12 Questions about ARMA-Q

1. How can the new proposed Regulator be seen to be “truly independent” when it is ultimately appointed by and accountable to ARMA’s Governing Council and financed by ARMA? Can the Regulator demonstrate sufficient operational independence?

ARMA- It is worth remembering that ARMA campaigned for many years for a statutory scheme of regulation and was heavily involved in proposals developed under the previous, Labour, administration.  The ARMA-Q proposal is a response to the Coalition Government’s decision in 2010 not to proceed with statutory regulation.

Although the Regulator has been appointed by ARMA he will be operationally completely independent.  It is in fact quite usual for professions to finance their own regulatory body. Examples include the RICS, the General Medical Council, the International Cricket Council and the British Parking Association.

It is in order to demonstrate and ensure this operational independence of the Regulator that we have appointed as chair the Right Honorable Keith Hill. He has no involvement with the industry and indeed has a public profile which identifies him as a man of integrity, with a strong track record in public service.  We are applying the same principles in appointing panel members, who will be drawn from related backgrounds and professions, but will not be currently practicing as a management agent.

The decisions taken by the Regulator and his supporting panel will be final and not subject to any ratification by the ARMA Council.  And they will be made public. The regulator will separately submit a report to the Council each year on the operation of the regime and may at the same time suggest ways in which it could be improved. The ultimate assurance however will be when leaseholder and other interests and our members themselves can see that cases are being handled with due rigor and in a fair and open way.

2. Why does ARMA recommend regulating and disciplining the managing agents instead of their staff?  Should regulation not be properly directed towards the property managers themselves as in other professions, such as doctors, accountants and lawyers? Will an upheld complaint automatically invoke an individual disciplinary procedure?

ARMA - As a Trade Association, ARMA can only accept corporate members, who must be firms engaged in block management.  The professional standing of individuals in the industry is addressed through the qualifications offered by the Institute of Residential Property Management (IRPM).

However, the standards on which we are currently consulting include a requirement for member firms to ensure that all their staff are competent to carry out the work they are asked to do and that suitable training and development opportunities are available to help them achieve this. This way we hope to improve professional standards among individuals working in the industry.

3. Why does the definition of “Associated Company” exclude an “in-law” and fail to define a “connection”? Why do “Associated Companies” themselves fall outside the regulatory remit of ARMA-Q?

ARMA- There is a distinction to be made here. In our standards, we define “Associated Company” as a situation where there is a connection or association between a company that is supplying a service and the Landlord, Managing Agent or other party requesting that service. We then go on to define what we mean by association, using a broad based generic definition, which is already used in many different contexts. However we are very happy to receive views on this point, as part of our consultation exercise.

Associated companies cannot become corporate members of ARMA for the simple reason that they are not managing agents. 

4. What costs and fines will the Regulatory Panel be able to impose? Will these be fixed or variable? What sanction will be applied if these amounts are not paid? Will there be a public indemnity or compensation fund available for leaseholders? If a complaint is not upheld against a managing agent, against whom can they recover their costs?

ARMA - These issues will be finalized as part of our follow-up to public consultation on the Consumer Charter and standards. As set out in our consultation paper (section 1.10) the regulatory panel will have a range of sanctions to impose which we expect to be used in proportion to the severity of the offence.  They will be able to;

- require the member to undertake training
- require an apology, acknowledgement of a specific action to be taken to remedy a complaint
- issue a formal warning by letter
- impose administration costs and fines
- publish disciplinary outcomes
- suspend  a member from membership for a specified period and on conditions
- permanently expel a member from ARMA

5. Will there be a system of precedent for complaints cases?  Otherwise, how will the proposed regime establish fairness between matters considered?

ARMA - Once the Regulatory Panel is established, it will be crucial for it to have regard to any relevant earlier decisions. Ensuring overall consistency will be an important role for the Panel chair. However, there is always the possibility that when a case is examined in depth, there are special or unique factors that have to be taken into account.

6. Will personal hearings be permitted and can the parties to a complaint be legally represented before the Regulator?

ARMA - Investigating complaints by third parties will form only a part of the work of the Regulatory Panel. Its remit will also include overseeing the accreditation of new and existing members, following up adverse audits, and reviewing the implications of adverse LVT and Ombudsman decisions.  The precise processes for investigating and deciding cases will be agreed with the Regulatory Panel when set up. But we expect the Panel to adopt an investigatory style, with minimal need for adversarial hearings or legal representation.

