The kids aren't alright

Chris and his wife lament the effect today's economic cuts will have on tomorrow's hopefuls

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Ask a stupid question …

KJ and Fee debate Labour's stance in opposition to the coalition's economic policy

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Why companies don't just target the rich - because the poor have most of the cashflow

Just because you aren’t rich doesn’t mean you aren’t rich-pickings. Just as in nature, so it is in the marketplace. The biggest of the beasts feed on the smallest morsels. The largest elephants munch on the delicate little leaves of trees, the biggest whales suck up microscopic plankton. One of the great secrets of Britain is though the rich have almost all the wealth, it is ordinary Britons from the moderately well off to the poor who have most of the cashflow. From the banks, insurance companies, and energy companies, with boards adorned by chivalrous knights, noble lords, and right honourable politicians, all the way across to the loan sharks, counterfeit market traders, and doorstepping shysters, they all pursue the cashflow – in the form of your average ripped-off Briton.


According to government statistics, although the poorest 50% have virtually no wealth,  they do 30% of the spending. Although the richest 10% have over 70% of the wealth, they only do 20% of the spending.

It is the biggest companies, with lovable adverts, catchy “da da da daah da daah da da da daah da daah” theme tunes, and high powered compliance-avoidance teams, that are the greatest villains. Those that understand their mutual interest gang up in associations and consortia to see off the regulators.  In it’s release in March 2011, OFGEM stated

Ofgem found that the industry response to its 2008 Probe reforms [relating to issues with the retail energy market] has been patchy, and in some cases poor. We have been disappointed with the reaction of suppliers to many of the Probe reforms and formal investigations have been launched into whether suppliers are complying with their licence obligations.

The big players as a matter of informal policy show their contempt for regulators by simply ignoring them. They have learned that the penalties they face are a fraction of the profits they rake in. This has been learned from the rarefied heights of providing dubious tax-avoidance services to the high rollers down to ripping off single parents putting pound coins into their electricity meters.

“Based upon our analysis of the applicable penalty sections, we conclude that the penalties would be no greater than $14,000 per $100,000 in KPMG fees”… “For example, our average [OPIS] deal would result in KPMG fees of $360,000 with a maximum penalty exposure of only $31,000.

Given as evidence to a US Congressional committee, revealing how fines are a fraction of earnings.

After all, British consumer law states that 50% of consumers are fair game to be ripped off . Not so much a loophole, more of an open gate through which the banks strode arms akimbo with full brass band “da da da daah da daah da da da daah da daah” when they beat the OFT in court over the unfair overdraft charges which make up 30% of their revenues generated from current accounts. Throwing out the OFT’s case, their lordships stated:

“Assessment of the unfair nature of the terms shall relate neither to the definition of the main subject matter of the contract nor to the adequacy of the price and remuneration, on the one hand, as against the services or goods supplied in exchange, on the other, in so far as these terms are in plain intelligible language.”

This means, in plain intelligible English: so long as the contract says somewhere, regardless of how well hidden, what the scam is, then it doesn’t matter what the scam is. In law it cannot be said to be “unfair”, and is therefore “fair”.

With the law backing up the scammers, it is for the buyer to beware – ‘caveat emptor’ for those with a classical education. The consumer needs to compare and contrast, read the contract, do the maths. But is your average Briton any more able to avoid predatory companies than a leaf is able to avoid the grazing elephant, or the drifting plankton to avoid the whale’s gaping maw? OFGEM’s own analysis shows that they are, on the whole, not.

It is these biases, these weaknesses in the average Briton’s decision making, that drive companies’ marketing. In search of confusing complexity, the energy providers have been growing the number of different deals on offer.

The implication is that companies don’t have to mis-sell – they don’t need to lie to their consumers. They can rely on the consumers making mistakes. In their paper, “Do [electricity retail] consumers switch to the best supplier?”

this paper has rejected an explanation suggesting that firms’ misleading sales activities may have been responsible for the inaccuracy of consumers’ choices.….. Instead, consumers’ poor choices seem more consistent with an explanation of pure decision error, perhaps as a consequence of the particularly complex market environment involving the use of complicated non-linear tariffs.

Energy companies know that they actually don’t have to compete on price, and don’t have to tell fibs – so long as they can keep the consumer confused. OFGEM/IPSOS surveys indicate:

·        60% of consumers never switch.

