Estate agency work has for years persisted as the most startling and controversial non-regulated activity in Maltese law. The law does not provide any comprehensive legal framework for people engaging in the activity, which is very lucrative and widespread. Anybody can do it.

Here, we briefly examine the so-called White Paper and draft Bill recently published by the government which attempts to regulate this sector. The 1991 White Paper entitled ‘Rights for the Consumer’ had proposed a licensing and oversight framework for estate agents to improve the service and ensure better protection for the public. This was part of a major overhaul of consumer protection in Malta.

Important measures followed including the setting up of a Department for Consumer Affairs in 1992 and the passage of the Consumer Affairs Act in 1994. An estate agency legal framework however never materialised.

Much law was then added in 2000 when EU membership was approaching. No specific EU directive exists on estate agents and this shows from the lingering lacuna. This is not to suggest that the services offered by an estate agent are entirely outside the law. If the transaction between an agent and a consumer exists in terms of general law, various private law rules apply, including EU-derived rules prohibiting unfair contract clauses and unfair commercial practices inserted in the Consumer Affairs Act.

Unfair commercial practices address behaviour such as providing incorrect information or using devious techniques to influence consumers’ decisions even where these involve the purchase of a home. If the consumer authority identifies such malpractices, it may impose administrative fines and issue public warnings.

The draft Bill proposes the setting up of another new authority, but its place within the whole enforcement fabric is unclear as the relevant regulations concerning its relations with other authorities are still unpublished.

Two plausible undesired scenarios may happen: duplication of work leading to contradictory regulatory measures, and inaction as enforcement agencies rely on each other.

The new authority may confuse consumers when it comes to lodging a complaint. One recalls the Fantasy Tours debacle where desperate consumers, due to lack of leadership, ended up knocking on every door possible in the hope of recouping their losses.

One would have expected more initiatives in favour of the consumer

Consumers face another hurdle. A €50 charge is recommended to lodge a complaint. No provision for mediation is made, and once the process is triggered the authority would have to decide within an undefined timeframe.

Four issues arise. First, the charge may deter consumers from lodging complaints. This would hinder the authority from detecting malpractices. Secondly, investigations and decisions should take place within specific timeframes. Thirdly, decisions should be reasoned. Fourthly, the authority seems unable to intervene to address urgent circumstances where consumers risk imminent damage.

The new authority should have all the necessary instruments at its disposal to address bad and poor conduct. When the draft Bill was launched, the heavy fines and possible impri­sonment were noted with some suspicion. However, these measures are not triggered automatically as the authority may instead impose an administrative fine.

No guidelines regulate how this would work out. Curiously, no rules provide for the suspension or withdrawal of a licence; those breaching the law may continue offering their services.

The authority’s internal organisation too is somewhat opaque. No criteria for the selection of its members are made. Anyone may be appointed and the minister may even waive the disqualification provision. Nothing indicates that consumer organisations will be represented. What safeguards and measures will curtail conflicts of interest?

The schedule regulating the conduct of affairs only briefly touches upon consumer-to-agent relations. It hints at the modalities that should take place before engaging an estate agent or property consultant. Consumers should be presented with pre-written agreements explaining the terms of business and details of any applicable charges before using a service.

No requirement exists that such agreements are to be drawn up in a clear and concise manner. Consumers may end up taking quick decisions when presented with voluminous agreements in fine print.

One would have expected more initiatives in favour of the consumer. The rules should: allow for à la carte services according to the consumer’s requirements; specify the duration of an agreement and not allow for an automatic renewal; regulate withdrawal charges to impede potential switching barriers that reduce consumer choice, and also a cooling off period.

A reference for the new authority to cooperate with the MCCAA, the national competition agency, in tackling malpractices that may distort competition is also lacking. The White Paper comes at a time when the Competition Office has flagged its concerns on practices taking place in the sector, more specifically on the rates of commission.

Consumers need structures that reassure them that any fees, commissions and services provided are the result of a competitive environment and nothing else. The White Paper is inadequate in this regard.

Unfortunately, the draft Bill is proposed in isolation. No assessment has been carried out on the applicability of existing relevant consumer or competition legislation. The White Paper focuses on the licensing requirements for estate agencies and their agents with little tangible concern towards enhancing benefits and safeguards for consumers.

We are also led to believe that a few in-house lectures and exams will make professionals of us all, while the minister is allowed to grant exemptions from these requirements.

The recently proposed framework is not good enough to protect the consumer interest, and more work and study is required.

David Fabri is head of the University of Malta’s Department of Commercial Law.

Antoine Grima lectures on Consumer Law at the University’s Faculty of Laws.

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