7. If a published disciplinary outcome is subsequently proved incorrect, what compensation will be available to the managing agent? What appeal process will be available to any of the parties in a complaint?

ARMA - The role of the regulatory panel will be to determine whether a member under investigation has materially failed to comply with the Bye-Laws, Consumer Charter, Standards, Codes of Practice and/or legislation, that are a requirement of ARMA membership. This should be capable of factual verification and we would not expect the Panel to take a decision without satisfying itself of the facts of the case. As with the present disciplinary regime, there will continue to be a period allowed for appeal, on specified criteria, following any decision, The decision would not be implemented until any appeal process was completed, so that the issue of compensation should not arise.

8. Why should an ARMA member have to pay a separate, additional sum to join ARMA-Q when this is simply an expression of ARMA’s objectives since 1991?

ARMA - ARMA-Q is not merely an expression of our objectives. These will still stand. ARMA-Q is our response to the government's decision not to regulate the leasehold management sector. The overall aim of ARMA-Q is to protect consumers  and deliver a recognised advantage to our members through professional self-regulation, that guarantees probity, the highest levels of ethics and best practice in all dealings between residential managing agents, intermediaries, landlords and lessees.

ARMA members will continue to have to pay an annual membership fee, which is graded according to member size.  In addition they will have to pay a “one-off” accreditation fee to cover the cost of checking compliance with the standards and certifying that the criteria for membership of the new regulatory regime are met. Thereafter there will be the usual single annual membership fee. Members will also have to meet the cost of a compliance audit on a three yearly rolling programme.

9. In the event of a complaint being upheld by the Regulator against one of ARMA’s larger members (who provide a significant proportion of funds to ARMA), will ARMA comply with a decision to permanently expel?  If so, what provision has ARMA made to protect its revenue stream?

ARMA - ARMA is not dependent on the membership fees of its larger members. It has a broad membership base, with firms across the full range of portfolio size. Naturally, ARMA has assessed the financial implications of introducing ARMA-Q.  We believe that our existing and prospective members will see the market advantage in being part of ARMA-Q and that we will continue our current rising trend in membership.  However that is a completely separate matter from the Regulator’s role in determining disciplinary cases. Should the Regulator decide that permanent expulsion is necessary, that decision will be implemented.  

10. Will published disciplinary outcomes name the parties involved? If not, how can a successful complainant be prevented from naming the company elsewhere?  Will the Regulator be able to refer to previous decisions against a company? If not, what will be the Regulator’s approach to serial offenders - or serial (unsuccessful) complainants?

ARMA - The Regulatory Panel’s role is to determine whether a member under investigation has materially failed to comply with the Bye-laws, Consumer Charter, Standards, Codes of practice and/or legislation, which apply.  Decisions by the Regulatory Panel to take disciplinary action will be published and will give the decision, the name of the member concerned, and brief details of the case.

In reaching its decisions, the Panel will be able to take account of all relevant information available to it, relating both to the complainant and to the member firm that is the subject of complaint.  In relation to the latter, this might include reports of LVT or Ombudsman decisions as well as the results of compliance checks and audit carried out by ARMA.

11. Will non-ARMA members be able to volunteer to be regulated by ARMA-Q without being a member of ARMA?  If not, why not - if the broader aim is to introduce a truly independent self-regulatory regime for managing agents in the sector?

ARMA - No.  ARMA will still have only one form of full corporate membership. Once we have introduced the new regulatory regime, meeting the regulatory standards will be an integral part of the conditions for corporate membership.  Customers will need to know that ARMA membership is a guarantee of quality service and to achieve that we must not confuse them with a two-tier system.  In any case, there is no point in a “regulation only” form of membership as it would simply cut them off from the full range of member benefits.

12. Will consumers be confused between the role of the Ombudsman, the LVT and the Regulator?

ARMA - It will be important for all these parties to be clear with their own customer base, how their roles differ. The Regulatory Panel will not be taking on cases that are more appropriately dealt with by the Ombudsman, the LVT, or indeed the courts.  However it will examine decisions affecting ARMA members that are made by these bodies, to see whether they indicate that a member was not compliant with the standards or other requirements of membership.

The deadline for responses to the  member consultation is 30th November 2012 and  for the public consultation it is 31 January 2013. Email armaq@arma.org.uk for more information.