Malcolm raises constituents's concerns about factoring services
Debate on Factoring Services Malcolm Chisholm (Edinburgh North and Leith) (Lab):
I speak in the debate because of the large number of concerns that constituents have expressed to me about factoring services. Those concerns have not come from the large number of people who live in traditional tenements in my constituency, because traditional tenements in Edinburgh have never had factors; they come from residents in the large number of new-build flats that are being built in various parts of my constituency, particularly - but by no means exclusively - at the Waterfront.

Like other speakers, I will concentrate on the problems that have been raised with me. However, I will make two other points to start with. First, we are not talking about all factors. Various speakers have recognised that there are good factors. To give an example, I had a meeting two months ago with one factor who supports Patricia Ferguson's proposed bill. I recently spoke to anothe - and will meet him later this month - who has complained about the fact that no independent body regulates his profession.

My second point is that not all constituent concerns have been about factors. Quite a large number of residents from one development have complained about people not paying because they are concerned that the factor may walk away from their development. I believe that that has happened at Kingston quay in Glasgow and in one or two places in my constituency. I have written to the minister about that issue, which we must recognise as well. As Patricia Ferguson said at the beginning of her speech, there are sometimes good reasons why people do not pay but, in most cases, people clearly ought to pay. There are issues with absentee landlords who do not live in the UK and do not pay.


I make those points at the beginning of my speech to put the rest of it in perspective.

The concerns that have been expressed to me overlap to a considerable extent with those that the OFT research highlighted. It highlighted significant dissatisfaction in relation to many issues, including lack of information, poor value for money, inadequate complaints handling and frequent failure to arrange repairs or supervise them adequately when they are arranged.

I spoke a few days ago to a constituent who complained about a continuing repair problem that had not been dealt with, although, interestingly, he pointed out one repair that the factor had done and for which the residents had been billed that ought, in fact, to have been done by the builder. That feature - the relationship between what factors are responsible for and what builders are responsible for - has not come out in the debate. The other enormous issue in the new builds in my constituency is snagging problems, some of which can be dealt with only by the Westminster Parliament rather than this Parliament.

The OFT report also highlighted the low level of switching. David McLetchie referred to that, but there are significant difficulties with switching. First, there are problems with title conditions. Perhaps we need to revisit the Title Conditions (Scotland) Act 2003, because residents often cannot change their factor for five years or until the last house in a development is built and sold, which may be nearer to 10 years in the current economic circumstances.

Secondly, there are often enormous problems when residents change their factor. In another horrific recent example that was brought to my attention, residents have changed their factor following persistent overbilling and other incompetence on the factor's part but the sacked factor is refusing to deal with refunds or any of the other outstanding issues. That factor also refuses to return the float, which makes the handover to the new factor difficult because people are understandably reluctant to pay a second float. All those issues must be addressed, too.

Other residents perhaps foresee those problems, cannot switch anyway because of the title deeds, or suspect that a new factor may not be much different and, therefore, try to come to the best arrangement that they can with their existing factor. However, I should mention that another residents association - obviously, I am referring to a large number of such associations without naming them - has kept its factor but has taken over many of the factor's activities, thereby greatly reducing the residents' bill. That is an interesting model that is open to others to use, although it presents some difficulties.

The residents involved decided to get new quotations for insurance and have ended up with a premium that is half what it used to be and with an excess of only £100 rather than £1,000. The issue of insurance highlights an on-going concern whereby the higher the premium, the higher the commission for the factor. That insurance example highlights the issue of costs, and many of the complaints that we receive are about the escalation of costs and lack of information about what the costs are.

One of my constituents from another development suggested that there should be independent annual auditing and even an independent auditing authority. Independence is a key concept, which contrasts with relying only on the Property Managers Association Scotland. There is also an argument for independence in complaints handling, because the only recourse at present is—again—to the PMAS. A key demand is independent redress as part of a quality control system with auditable standards.

Patricia Ferguson's proposed bill offers many elements that are at the heart of my constituents' demands. It proposes a dispute resolution mechanism, using the quasi-judicial infrastructure that we already have through the private rented housing committee. In addition, and crucially, it proposes a registration system that is based on a fit-and-proper person test and adherence to set standards.

Although that is an excellent foundation, I would probably add things to the bill; it will be possible to propose additions, given the procedure for members' bills. I certainly do not believe that a purely voluntary system will address the serious problems that should be clear to all from the debate.
March 4th 2010, (Column 24241-3)