For information
on 7 June 1999


Purpose

This paper outlines the work of the Estate Agents Authority since its inception for Members' information.

Background

2. The Government appointed a Working Group on the Regulation of Estate Agents in November 1993 to examine the need for a proposed regulatory system for the estate agency trade. The Working Group produced its report in August 1994 recommending that a statutory body be established to implement a licensing and regulatory system. The Estate Agents Bill was introduced into the Legislative Council in November 1995 and was passed by the Council in May 1997. The Estate Agents Authority (EAA) came into being with the Chief Executive of the Hong Kong Special Administrative Region appointing one Chairman, one Vice-chairman and 18 other members in November 1997.

Progress in major areas of work

Licensing

3. In November 1998, the Legislative Council passed the Estate Agents (Licensing) Regulation. A territory-wide licensing exercise was launched immediately to ensure that all in the trade would be licensed by the end of December 1998. As at 31 May 1999, 20,136 individuals and 3,934 companies have obtained licences/particulars of business. The register of licensees is available for public inspection at the office of the EAA and will be made available on the EAA website in the near future.

Practice regulation

4. The Estate Agents Ordinance empowers the EAA to prescribe by regulations matters relating to the conduct and practice of estate agents, including provision of property information to a client, disclosure of pecuniary and other beneficial interests in a transaction, the usage of an estate agency agreement, conduct to be observed in seeking instructions, advertising, property inspection, negotiation and keeping of accounts, etc. The EAA issued a consultative document in May 1998 to gauge the views of the trade, the public and relevant professional bodies on the proposed regulations. Feedback and views received were given due consideration in the preparation of the Practice Regulation which has recently been tabled at the Legislative Council.

Handling of complaints

5. Another major function of the EAA is to handle complaints against estate agents. This includes processing complaints, verifying allegations and taking disciplinary sanctions. During the period from January 1999 to May 1999, a total of 351 complaints were received. Complaint cases can be broadly categorised under the major headings of commission disputes, misrepresentation, poor standard of service, failure to comply with conveyancing practice, and breach of the Estate Agents Ordinance and related regulations. Among the cases received, 166 have been concluded, with penalties ranging from the issue of warning letters, admonition, reprimand to fines where the licensees were found to have breached the regulations. The complaint record system is interfaced with the licensing record system to ensure that details of established complaints can be taken into account for the renewal of licences.

Compliance

6. The Compliance Section of the EAA conducted over 100 checks, largely based on information provided by the public, on companies and individuals during the period from January to May 1999. In addition, checks and investigation of alleged breaches were also conducted on agency firms from time to time on a district basis, and at sale sites of new developments. Apart from taking appropriate actions where non-compliance could be established, EAA officers also took opportunity of such visits to reiterate various compliance requirements to the licensees and answer their queries. The major instances of non-compliance were practice without a valid licence or without particulars of business and faulty advertising. Penalties ranged from written warning to fines were imposed.

Training and examinations

7. Under the Licensing Regulation, a licensed estate agent/salesperson is required to pass a qualifying examination within three years from 1 January 1999, unless exempted on account of proven trade experience or relevant professional qualifications. Senior practitioners, who are exempted from such examinations, are required to undertake a prescribed course of training before the end of 2001. The qualifying examinations are administered three times a year by the the Hong Kong Examinations Authority. The first examinations for estate agents and salespersons took place in early March 1999, with a total of 3,886 candidates and 2,713 (68%) passed the examinations (The passing rate for the Estate Agent examination is 66.9% and that for Salesperson examination is 84.2%.). 674 or 17.3% of the candidates who, at the time of the examination, were not practitioners of the estate agency trade.

8. To assist the trade in passing the examinations and familiarise themselves with the new mode of operation, nine tertiary/vocational institutions are currently providing a number of training courses. These courses are specially designed for those who aspire to pursue a career in the estate agency trade, existing practitioners who wish to improve their knowledge and senior practitioners who are required to attend training courses before the end of 2001. These courses followed a syllabus prepared by the EAA and guidelines issued by the Authority from time to time. Course contents and student feedback are subject to frequent review by the EAA.