·        Of those that do switch, up to a third switch to a worse, more expensive, tariff.

·        Of those that do switch, only one in five switch to the best tariff, with the rest switching to less good deals.

The number of deals on offer has nearly doubled between January 2007 and January 2011.

  

Lie-free gotchas range from banking to insurance, to gym membership to mobile phone contracts, to just about everything. Use ‘competition’ as a cover for ‘complexity’. The Bill Monitor service, “invented by mathematicians in Oxford approved by Ofcom”, shows that there are 3,704,859 possible deals for someone wanting a £15 per month mobile phone contract from a UK provider (figure taken in March 2011). 


Banks, as always, are in on the ripping-off with complex formulae for paying interest and 'teaser rates' which offer you a decent interest for the first year followed by something derisory - knowing that billions of investor money will be left earning next to nothing because the saver never gets round to shifting their cash.


The Lloyds Bank Vantage account makes the promise of upto 4% interest on savings of upto £7,000 paid in tiers. If you do the maths, this means by keeping £7,000 continuously in your account you get an effective gross rate of 2.59%. If you have less than £5,000 then your rate drops to 2.02%, less than £3,000 your rate drops again to 1.37%. And 0.1% if you have less than £1,000.


Complexity is the mother of profit - but the profit is not for you.

Could ripping-off confused Britons be related to why Britons don’t save? Is the key issue around poverty and pensions not so much that Britons are profligate, and more that we are ripped-off?

http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database

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Budget 2011: fuelling the economy?

Chris and Fee think Osborne's plans for the British economy are running on empty.

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Regulatory Fines – the most lucrative investment a bank (or any financial services company) can make

London, New York, and Chicago are the World’s main financial centres. There was a time, only a decade or two ago, when this was principally because of the need to communicate.  The Lloyds Insurance Market’s lifeblood was the stream of insurance brokers walking along Lime Street to sit, in offices and restaurants, with the underwriters negotiating and administering insurance policies. Exchanges from stocks and shares to futures and options involved traders massed together in large open halls shouting deals at one another. The reason for these cities’ pre-eminence was the advantages that came from being at the centre of trading – which once could only be done by being physically there in person. Now your physical presence is no longer required to trade in person. Placing insurance and trading shares, futures, and options is done electronically. Where you are in the world doesn’t matter.

However, the falling importance of physical location has not undermined London, New York or Chicago. New York and Chicago remain locations of choice because they are at the centre of the World’s largest economy. London joins them at the top table because of the promise of pussy-ish regulation. From banking and trading all the way to personal taxation, regulation in London and to a lesser extent in the USA has been bent into a pretzel to be accommodating.

Financial services firms have long since learned that the most lucrative of all their investments is the money they pay in fines, without admitting wrong-doing, which allow them to carry on with their dodgy doings. They regard paying fines as a cost of doing business, just like paying their rent and their electricity bill.

In evidence taken by the US Senate in 2003, investigating dodgy tax evasion tactics, it was stated that a senior KPMG tax professional calculated just how excellent an investment paying fines is.

“Based upon our analysis of the applicable penalty sections, we conclude that the penalties would be no greater than $14,000 per $100,000 in KPMG fees”… “For example, our average [OPIS] deal would result in KPMG fees of $360,000 with a maximum penalty exposure of only $31,000.”

Even where it comes to aiding the financial transactions of despots and terrorists, the banks are let off lightly. Barclays and LloydsTSB were fined hundreds of millions of dollars by the US authorities for clandestinely processing transactions with banks in Libya, Sudan and Burma. But in each case, the banks were not required to admit to any wrongdoing. Admitting wrongdoing would have triggered further legal sanctions and curtailment of their businesses, which the regulators were keen not to do. US judges rejected and criticised the deals being done with the banks by the US financial regulator, the SEC. Commenting on a deal done by the SEC with Barclays involving a US$298 million fine with no admission of wrongdoing, US District Judge Emmet Sullivan said:

“The public has very little confidence in white-collar crime prosecutions. It’s proceedings like these [that raise questions about] fairness and justice. Why are the financial institutions being treated like this? People plead guilty to criminal conduct. This bank isn’t being asked to do that,” …..“If other banks saw that the government was being rough and tough and that bank executives had to stand before a judge and plead guilty, it might be a powerful deterrent,” 
US District Judge Emmet Sullivan, August 2010.

