A crude description of ‘self-regulation’ but is it appropriate? Who is to blame for poor industry standards?
Topic – The industry from the inside out
Mentor – Veronica Morgan
- Is it all about license fees?
- How can the industry lift its own standards
- Is the OFT really concerned about consumer protection?
Kevin: Okay, the question for this morning, as we welcome back our mentor guest for this week, Veronica Morgan. Veronica is from Good Deeds Property Buyers, and Elephant in the Room Property Podcast. The question for you this morning Veronica: Is it okay for us to put the fox in charge of the hen house? In other words, are we headed towards industry self regulation? Theres been a lot of push back from consumers and consumer bodies from the industry who actually want this to happen. What’s your view?
Veronica: This is really interesting. Of course, I’m from New South Wales and I’ve been very much aware of the push in NSW in particular to raise the bar for real estate agents, the educational bar, or the qualifications bar. And I’ve been shocked and appalled, I have to say, at the way in which the state governments, or our governing body in the state government, has actually wanted lower… To basically have the bar lower than what the industry wants it to be.
Kevin: Lower standards, yeah.
Veronica: Yeah. And so I, I actually went along to … They had put together a whole big paper about the licencing requirements and everything and I went along and had a session with them when they were doing the research for it. And when I read the preliminary report, in particular, I was just gobsmacked that they just, honestly, just seemed to gloss over so many of the things that are really important, that need to be addressed. One, in that particular instance, it was around the recognition that buyer’s agents actually need a higher level of education than a sales agent. And the reason for that is because, obviously, if you’re a sales agent, you’re helping somebody sell a property once they’ve already owned it. They’ve made the decision, good bad, or otherwise, sometime in the past. You’re helping them get out of it the best possible way. When you’re a buyer’s agent, you’re actually, potentially, helping them to buy something that’s really gonna set them up for life. Or, you could be helping them buy something that’s really gonna undo them financially. And, there’s a massive responsibility for that. But there was no recognition whatsoever.
Veronica: But, rolling on further. Now, that they’ve actually put this new regulations in place, they’re dumbing down the licence. I’m shocked. And when I actually put that question to one of the state government representatives at a forum recently, I said, you know, what are the problems with raising the bar? Because of what’s been identified as being the standards as being too low in the past and there’s too many under qualified people in the industry, why are those people gonna be grandfathered straight into the new regulations?
Veronica: And, in fact, some of them have been given a higher qualification than they currently have. And the answer was, “Oh, we don’t want to place a burden on the industry.” Okay, that’s the state government saying that.
Veronica: I’m telling you right now, I think the industry wants this burden placed on us.
Kevin: Well, there is a problem here. Because, and it goes a lot deeper than just the state governments and the office of fair trading. You’ve got to look at some of the other government bodies as well. Moving away from the real estate industry just for a moment, but in a kin industry, and that is the building industry. The various state governments, the building construction commissions and so on, I mean, they live for the fees from builders.
Kevin: They’re meant to be set up as a protection mechanism for consumers, but they’re anything but.
Kevin: They are, in fact, a protection mechanism for bad builders. They don’t really … They say we’re here to look after the consumer, but at the end of the day they make an enormous amount of money from builder licence fees and from builders’ insurance. So that’s really what … They’ve got a conflict of interest.
Kevin: Now, let’s move that back to the office of fair trading. They don’t want to have a reduction in the number of agents because of the agent, the licencing fees. The licencing fees are huge. So why would they want to increase the level of competency and therefore reduce the number of agents?
Veronica: Are you a conspiracy theorist?
Kevin: No, I just like to think these things through. And I think to me it makes sense.
Veronica: Yeah, I agree.
Kevin: We’re doing a lot of consumer work with the building and construction commission at present. And this has really got me thinking. And I can see that there is a huge amount of conflict in that industry. It relates to a lot of industries, wherever there’s licencing and the government are in control of it.
Veronica: Yeah. Very interesting point. And it’s alarming because, of course, the consumer sort of thinks the government’s there to protect them.
Kevin: That’s right.
Veronica: And really the government protecting their own coffers.
Kevin: And you know when they find out? When something goes wrong. And then they find out that they’re not getting protected.
Kevin: You know, they’ve paid for some insurance that’s totally meaningless.
Veronica: Yeah. Look, it’s interesting, actually, because there’s a bit of a fight going on between the New South Wales government and R.E.I. New South Wales C.E.O. Tim McKibbin and the moment. I read an article yesterday on this. They’ve come out saying well, the fox shouldn’t be in charge of the hen house. And the fox is saying well, hang on a minute, you are not protecting the hen house.
Kevin: That’s right. Exactly.
Veronica: And the end of the day, consumers need to be protected. And as an industry, we are proud to be real estate agents. And, so therefore, we don’t want it dumbed down. We actually want it … We want the appropriate recognition for the advice that we give people at these important times in their lives. And we certainly don’t want a government organisation that clearly doesn’t know much about the industry, and certainly not much about the risks, in charge of making it easier, again, continuing to make it easier for people to enter this industry.
Kevin: Mm. Hey, great talking to you, Veronica. We are out of time for today and for this week. It’s been a tremendous conversation. We’ve certainly raised a lot of issues. We haven’t solved many problems. But I think we’ve sort of talked quite openly. And hopefully we’ve added a bit to that dialogue about where are we all headed and what should we be doing. So, it’s been great talking to you, Veronica. Thank you so much. It’s a great podcast. Suggest you have a look at it, or have a listen to it, Elephant in the Room Property Podcast. And also Veronica is from Good Deeds Property Buyer’s Agency. Veronica Morgan, thank you so much for your time.
Veronica: Thank you, Kevin.