9. Seminars are extensively held in various parts of the territory to enable members of the trade to familiarize themselves with the new regulations and the use of prescribed documents. In addition, the EAA has organised a number of "Train the Trainers" seminars, which are intensive courses for academics teaching estate agency courses in tertiary and vocational institutions, human resources development/training managers of estate agency firms and others in training capacities.

Determination of commission disputes

10. Under section 49 of the Estate Agents Ordinance, the EAA is empowered to prescribe matters relating to the resolution of disputes over commission. The dispute resolution mechanism aims to provide an additional avenue, other than the court, to settle commission-related disputes in a speedier and less formal manner. A dispute over commission can be referred to the EAA for determination with both parties' consent. The Determination Regulation which sets out the procedures for handling such disputes has recently been tabled at the Legislative Council. Administrative arrangements to tie in with the passage of the Determination Regulation and its formal implementation are being prepared.

Publicity and community education

11. The licensing and regulatory system of the estate agency trade is novel to both the trade and the community at large. To ensure smooth and effective implementation of the Ordinance, apart from educating the trade, the EAA also targets at consumers to promote greater public awareness of the Ordinance and its benefits to the consumers. These messages are disseminated regularly through EAA's newsletters, pamphlets, posters, handbooks, radio and television Announcements in the Public Interest (API), as well as feature articles in newspapers and magazines. The EAA will also seek cooperation from the District Offices and the Consumer Council in this respect.

12. To facilitate enquiries from the trade and the public, the EAA maintains a website and a telephone hotline service. Forms and other useful information can be downloaded by users through the website. The EAA is also in the process of establishing an electronic distribution network for the dissemination of relevant information and publication, including the Ordinance, subsidiary legislation, the Code of Ethics, the practice directions and circulars to all licensees.

13. Furthermore, the EAA plans to open a Resource Centre in July 1999. This is intended to be a one-stop service centre for trade practitioners and consumers. The centre will maintain a collection of publications on the estate agency trade, a computerised licence register for public inspection and other relevant materials/documents in electronic format for public access. There will also be materials for members of the trade to facilitate self-learning. The centre will be operated by staff members who will answer questions on estate agency practice from both the trade and the community. As a more proactive approach to community education, the EAA Outreach Team, a group of trained staff members, will take turn to visit all the District Offices and the advisory centres of the Consumer Council. They are tasked to promote the new regulations, answer queries pertaining to property agency and transaction and facilitate public access to information relating to the new regulatory system.

Way forward

14. The EAA is charged with the statutory duties of promoting the standard of service of estate agents, enhancing protection of consumers, and encouraging open, fair and honest property transactions. To achieve these ends, the EAA anticipates that, in addition to implementing the licensing system which involves an annual renewal of licences, the building up of an integrated licensee database and the conduct of qualifying examinations, it will, in the coming months, direct much of its effort towards activities in the following areas:

• Full-fledged implementation of the Practice Regulation and frequent inspection on individuals and companies to ensure compliance.
  
  
• Speedy and efficient handling of complaint cases, with the compilation of casebooks for educating the trade and the public.
  
  
• Promotion of the commission determination mechanism to the trade and the community as an alternative to litigation.
  
  
• Continuous training for members of the trade to facilitate their adaptation to the new practice regulations.
  
  
• Strengthen community education through the establishment of the Resource Centre, the Outreach Team, printing of publications, the use of electronic media and organising public seminars.
  
  
• Efficient dissemination of information relating to newly introduced regulations through conventional and electronic means, and training materials for those who wish to learn the new mode of estate agency and to sit for the qualifying examinations through self-study.
  
  
• Preparation of regulations on overseas properties, commercial properties, etc.

Estate Agents Authority
4 June 1999