It’s not only the top firms that are let off lightly. Even the pipsqueaks are allowed to turn their trade profitably in the face of regulator action. In January 2008, the FSA  demonstrated where its sympathies lay, when it imposed a fine on Square Mile Securities for mis-selling.  The FSA’s report, included the following comments –

“Square Mile recklessly established a high pressure sales business to recommend higher risk securities and adopted unacceptable sales practices and methods that undermined the requirements of the regulatory system”.  It’s customers were “subjected to inappropriate sales practices which actively encouraged and pressured them to make immediate investment decisions about higher risk securities based on information that was inaccurate, incomplete and misleading.”. “Square Mile's customers were exposed to the risk of loss as Square Mile failed to assess the competence of its advisers or provide appropriate training for them, knowing that customers would rely on their apparent skills, knowledge and expertise”. Squaremile’s “failings were widespread and impacted at all stages of Square Mile's sales process of recommending securities in smaller capitalised companies.”

The FSA report continued to say –

“This dishonest conduct, by these advisers, posed a significant risk to Square Miles' customers as they could have been charged for the purchase of securities they did not consent to. By way of example:

(1) One 89 year old customer had at least £75,000 charged to his account from five transactions entered without his consent. At the time of these transactions he had an agreed risk capital limit of only £25,000, yet, by the end of May 2006, Square Mile ended up selling the customer securities at a cost of £398,000.

(2) One 79 year old customer had at least £129,000 charged to his account from 13 transactions entered without his consent. At the time, the customer had an agreed risk capital limit of only £10,000, yet, by the end of May 2006, Square Mile ended up selling to the customer securities at a cost of £284,000.”

According to the FSA report, Square Mile earned gross commissions of £947,307 from “recommending the Securities during the Relevant Period”. And the total fine imposed by the FSA was £250,000.  To be paid in 4 instalments over a year – to avoid unduly stressing Square Mile’s cashflow.

 “Annual income twenty pounds, annual expenditure nineteen six, result happiness.”

Said by Mr.Micawber in Charles Dickens’ novel David Copperfield.

Mr.Micawber’s wisdom was that so long as your income is greater than your expenditure, you will be happy. With an income earned by “failings [that] were widespread and impacted at all stages of Square Mile's sales process” almost four time greater than the FSA imposed fine, the Square Mile’s residents would have been beaming.

In January 2008 the FSA also fined HFC Bank, for mis-selling payment protection insurance.  The FSA report states –

“In a sample of sales reviewed by the FSA, the average cost (including interest) of a usual, single premium policy (i.e. with life cover) was approximately £2,100 (£1,200 excluding interest), adding some 40% on average (23% excluding interest) to the loan to be repaid”. The degree to which PPI was being pushed is made clear by the HFC advisers and branch managers having “a target of selling PPI with 80% of the loans”.

HFC, which sells to poorer customers, is a wholly owned subsidiary of HSBC. HSBC group’s profit in 2006 was over £10 billion. HFC’s fine was just over £1 million. That is equivalent to one hundredth of a penny in the pound. Once again, readers of Mr. Micawber would have been beaming!

As a general statement, the FSA’s punishments have been derisory. Having been shown up as surplus to requirement by the regulatory failure that became the 2008 Credit Crisis, the FSA started throwing its fly-weight around with a steep rise in the fines it was imposing from 2009.

However, a good measure of how much of a deterrent fines are to the Financial Services can be seen by comparing the level of fines with the level of bonuses paid in the City of London.

If you squint very hard, you can just about see a small blip for the FSA fines. Try and use the zoom on your internet browser – that might help, at least for 2010 and 2009.

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2011 budget repercussions (3 part series)

The country and economy are on a knife-edge as George Osborne prepares to deliver his budget. What will its impact be?

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Coalition cocktails

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The law that makes it quite legal to rip off 50% of Britons

The rotten secret hidden inside “The Consumer Protection from Unfair Trading Regulations”:

Jesus’ reference (Mathew 23:27) to certain individuals as “whited sepulchres” compared them to white painted tombs – pristine on the outside and full of rotting decay inside. Among the whitest of legislative sepulchres is “The Consumer Protection from Unfair Trading Regulations 2008”. 

