not negate the penalty and this is made clear in the letter that accompanied the Notices of Intent.
- The Appellants challenge a financial penalty imposed upon them by the Council on 15 October 2021 requiring them to pay the sum of £1,000 in respect of an alleged breach of the Client Money Protection Schemes for Property Agents etc. Regulations 2019 ('the 2019 Regulations'), reg 3, namely failure to join an approved client money protection scheme.
- The appeals came before me for final determination on the papers, neither party having requested a hearing. I am satisfied that it is just and proper to proceed in that way.
- Under Schedule 9 to the 2015 Act, para 5(1) and (2), a letting agent may appeal to the First-tier Tribunal ('FTT') against a financial penalty on one or more of four specified grounds, namely that: (a) the penalty was based on an error of fact; (b) the penalty was wrong in law; (c) the amount of the penalty was unreasonable and (d) the decision to impose the penalty was unreasonable for any other reason. Disposal of the appeal by the FTT may involve quashing, confirming or varying the final notice or affirming it, whether in its original form or subject to modification (para 5(5)).
- Appeals under the 2019 Regulations are governed by very similar provisions (Schedule, para 5).
- It is well-established that the FTT treats appeals in cases of the sort under consideration here as a rehearing. It must simply make its own decision on the evidence before it (which may sometimes differ from that before the enforcement authority at the time of the decision under challenge).
- The Appellants sent written representations in response to the notice of intent, pointing out that they had co-operated with the Council, that the breach had been remedied and that they were a small company with limited resources and would be hard hit by any financial penalty.
- The Council issued a final notice requiring the Appellants to pay a penalty of £2,500 in respect of the breach identified in the notice of intent.
The Appeal:
- The Appellants accept that they were in breach in the respects alleged but contend that, given the mitigating circumstances, the penalties imposed were excessive and unreasonable. Overall, I interpret the notices of appeal as arguing that, in all the circumstances, it was not appropriate or proportionate to impose the penalties of £2,500.00, or any penalty.
Conclusions:
- I have no doubt that this appeal on quantum only is on the fine margin of errors and the Respondents make sound submissions in resisting a further reduction in the revised fine imposed. The legislation under which the penalties were issued is intended to serve the crucial purpose of protecting consumers. It applies to professional practitioners who must be assumed to be aware of the law that regulates their activities and of their professional duty to keep themselves up to date on their legal obligations. The 2015 legislation has been in place for more than five years and the 2019 Regulations for over two years. It was manifestly proper to impose a penalty.
- As to the level of the penalties, while I am in no doubt that a failure to correct the infringements would have warranted sterner punishment, I am equally clear that the act of correcting them did not absolve the Appellants of the consequences of their default. In light of the clear breach of the above stated requirements, the Respondent was fully entitled to impose financial penalties in accordance with CMPSR. The Respondent respectfully invites the tribunal to uphold the financial penalties as stated, namely £2,500 for a breach of regulation 4 of CMPSR.
- Accepting, as I do, that the infringements were accidental and not deliberate, they plainly merited some penalty. That being so, the appeal to have the penalty dismissed or absolved is notably ambitious. The duty to enforce consumer protection laws will not be served by imposing no or derisory penalties. Despite pleading financial hardship, the Appellant has provided no evidence in support of this plea. On the other hand, there is no evidence of previous breaches or intentional misconduct by the Appellant, and they have co-operated fully in the response to the Respondents investigation. In these circumstances I will reduce the penalty to £2,000.00 which should be paid within 10 working days of this Judgment
Signed Brian Kennedy KC
Judge of the First-tier Tribunal
Date: 30 April 2025.
