The X Factor

Ask anyone who has ever lived in a tenement about property factors and you'd better make sure you have a flask of tea and chocolate hobnobs at hand. You'll be in for a woeful story of poor service, dodgy repairs, and rip-off charges. Can anyone think of an industry that is as unregulated as Scotland's property factor market?

An industry where the good, the bad, and ugly roam free on the prairie. Clint Eastwood would have a hard time with some of these cowboys. You can sack your property manager if they don't have the X factor but it can be difficult or impossible in practice. My colleagues at Govan Law Centre acted for a close of homeowners who unanimously sacked their factor five years ago and are still receiving bills. The company refused to accept it was sacked! And the legal aid board wouldn't grant civil legal aid for a declarator and interdict.

Many homeowners complain their factor does no actual management work and simply sends out bills for unearned fees. If you don't pay they will slap on charges and interest and turn their customers into debtors. There are too many factors who seem to spend all their time running a manufactured debt collection business. One factor in Glasgow operates a scam that is so outrageous it would bring a tear to the glass eye of a loan shark.

Here's how it works. You don't pay a £15 monthly bill on time so they send out a reminder letter every week and charge £17.62 for the privilege. They also apply monthly compound interest. I've seen clients with a bill of couple of hundred pounds metamorphisise into a bill of thousands of pounds. And we then get actions for payment, legal costs and ultimately petitions for sequestration. It's a scandal.

Visit the debtors court in Glasgow and you'll discover it is dominated by property factors. As the draftsperson of the Abolition of Poindings and Warrant Sales Act I and many others in Scotland found it morally repugnant to see vulnerable people have their few household possessions poinded or sold off for pennies. The replacement to warrant sales was the exceptional attachment order and guess who uses that now? To some factors it's the unexceptional attachment order. There are good and decent factors but equally there are bottom-feeders who make Dick Turpin look like a cuddly ted.

Back in 2007 I drafted a consultation paper for a proposed Property Factors (Scotland) Bill for Gordon Jackson QC. That project has now been championed by Glasgow MSP Patricia Ferguson. The proposal would see the creation of a Scottish Property Factors Register to ensure that only 'fit and proper persons' could be factors, as well as setting out minimum statutory standards. We also suggested an extention to the jurisdiction of the Private Rented Housing Committee to handle homeowner complaints. In early 2008, Govan Law Centre worked closely with the Evening Times on a campaign exposing sharp practice and calling for statutory regulation of property factors.

Many people were delighted when the Office of Fair Trading (OFT) announced its investigation into the Scottish property factors market in June last year. Last month the OFT published its MORI findings which provided robust statistical evidence confirming what everyone suspected. A remarkable two-thirds of those who had complained to their factor remained dissatisfied. The market was and is failing thousands of Scotttish homeowners. Redress in practice remains illusory for the many.

Thursday, 12 February saw the publication of the OFT's final report. Given the shocking findings of the OFT's research any reasonable person might have thought calls for tough regulation was a given. But instead the OFT has told us to trust dodgy businesses to regulate themselves. Quite frankly the OFT's recommendations are a shambles and show that our regulators - who let us down with the banking meltdown - are letting us down again.

There is also double standards in the OFT and Scottish Government's support for voluntary self-regulation - and I'm leaving aside the fact we already have self-regulation and it doesn't work. If you rent out a flat in Scotland you need to be 'a fit and proper person' from Part 8 of the Antisocial Behaviour etc., (Scotland) Act 2004. Yet if you preside over the repair and maintenance of many thousands of homes you can be a con-artist, bankrupt, or fraudster. There is absolutely no protection for the public.

Who believes bad factors are going to start being nice if we ask them nicely? The OFT's conclusions are utterly incompatible with their own findings. Voluntary self-regulation is a nonsense when there is evidence of mass customer dissatisfaction and market failure. I remain committed to working with Patrica Ferguson MSP on her proposed bill to introduce a statutory framework to root out cowboy factors and protect the public. If the Scottish Government and OFT won't act to protect homeowners in Scotland hopefully the Scottish Parliament will.