Consumer rights – Letting agent – Appellant local authority imposing monetary penalty on respondent letting agent for breach of requirements of Consumer Credit Act 2015 – First-tier Tribunal (FTT) reducing amount of penalty giving credit for revision of wording of details of relevant fees before final notice issued –Whether FTT wrong to find revised wording complied with statutory requirements – Appeal allowed in part
The respondent was a letting agent with many branches, including three located in the appellants’ borough. It also had a website. On June 30 2015, the appellants wrote to all letting agents in the borough drawing attention to the coming into force of the requirements of section 83(1) of the Consumer Credit Act 2015 in relation to publishing details of relevant fees.
The appellants’ consumer protection officer later visited one of the respondents’ branches to carry out a routine inspection, handed them a copy of the letter of 30 June and explained that simply describing their fees as an “Administration fee or charge” was contrary to the 2015 Act. He also handed them a non-compliance notice identifying three issues to be addressed, including that no clear prices or charges were on display within the store or on any documentation supplied to potential tenants.
On 11 February 2016, the appellants issued a notice of intent to each of the branches and one in respect of the website, indicating an intention to impose a monetary penalty in respect of each of them. A final notice confirmed the imposition of penalties totalling £20,000. The respondents had changed the wording of its scale charges with effect from 28 March 2016 but the appellants took the view that it was still in breach of the requirements.
The revised wording set out a standard administration fee of £420 per tenancy and stated: “This is a fixed cost fee that can cover a variety of works depending on the individual circumstances of each tenancy, including but not limited to conducting viewings, negotiating the tenancy, verifying references and drawing up contracts”.
The first-tier tribunal (FTT) allowed the respondent’s appeal to the extent of reducing each penalty to £3,000 on the basis that the revised wording complied with the statutory requirements but that the respondent was in breach from 27 May 2015 to 28 March 2016.
The appellants appealed to the Upper Tribunal contending that the respondent’s revised wording failed to sufficiently describe the administration fee so as to enable a person who was liable to pay it to understand the service or cost. The FTT was wrong to find that the revised wording was in compliance and the original penalties should be restored.
Held: The appeal was allowed in part.
(1) Had the revised wording actually stated that the administration fee could and would never exceed £420 and indicated that any further services not specified under the heading “Other fees” would never increase the administration fee, it would have complied with the requirements of the 2015 Act. However, the relevant part of the wording referred to a “fixed cost fee that can cover a variety of works depending on the individual circumstances of each tenancy, including but not limited to conducting viewings, negotiating the tenancy, verifying references and drawing up contracts”. The use of the phrase “can cover” gave rise to concern. It encompassed the idea of “might not cover” and therefore the wording was not clear that there would be no services (not listed under “Other fees”) which incurred or might incur a further charge. The failure of the FTT to appreciate that implication of the wording went beyond a finding of fact and amounted to an error of law. The revised wording did not provide “a description of each fee that is sufficient to enable a person who is liable to pay it to understand the service or cost that is covered by the fee or the purpose for which it is imposed” and accordingly did not meet the requirements of section 83(4)(c) of the 2015 Act.
(2) Schedule 9 to the 2015 Act, which provided for notice of intent to be served at any time during a continuing breach, included reasonableness as a consideration in the approach to be taken, including in relation to the amount of any penalty, and did not limit matters that might be included in representations to the local authority after the notice of intent had been served. A local authority would be acting unreasonably if it failed to consider any change of circumstance which had properly to be taken into account in relation to any penalty. Such an approach was consistent with the whole purpose of the provisions and it would be wrong to prevent a letting agent from being able to rely on the fact that it had now remedied the breaches identified in the notice of intent. The overall purpose was to protect consumers. If letting agents were not in compliance, they should be encouraged to come into compliance. Allowing changes of circumstances that were beneficial to consumers to be taken into account before the final notice was issued contributed to that.
(3) Since the FTT’s decision involved the making of an error of law, it would be set aside. Although a penalty of £3000 for each breach was appropriate in respect of the wording in operation from 27 May 2015 until 28 March 2016, the revised wording also breached the statutory requirements. Nevertheless, credit should be given for the respondent’s attempt to design a compliant revised wording, although it had been unsuccessful. That credit would be assessed as meriting a 25% discount (£500 in respect of each breach) from the maximum penalty (a further £2000 for each breach) to which the company would otherwise be liable in respect of the period after the issue of the revised wording. Accordingly, a penalty of £4500 would be substituted for each of the four breaches, totalling £18,000.
Cameron Crowe (instructed by Camden London Borough Council) appeared for the appellants; James Byrne (instructed by Anthony Gold Solicitors) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read transcript: Camden London Borough Council v Foxtons Ltd