The foulest corpse in this graveyard of ‘fair practice’ is the reference to “the average consumer”. The legislation states that a practice is only “unfair” if it brings detriment to the “average consumer”. It is this camel-sized loophole that has given the banking, television, energy, lottery, train, insurance, and charity industries and just about any other economic actor free range to rip chunks off Britons to the fullest extent of their appetites.

It is this legislation that allows Ripped-Off Britons to be entirely legally ripped off. Subtle references to the “average consumer” by well compensated lawyers have kept up company profits and executive bonuses at the expense of the less than average consumer. The fact is, half the population falls into this ‘less than average’ category.

Is it an indictment of us Britons that half the population of the UK has a lower than average IQ?  Are schools failing because half of students have less than average literacy for their ages? And that half the population is less than average height? And that half of everything and everyone is less than average in just about every way? Because, that is what “average” means.  It broadly means the middle value, from which half are above and half below.  (***Mathematical pedants, please see note at the bottom of this post).

With “The Consumer Protection from Unfair Trading Regulations 2008” British legislators declared open season on half the population of Britain! An invitation few successful British corporations hesitate to pitilessly accept.

Defining the “average consumer”, the act states

(2) In determining the effect of a commercial practice on the average consumer where the practice reaches or is addressed to a consumer or consumers account shall be taken of the material characteristics of such an average consumer including his being reasonably well informed, reasonably observant and circumspect.

(3) Paragraphs (4) and (5) set out the circumstances in which a reference to the average consumer shall be read as in addition referring to the average member of a particular group of consumers.

(4) In determining the effect of a commercial practice on the average consumer where the practice is directed to a particular group of consumers, a reference to the average consumer shall be read as referring to the average member of that group.

(5) In determining the effect of a commercial practice on the average consumer—

(a) where a clearly identifiable group of consumers is particularly vulnerable to the practice or the underlying product because of their mental or physical infirmity, age or credulity in a way which the trader could reasonably be expected to foresee, and

(b)where the practice is likely to materially distort the economic behaviour only of that group,

a reference to the average consumer shall be read as referring to the average member of that group.

(6) Paragraph (5) is without prejudice to the common and legitimate advertising practice of making exaggerated statements which are not meant to be taken literally.

It is even questionable whether the ‘average consumer’ is ‘reasonably well informed, reasonably observant and circumspect.’  Does ‘reasonably’ mean ‘averagely’ well informed, observant and circumspect? Or does it mean you actually read the contract? If so, a YouGov survey indicated that less than a quarter of consumers actually read contracts when they buy goods and services. So, on this basis, “The Consumer Protection from Unfair Trading Regulations” considers over 75% of consumers fair game for unfair contracts.

Companies well know that most consumers don’t read contracts. When you last bought a train ticket, did you really read the ‘terms and conditions’? Just in case something had changed since the last time your read them? In 2009, Manchester United had to be taken to task by the OFT for not making it clear that buying a season ticket did not actually guarantee you a seat. On April Fool’s Day 2010, the video games retailer Gamestation inserted the following clause into their ‘terms and conditions’ for online purchases:

"By placing an order via this web site on the first day of the fourth month of the year 2010 Anno Domini, you agree to grant Us a non transferable option to claim, for now and for ever more, your immortal soul," the terms and conditions read. "Should We wish to exercise this option, you agree to surrender your immortal soul, and any claim you may have on it, within 5 (five) working days of receiving written notification from gamesation.co.uk or one of its duly authorized minions. We reserve the right to serve such notice in 6 (six) foot high letters of fire, however we can accept no liability for any loss or damage caused by such an act."

Apparently 7,500 people ticked the ‘I have read the terms and conditions’ box, which is probably the most common lie in the world, after “I’m very well, thank you” and “of course I love you “. I understand Gamestation subsequently released its customers from this clause by email.

In February 2011 a Guardian article on an OFT report stated that problem contracts lost consumers £3 billion

Misleading and problem contracts led to consumers losing £3bn over the past 12 months, according to a study by the Office of Fair Trading (OFT). The highest instance of problems occured with telecoms and internet access packages, with 10.3% of consumers surveyed affected.

In an interview with the Daily Telegraph newspaper this month, Mervyn King, the Governor of the Bank of England, commented ruefully about the tactics of the british banking sector:

“if it’s possible to make money out of gullible or unsuspecting customers, particularly institutional customers, that is perfectly acceptable”.

