2. In response to members, the Assistant Secretary for Housing (AS for H) advised that clause 50(5) required estate agents to disclose to clients their beneficial interests as regards properties in estate agency agreements, including those of their spouses and nominees of estate agents or their spouses. She expressed reservations on the proposed inclusion of other next of kin of estate agents, such as parents and siblings, in the clause having regard to the extent of direct beneficial interests which estate agents might have in the properties possessed by their parents or siblings. Hon LEE Wing-tat however took a different view and cautioned that the extent of consumer protection would be reduced if parents and siblings of estate agents were to be excluded from the clause. He added that parents and offspring of tenants in public rental housing units were required to declare their income and assets for the purpose of income and assets assessments. AS for H undertook to consider the merits of including parents of estate agents in clause 50(5).

Clause 57. Regulations

3. At members request, AS for H undertook to provide a list of regulations to be prescribed by the Estate Agents Authority (EAA) under clause 57, as well as a preliminary schedule for implementation. She emphasized however that EAA had the power to determine the implementation of the regulatory system having regard to different circumstances. As to whether EAA would consult the trade on particulars to be included in the regulations, AS for H assured members that EAA would take into account public opinions collated during the consultation period of the Report of the Working Group on Regulation of Estate Agents and the Administrations proposals before making a final decision.

(Post-meeting note: The list of regulations was circulated vide LegCo Paper No. CB(1) 894/96-97.)

4. While noting the suggestion for a transitional period of two years to allow the trade to meet the full licensing requirements under the Bill, AS for H advised that the exact length of the transitional period would have to be determined by EAA taking into account the progress of implementation of the regulatory system. She also clarified that the phrase "educational qualifications" under clause 57(1)(d) was not necessarily confined to academic qualifications. Hon Mrs Selina CHOW was of the view that educational qualifications should not be regarded as licensing criteria. She was worried that such requirements would be difficult for some serving estate agents, and suggested deleting clause 19(1)(b)(ii) from the principal legislation. Hon CHAN Yuen-han also considered that professional integrity and competence were more important than educational qualifications. In reply to members, the Assistant Legal Adviser confirmed that clauses 19(1)(a) to (c) were the basic licensing requirements which EAA must have regard to when granting licences. The Senior Assistant Law Draftsman (Acting) (SALD (Atg)) however pointed out that clause 24 had provided certain degree of protection against refusal of applications for licences.

5. Mr LEE agreed with the Administration that educational qualifications should not be confined to academic qualifications, and that these should include professional training provided by educational institutions. He considered that in view of the difference in responsibilities between estate agents and salespersons, the former should be required to acquire certain qualifications whereas the latter should be exempted. While agreeing that professional training was another form of qualifications, Mrs CHOW remained opposed to linking licensing requirements with educational qualifications as the latter was not a pre-requisite for undertaking estate agency work. She also expressed reservations at the proposed exemption for salespersons as they might become estate agents at a later stage. Hon James TO Kun-sun suggested and members generally agreed that one possible way to tackle the problem would be for EAA to organize entry examinations for both estate agents and salespersons to ascertain their eligibility for licences. Mr LEE however took a different view and considered that additional provisions such as exemption clauses should be included in clause 19(1)(b) so that candidates who had attained certain professional qualifications could be exempted from the licensing requirements.

6. In response, AS for H expressed reservations on the proposed deletion of clause 19(1)(b) as educational qualifications would help to promote professional integrity and competency of the trade in the long term. She reiterated that the phrase "educational qualifications" would include both academic qualifications and professional training. AS for H added that clause 57(1)(d) had provided flexibility for EAA to devise different requirements for different classes of licences, and that the initial licensing requirements during the transitional period would not be so stringent as to disqualify many serving estate agents. Some members were supportive of minimal entry barriers to be followed by acquisition of the necessary qualifications in the long term; others suggested deletion of the phrase "educational qualifications" for the present stage with a view to reinstating this again if circumstances so required. Mr TO suggested including such wordings as "or equivalent" after the phrase "educational qualifications" to provide greater flexibility. AS for H and SALD (Atg) undertook to re-consider the provisions under clause 57(1)(d) having regard to views expressed.

