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Emma Vigus: Why Estate Agents should not ignore the rise in complaints to The Property Ombudsman

Emma Vigus, MD of mio, who specialised in Professional Indemnity Insurance and Risk Management for residential property professionals for a decade before joining mio, provides her response to The Property Ombudsman’s (TPO) recent figures on complaints about estate agents.

Summary of the statistics in the TPO Annual Report figures for 2019:

  • 20 per cent rise in formal complaints about agents taken up by TPO.
  • TPO dealt with 1,669 complaints relating to sales, up 27 per cent on 2018. 
  • Communication and record keeping, followed by complaints handling were the top causes of complaints relating to sales.  
  • Compensatory awards paid by agents to consumers rose by 1.4 per cent to a total of £2.2m. The average award relating to Sales was £742 whilst the highest award exceeded £20,000

British consumer are more likely to complain but

“The increase in complaints should not come as a surprise as British consumers are simply more likely to complain than they were a decade ago.  The rise in the discontented is driven by a range of factors from a growing awareness of consumer rights through to the increasing reach on social media, of law firms who are, sometimes, all too willing to take on claims on behalf of consumers.

However, Estate Agents should not ignore the substantial rise in formal complaints taken up by TPO, particularly as they come at a time when the cost of Professional Indemnity Insurance (PII), is for many firms, rising. 

Poor communication is often one of the root causes of complaints against a wide range of businesses. In isolation, it’s unlikely to lead to the financial loss required to bring a successful PII claim but, a firm that communicates promptly, politely and effectively with clients is less likely to receive a complaint or a formal allegation of negligence. 

Dealing with complaints

Effective record keeping can be critical to defending any form of complaint. It’s not enough to be able to say, we said that, or we provided advice on this. You must be able to evidence it and better still, you should be able to demonstrate that the consumer has understood or at the very least acknowledged receipt. This is just one of the reasons why mio’s instant chat feature, which allows agents to track and store communications with buyers and sellers is so important.

Any indication that a client is unhappy must be dealt with as quickly as possible. All too often, firms ignore grumbles in the hope that they will go away.  Imagine how you’d feel if you’ve raised a concern and are simply being ignored and think how often you vent your frustration on social media, broadcasting an issue with a specific business for all too see. In addition to the financial impact associated with an upheld ombudsman complaint, this can also lead to reputational damage for your firm that can be very hard to repair. 

Safeguarding against complaints

Do not ignore your customers’ concerns and where possible, try to proactively identify them. For example, if you know that a sale is taking longer than expected or you can see from the mio chain view that there’s a problem further up the chain, ring you seller, explain what’s happening and tell them what you’re doing to address it. 

When a concern is raised, respond to it as soon as possible but make sure your response is honest and clear; do not be tempted to promise something that you can’t deliver.  All businesses make mistakes and receive complaints but the way your firm responds could be the difference between a happy customer and a later allegation of negligence, or a complaint to TPO. 

The financial implications of complaints

The TPO data reports that the levels of compensation awarded to consumers are relatively low but it’s important to recognise that for many firms, these amounts will fall into a firm’s self-insured excess, meaning that it’s the firm’s balance sheet rather then the firm’s PI insurance that covers the cost.  £742 might not seem like much but if your firm is operating at a 10% margin, think about the income you need to generate to recover that cost. 

As we emerge from lockdown, many agents will be dealing with buyers and sellers who are desperate for reassurance, guidance and clarity.  Whilst it may be difficult to provide a meaningful update e.g. “you will be exchanging in ten days”, some simple reassurance along the lines of “we’re in touch with your lawyers and your buyers and we can see that this is progressing”, will go a long way.

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