With a background in professional regulation, PSRA Chairperson and solicitor Geraldine Clarke is a strong advocate for the new licensing system. She spoke to ANN-MARIE HARDIMAN about the Authority’s work.
As a member of the original Implementation Group established by then Minister for Justice, Equality and Law Reform Michael McDowell in 2005, to advise on the establishment of what became the Property Services Regulatory Authority (PSRA), Geraldine Clarke has been involved in this process for some time, but in recent months, as the licensing deadline approached, the volume of work has increased.
“The Act was passed at the end of last year, but the regulations required to implement the licensing weren’t signed off until the end of May, and we had to be up and running in time for the July 6 deadline, so a number of board meetings were needed and it’s very hands on at the minute.”
As Chair of a diverse Board, with members drawn from professional and consumer interests, one aspect of Geraldine’s role is to liaise with the Navan-based staff of the Authority.
“The overall authority is with the Board, but the day-to-day running of the licensing and complaints handling procedures is with the Chief Executive, Tom Lynch, and his employees.”
Geraldine welcomes the advent of regulation for this sector, and has strong views on professional regulation in general.
“I think that every profession dealing with the public should be regulated, and in particular every profession that has an obligation or facility to handle client monies, as property service providers and solicitors do. The issue of whether it should be self-regulation or regulation by an outside body is a matter that has been debated not just in Ireland but all over the world. Self-regulation doesn’t always mean non-statutory regulation; for example, the solicitors’ profession is regulated by the Law Society, in accordance with statute.
“The important thing from the public’s perspective is that there should be a system in place where the regulator, whoever that is, can instigate investigations and handle complaints, and that there should be sanctions for non-compliance, particularly for serious misconduct.”
At the time of our interview (mid July), the Authority has received approximately 2,500 licence applications. Some 2,000 of those are from companies, and since the Act requires, for the first time, that each individual employee who carries out a service covered under the Act must obtain a licence, the Authority estimates that 5,000 to 6,000 property service providers (PSPs) will need to be licensed.
Naturally, some initial teething problems have surfaced, but the Authority is prepared to engage with applicants to resolve issues as quickly and efficiently as possible.
“Because this is a new and totally different system, we expect a large proportion of applications to be returned because they are not in order. But once the application has been logged with the Authority it will remain logged, and the Chief Executive and his staff will try their very best to iron out all the difficulties and help people.”
While applicants will receive every assistance, the Authority takes a dim view of those who continue to practise without applying for a licence, and Geraldine is very clear on this.
“We will not countenance people continuing to practise without having made applications. There will be a certain amount of leeway of course for those who have put in their applications and have to have those amended, but if applications are not received and it comes to the Authority’s notice that people are practising, that will not be tolerated.”
While there is no official cut-off point after which the PSRA will pursue those who have not submitted applications, Geraldine says it will be sooner rather than later and strongly advises PSPs to submit their applications without delay.
There are very important new requirements, which service providers must meet if they are to be licensed. These include: the requirement to have professional indemnity (PI) insurance; to contribute to a compensation fund; and, to meet minimum qualification standards. These are prerequisites.
“Applicants must provide evidence that they have PI, or that they will have it as soon as the licence issues; they can’t practise without it”.
Applicants must also lodge their contribution to the compensation fund during the application process:
“We have an obligation to build up the compensation fund in the first four years to €2 million, so that if there are any claims on the fund, there’s money there to pay them”.
The regulations require applicants either to have obtained a minimum of two years’ academic training or to demonstrate appropriate experience.
A number of third-level institutions are already providing courses that more than meet the academic requirement, such as the BSc degrees in Real Estate, Property Studies and Property Economics in the institutes of technology, and discussions are underway with a number of other colleges. Experience will be measured on a case-by-case basis, with applicants required to demonstrate “appropriate experience in the provision of property services”.
It makes the world go round
One area that Geraldine is anxious to draw attention to is the specific regulation regarding the holding of client monies, which again represents a new departure for the profession.
“There must be a designated client account for the firm, and within that account each individual client’s funds must be properly identified, and must be held for the purpose for which they have been furnished, for example as a deposit for purchase or rental of a property. Applications must show that systems are in place for this account to be opened and maintained as soon as the licence is granted.”
