Independent watchdog urged

Real estate agents who face disciplinary action should be dealt with by an independent body, says a legal expert.

John Waymouth, an Auckland real estate barrister, said offences were being heard behind closed doors.

"Openness and transparency are fundamentals when the public is dealing with professionals such as real estate agents. If a professional body like the [Real Estate Institute] is to have sole control over the disciplinary process, then it must exercise disciplinary power with transparency."

Debate about the way the country's 16,000 real estate agents are disciplined comes as the Commerce Commission says it will take tough action if agents flout the law. Fair trading director Deb Battell said last week the commission had concerns about the real estate industry as a whole.

Mr Waymouth said the fact that agents could be sanctioned by the institute without even having to advise the complainant, let alone the public, had to end.

"This is a total breach of a fundamental duty the institute has to the public, who have a right to know which real estate companies and which salespersons are being disciplined. The vast majority of agents who do not fall foul of the disciplinary procedures are entitled not to have their good name besmirched by a minority," Mr Waymouth said.

Australia real estate ethics crusader Neil Jenman also called for a more open process and said agents should not be hearing charges against their own kind. This process was outlawed in Australia and now the Government polices the sector, he said.

"Your agents are policed and disciplined primarily by agents. Even saying such a statement makes me gasp - sort of like giving control of law and order to the Mafia," Mr Jenman said.

David Russell, Consumers Institute chief executive, said it was time the institute was stripped of its powers to handle complaints and offences. The motor vehicle sector had just been overhauled so that the Ministry of Economic Development ran the registration of licensed motor vehicle dealers. The same should happen with real estate agents, he said.

"From a consumer point of view, it's better to have an independent body doing this, rather than the institute which is essentially an industry trade union acting as the consumer protector," Mr Russell said.

The institute itself has even called for changes to the disciplinary process, demanding harsher penalties.

Agents now face a maximum fine of $750 - a limit set 30 years ago - but the institute has asked for an increase to between $10,000 to $30,000.

Institute president Howard Morley said the industry had been lobbying the Government for six years about the level of fines, which can only be changed through an amendment to the law governing agents.

Institute officials say the matter has become more urgent, as the amount of money involved spirals. Commissions which averaged about $850 on a deal 30 years ago were now nearer $30,000 and punishments should have risen in line with the market, they say.

Associate Justice Minister Clayton Cosgrove said he believed the maximum fine needed to be reviewed.

He said he was waiting for "formal proposals" from the Real Estate Institute.


A sample of complaints and disciplinary actions against agents

These are some of the complaints and disciplinary procedures which have been described by the Real Estate Institute, some of which date back to 2003.

They were dealt with internally by the institute, with many details not made public.

Where agents plead not guilty, they appear before a regional disciplinary sub-committee - a group of their peers, who are chosen from within the same region.

* A saleswoman at Unlimited Potential in Auckland "advised the prospective purchasers that another party had become interested in the property and failed to advise that she was actually the other interested party", the institute found.

Penalty: $750

The agent also failed to be fair and just to all parties and was found to be misleading, evasive and dishonest about the extent of her interest in acquiring the property for herself.

Penalty: A further $750

* A salesperson at Buller Real Estate on the West Coast of the South Island held on to an offer for six days, rather than presenting it to the vendors. Meanwhile, another offer was made - by the salesperson's brother-in-law. But the salesperson failed to disclose the relationship to the vendor or to the person who came up with the first offer.

Penalty: A $600 fine, plus costs

* A salesperson at a Century 21 agency in Auckland didn't tell purchasers that a proposed loop driveway, bought as part of a property, would not go ahead.

Penalty: The maximum $750, plus $2081.25 costs

* Pamela Anne Harrison, trading as Century 21 Tokoroa Realty, failed to provide a true copy of a tenancy agreement as soon as it had been signed by the tenants.

Penalty: $750 plus $450 costs

* A Barfoot & Thompson agent in the Auckland region failed to get consent of the principal officer to be involved in the purchase of a property.

Penalty: $400 and costs of $450

* A Bay of Plenty agent working for First National Realty failed to be fair to all parties in negotiations, and particularly failed to follow a buyer's instructions in the preparation and execution of all forms and agreements.

Penalty: $250 and $2306.25 costs

* An Otago agent working for LJ Hooker failed to render skilled and professional service by not adequately advising the vendor about GST on the sale of a property.

Penalty: $250 and $2306.25 costs