Schedule

Constitution of Authority

7. In relation to the extensive power of the Authority, Mr LEE was worried that consumer interest might be compromised as two-thirds of EAAs members would come from the trade and related professions. He said that the position of the Democratic Party was that members from the trade and related professions should each comprise one-quarter of the membership of EAA, and members of the community should constitute the remaining half. This would ensure proper checks and balances in the operation of EAA, in particular on cases where disciplinary actions were required. AS for H advised that divergent views had been received on the size of membership from the trade: some considered the percentage too high while others considered it insufficient. She said that it was incorrect to assume that members of the trade and related professions would have common interest as the latter might include persons who were conversant with and interested in consumer affairs. While acknowledging the need to ensure impartiality, AS for H advised that there were adequate checks and balances in the Bill to monitor the operation of EAA. These included the provision for the Secretary for Housing (S for H) to give general directions to EAA in the public interest, the requirement for rules and regulations prescribed by EAA to be endorsed by S for H and the Legislative Council (LegCo), and the availability of redress channels through which applicants could appeal against refusal of applications for the grant or renewal of licences. AS for H added that factors such as contribution and commitment to the improvement of estate agency work, experience, expertise, integrity and impartiality would be taken into consideration when appointing members of the EAA. Furthermore, Section 3(1)(c)(iii) of the schedule prohibited the appointment of the Chairman and Vice-Chairman from members of the trade to ensure impartiality. AS for H cautioned that the change in composition proposed by some members might lead to insufficient professional expertise in EAA. Mrs CHOW also expressed reservations on the proposed reduction in the membership from the trade as it was not uncommon for trade-related bodies to have the majority of members coming from the trade. She sought clarification on whether reference had been made to other legislation such as the Travel Agents Ordinance (TAO) in drawing up the composition of EAA. AS for H emphasized that it was the Administrations objective to achieve a balanced composition of the Authority, and that the membership had been proposed having regard to public opinions collated. She added that a direct comparison between the Bill and TAO might not be appropriate having regard to the unique nature of the former. Nevertheless, she undertook to collate information on the composition of other regulatory bodies for members reference.

(Post-meeting note: Information on the composition of other regulatory authorities or advisory committees as stipulated in existing legislation was circulated vide LegCo Paper No. CB(1) 894/96-97.)

Transitional period

8. Mr LEE asked if the Administration would consider stipulating a fixed transitional period in the Bill to facilitate implementation of the proposed legislation. AS for H reiterated that the length of the transitional period would have to be determined by EAA having regard to different circumstances, and that it would be imprudent to prescribe a fixed transitional period at that stage as this would limit the operational flexibility of EAA. Members held different views on whether such a transitional period should be included in the Bill. Some considered the proposed inclusion desirable so as to enable the trade to meet necessary requirements within a reasonable period of time; others considered the proposal inappropriate before details of implementation had been worked out, and suggested that the Administration should list out the types of transitional arrangements in an undertaking to allay the worries of the trade and in order that LegCo could monitor the progress of implementation. They also urged the Administration to step up publicity efforts to arouse public awareness of such arrangements, and to allow a grace period for the trade to meet the necessary requirements. A member emphasized the importance for striking a balance between the interest of the trade and the consumers in drawing up such a transitional period, and urged the Administration to take into account previous experience with the Sex Discrimination Ordinance.

9. In reply to members on transitional arrangements, AS for H advised that the Administration intended to set up the EAA within three months after passage of the Bill. She said that it could take EAA up to a year to complete such initial tasks as application for a start-up loan, and formulation of code of practices, licensing requirements and estate agency agreements. Members suggested that in order to expedite the process, steps such as funding requests for EAA and organization of training courses for the trade could be conducted in parallel. At members request, AS for H undertook to provide a schedule of the transitional arrangements but emphasized that EAA was empowered to adjust the implementation schedule of the regulatory system.

II Any other business

10. As AS for H advised that it would take about two months to prepare Committee stage amendments, members agreed to hold the next meeting on Tuesday, 18 February 1997, at 4:30 pm.

(Post-meeting note: At the instruction of the Chairman, the meeting was subsequently re-scheduled to Wednesday, 26 February 1997, at 8:30 am.)

11. There being no other business, the meeting ended at 6:00 pm.

Legislative Council Secretariat
20 February 1997

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