Regulation of the residential leasehold block management industry is coming. ARMA has recently published a special newsletter with a foreword by Baroness Hayter that outlines the time scales and the format that this industry led initiative will take. This initial outline has been well received by ARMA members but, interestingly, met with a deafening silence by the industries critics who have been asking for regulation for a long time.
Critics will say that industry driven regulation will never have the teeth of a government sponsored scheme. However, and as I have previously written, state regulation remains highly unlikely given the many pressures on government at present and the myriad calls for regulation across a wide number of industries. Advice received has been, for many years, that the preference is for light touch independent regulation through the industry's professional and trade bodies.
Other criticism that will be levelled is just how independent such a scheme could be? I am pleased to report that independence is a fundamental tenet of the ARMA Q proposal which will ensure that both the accreditation process and the complaints process will be overseen by externally appointed chair and panel members.
There are obvious problems with any regulatory scheme. Powers to admonish, fine and ultimately expel businesses that do not or will not comply are significant and must be wielded with care. Expelling businesses can have a significant detrimental effect on their staff and clients, can lead to protracted legal wrangling and huge costs. This is one of the reasons that governments never relish direct regulatory intervention, preferring the industry to come up with its own solution, as many consumer focussed professions have already done.
Any regulation will be 'light touch', in the sense that it is anticipated that the tools will be provided for companies to assess and ensure that they meet the standards without intervention. Periodic inspections will be undertaken and, where there is a need, advice and/or training will be offered. All of this will be underpinned by a consumer charter and a detailed set of standards - publicly available for scrutiny.
Of course the success of ARMA Q is dependent upon members agreeing to meet the standards and alter their processes where necessary to do so. There will be a cost too, but this will be offset in my opinion by the added value that membership of an accreditation scheme brings. You will also need to be an ARMA member to get the accreditation required. ARMA estimate that just over half of private sector leasehold management is undertaken through its members.
There are still many firms who do not believe that membership is beneficial, but it will be impossible to say that next year. By then I expect all consumers, developers and landlords to be asking; 'are you in or out'?