These accounts must be examined by the firm’s accountant, who will supply a report to the Authority every year at the renewal of licences stating that all is in order. The only exception to this regulation applies to management agents, who are exempt on condition that such monies are lodged to the owners’ management company account.
Misuse of client monies carries the most severe sanctions under the Act.
“The sanctions are very tough on this and they’re intended to be. Fines of up to €250,000 can apply, as well as revocation of the licence, or even a prison sentence.”
Now that applications are coming in, the Board can turn its attention to other facets of the Act: the complaints handling procedures; the Commercial Leases Database; and, the long-awaited Residential Property Prices Register.
Complaints and appeals
Once a complaint has been made the Act provides the Authority with extensive powers to commence an investigation.
Staff in Navan have already received a small number of complaints, which they have dealt with – mainly by conciliation.
“Often in my experience the complaints made against professionals result from poor communication and misunderstanding as much as anything else, so where it has been possible to do that these complaints have been dealt with on an ad hoc basis.”
If complaints are serious and involve allegations in relation to clients’ money or to the manner in which a firm or PSP has been practising, an inspector will be appointed to investigate. The complaint will be furnished to the PSP, who will be given a period of time to respond to it, and then the inspector has wide powers to meet with the parties.
The Act defines the sanctions for a breach, whether minor or major.
Minor breaches will warrant a reprimand, warning or caution. Major breaches carry far heavier sanctions, including: suspension or revocation of a licence; payment of up to €50,000 to the compensation fund; payment of up to €50,000 towards the cost of the investigation; a penalty of up to €250,000; or, a prison sentence. Details of major sanctions will be published.
Given these stringent sanctions, it is appropriate that the legislation also provides for the establishment of an appeals board, which will give a right of appeal to anyone who is unhappy with a decision in relation to the handling of a complaint, or the refusal of a licence. The Minister recently appointed the Appeals Board, which is independent of the Authority.
Commercial leases database and residential property price register
“The forms for submission of information to set up the Commercial Leases Database have already been completed and information is coming in. The idea is to build up a database that will be accessible in the same way as the Companies Office database is.”
There will be a fee scale to access the database, which will operate along the lines of the present Companies Registration Office system.
With regard to the Residential Property Price Register, things are moving apace.
“Publication of the register is a priority of Government and we are hoping to launch it by the end of September. There will be no charge for accessing this register.”
Geraldine says that future setting of fees for applications and renewals will depend on the Authority’s running costs.
“The Authority has an obligation to be self-financing, so we have to price not to make a profit but to be viable. Application fees this year were priced in order to break even. It’s been difficult because we had to estimate the number of applicants in advance, but it will be reviewed on an annual basis.”
The ‘An Bord Snip Nua’ report, as a possible cost-saving measure, recommended that the PSRA could be merged with the Private Residential Tenancies Board (PRTB), but Geraldine is not in favour of this.
“This is a statutory regulatory body that is regulating a profession, whereas the PRTB deals with complaints from tenants in relation to landlords. A merger would make no sense, as our functions are completely different.”
Another of the Authority’s ongoing functions will be to monitor CPD for licensees.
“It’s very important because what PSPs do is important; it involves knowledge of law and property matters, and all of these areas are developing. It will be an honours system initially and we hope that people will voluntarily subscribe. They will have to provide information on the renewal of their licence as to what they’ve done.”
This is where bodies such as the Society of Chartered Surveyors Ireland come in, and Geraldine readily acknowledges the role of professional bodies in this regard.
“I want to give huge credit to the Society and other representative bodies because they’ve done a huge amount of work in this area over the years. The difficulty arises where you have a system that does not involve mandatory membership of a body. People who won’t join professional organisations and don’t recognise that they have obligations are why regulation is necessary. They are a danger to the public and bring the profession into disrepute because sadly, as professionals, we’re often judged by the lowest common denominator.”
Now that the process has begun, there is still much work to be done before all systems are up and running. However, Geraldine has a clear idea of how the Authority can measure its success, and how she would like to see things progressing into the future.
“First of all I hope that the licensing system will be up and running and will be seamless. From the point of view of applicants it’s important to bear in mind that the hard work is this year. This is the year that they have to establish their credentials and once that’s all done, next year will be very easy.
“I hope that we will have a complaints handling procedure that we are proud of.”
She also cites the establishment of a good commercial leases database and the residential property price register as signs of success.
“We will have achieved what the legislation has authorised, empowered and directed us to do.”