Questions to answer for “terrified” deposit scheme boss
 
Published on 06 Jul 2017

•    Property reform campaigner: “This isn’t a White Paper, it’s big business bully tactics”.
•    Jagota tells Hooker: “I’ve answered your questions. Now it’s time for you to answer mine”.

A leading property campaigner believes the boss of a tenancy deposit scheme has “serious questions to answer” following his thinly-veiled attack on renting reform.

Mydeposits CEO Eddie Hooker last week issued a 14-page “White Paper” arguing in favour of the old-fashioned tenancy deposit schemes which cost the UK economy £3.5bn and denying the need for reform of the private rented sector.

Deposit reform campaigner Ajay Jagota, founder of deposit-free renting solution Dlighted, has provided answers to all the “pertinent questions” Hooker has posed about deposit free renting, as well as posing some questions of his own to the deposit scheme boss.

He said:

“This isn’t a White Paper, its big business bully tactics using a project of fear to try and stifle innovation.

“It would be easy to respond in kind, but deposit free renting is an idea whose time has arrived, and that’s because we have compellingly made a case that it makes it easier for landlords and agents to find and keep tenants, lowers the cost of renting, offers better asset protection to investors and stops millions of pounds being stolen – not through ranting and raving.

“I’m confident in and proud of the systems we’ve created. So Eddie, I’m happy to answer all your questions. Now it’s time for you to answer mine.

“One question that doesn’t need answering is ‘why is Eddie Hooker doing this?’. We all know it’s because he’s terrified by all the customers he’s starting to lose. And he’s right to be worried. The government is clear that deposit reform is on the agenda and just this week leading property academic Brian Sturgess published a real White Paper outlining the merits of deposit free renting. Like it or not, change is coming.”

Ajay Jagota’s questions for Eddie Hooker are as follows:

1.    You claim that charges are made for making claims under deposit free renting. This is not the case with Dlighted. Was this intentional or were you acting out of ignorance?

2.    You imply deposit-free renting firms are not regulated by the FCA. Dligthed is. Again, was this intentional or ignorant?

3.    Do you intend to apologise for the misleading impression you have created with regards to the above?

4.    You state "tenancy deposit protection schemes are not regulated by the FCA (as they do not sell insurance)" but on the mydeposits website you say "Keep the deposit in your bank account using our insurance based product". Are you not regulated by the FCA then?

5.    I welcome the commitment to transparency to make in your “White Paper”. So how about the £1.4bn of deposits you and your fellow TDS schemes won’t disclose under our Freedom Of information request as to the location of due to “commercial sensitivity”. Are you finally going to tell everyone where they are? Or do you not Know?

6.    You mention that tenants get their deposits back are better off – but have you considered how with inflation currently close to 3% the deposit they get back it worth less than the deposit they initially handed over? Not to mention any loss of income now there is talk of increasing interest rates

7.    You claim your key performance indicators are "robustly monitored” – so how does so much money end up being stolen from tenancy deposit schemes? And what happens to companies where this occurs? Are they forced to undergo training? Subjected to additional scrutiny? Fined? Does anything happen?

8.    You say: "what evidence do these alternative companies have that show deposits significantly increasing". The government announced last week that they were going to cap them. Do you not read the news?

9.    When deposits are capped at one month, how will they protect landlords who lose out on more than one month’s rent, suffer significant damage to their properties or require costly legal support – all of which is covered by Dlighted’s system?

10.    The only people you cite in support of your arguments in the “White Paper” are the National Landlord Association – an organisation who own 50% shares in mydeposits! Not to mention ARLA’s share in another one of the deposit scheme providers ? Do you not think this sort of cronyism is part of the problem?

11.    I share your concern about operators who “bring the whole PRS” into disrepute. Are you not worried that by being at the centre of a system where at least £1m of deposits are stolen every single year you yourself could be accused of that?

12.    You states that dispute levels of 2% are cases where tenants and landlords cannot reach an agreement and 46% deposits are returned to a tenant with a deduction (ie where disputes can be settled). We and the insurers are aware of the figures and have experienced no difference in settling damages with our product where the parties agree there is NO CLAIM.  Projecting 1.8 million claims by using the 46% of deposits where a deduction is agreed is a floor in your assumptive calculations!

13.    You imply that insurance companies cannot be trusted as they only care about “the value of the claim rather than who should be entitled to the award”. You are of course the CEO of an insurance company. Do Hamilton Fraser only care about the value of the claim rather than who should be entitled to the award?

14.    Again, when you say that landlords and tenants lack safeguards and must “rely on the insurer’s terms and conditions” under deposit free renting are you implying – as the boss of an insurance company – that insurances companies cannot be trusted?

Jagota also responded to questions posed by Hooker in his “White Paper”:

1. Do Tenants fully understand that they pay a non-refundable FEE for the product which (it is my understanding) will be more than the average deduction made from 'non-disputed' deductions?
Our system is designed to lower the cost of renting and we were one of the first companies to commit to up-front fees.
Any fees we charge are fully transparent under FCA regulations, and are made clear during the process and within our terms and conditions.

2. Do Tenants understand that, despite paying this fee, that the products either place them as financially accountable for the first 6 weeks rent (value) of any claim OR will then mean that a future product will be significantly higher having lost their 'no claims' status?
Yes.This is explained and documented by the agents or landlords and by ourselves at the start of our process.

3. If a Tenant is (or thinks they are) covered for X damage having paid Y- will they treat the property with less care as it isn't 'their' money on the line?
Do people deliberately crash their car after taking out comprehensive insurance policies? And do traditional deposits guarantee that tenants don’t damage properties?
All our documentation and statements make it clear to tenants what their obligations are and that claims can be processed by agents or landlord to recover any monies from the insurers who in turn recover claims under subrogation.

4. How expedient will the claims process be and how fair will the payouts be to Landlords?
After more than five years of operations our satisfaction ratings with both landlords and tenants are near enough 100%.
There is a Service Level Agreement in place to process claims which are evidential based and governed by FCA regulation.

5. In what is a crowded marketplace for a test product the question also remains that, when one of these fail (and make no mistake, at least one of them will) what protections will remain in place- especially for the companies not already FCA compliant?
Dlighted are FCA compliant.

View more news from KIS »