Sir Howard Davies, outgoing Chairman of the FSA in 2003, said

“The biggest disappointment of my time at the FSA has been the failure of firms, and particularly their senior management, to learn the lessons of past mis-selling”

Mervyn and Sir Howard have had the best possible vantage point from which to witness the rip-offs perpetrated by the financial services industry.

The chief executive of Which?, the leading UK consumer affairs organisation, commented in January 2011 about financial services

“If left to its own devices, the industry will spend its energy inventing products and sales practices that fill the balance sheets but don’t deliver for their customers. From pension and endowment mis-selling to PPI and most recently the emergence of identity theft insurance, this hall of shame is evidence enough that a new approach is long overdue.'

Look back over 200 years to the words of that icon of capitalism, Adam Smith. In his book “The Wealth of Nations”, published in 1776 and considered by some to be the bible of the free market, presumably because like the Bible it is more quoted from than read, Adam Smith states:

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices”

Adam Smith referred to not just the banks, but to all trades. In a country which scores poorly on literacy and numeracy, regulators such as the Financial Services Authority, OFGEM, OFTEL, OFCOM and the Office of Fair Trading have a continuing record of allowing mis-selling. The regulators think it is enough to make a discrete press statement that one organisation or another is ripping off its customers, which will be news for a couple of days and then forgotten. But they generally do not require the offenders to explicitly contact their victims, and they tend to shy away from ‘naming and shaming’.

Their approach is

-         You have been very naughty indeed

-         But we won’t tell anyone who you are

-         And you don’t need to tell anyone either

From contracts for goods, services, insurance, investments all the way to the size of a chocolate bar. Companies do not hesitate to swipe the treats from the mouths of children – presumably on the basis that the ‘average child’ would read the contractual weight on the packet, remember what it used to be, and decline to make the purchase. Changes since 2008 to the size of your sweetie have included

·        Box of maltesers: down from 140g to 120g

·        Mars Bar and Snickers: down from 62.5g to 58g

·        Cadbury’s Dairy Milk: down from 140g to 120g

While companies boast about ‘maxing’ a bigger bar, they forgot to widely advertise their new ‘clipped’ products.

Other bamboozlements popular among british companies include

• Impenetrable gas and electricity bills
• Misleading train fares
• Deceitful special offers by airlines and furniture stores
• Banks pushing costly executor services hidden behind free will writing.
• Phoney food labels

Companies do their risk assessments, and know very well that the law protects them from the regulators and courts, and the downside of being found out by a few customers who withhold their custom is wildly outweighed by the profits of continuing to rip-off everyone else.

***For the mathematical pedants: there are examples where half the people are not below average.  Almost every living human has one head – though a very few have two.  Therefore the average number of heads per human is a tiny bit more than one – so in this case, almost everyone has fewer than average heads. Mathematics, like law, provides endless opportunities for games like this for those whose purpose is to confuse. Ask the CFO of Goldman Sachs, and his reference to "25 sigma" events as an excuse for the Credit Crisis!

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Why we should love Estate Agents

"Why are you so negative about everything in your blog?" said a little voice. "Say something nice before springtime". So I set myself the task of finding a benevolent salesman. The one I came across, the one that always works in the interests of the public, is the Estate Agent.


For those of us who own our homes, the value of our house probably forms the bulk of our personal wealth. Apart from living in it, we use it to borrow money cheaply by re-mortgaging, and we hope it will make a big contribution to funding our old age should we downsize to a cheaper home to release capital. The monetary value of our houses exists because of the liquid housing market, which in turn exists because of the much despised Estate Agent.

Why are Estate Agents regarded as being close to the bottom of the morality pile? Cushioned from the absolute pits only by used car salesmen and politicians? The truth is the Estate Agent’s reputation is entirely undeserved. Like mild mannered Clark Kent, Superman disguised as a reporter, estate agents are actually some of the best disguised heroes of our economy.


Most salesmen lie. Zero fat; high interest; free broadband; low repayments; extended warranty; stay slim and beautiful – fibs told by supermarkets, banks, telephone operators, credit merchants, electrical goods retailers, and resting celebrities. But all these salesmen are ranked above Estate Agents. Why? After all, these other salesmen are there to lie to us. Sure, the Estate Agent lies to us – but he also lies for us. He enables us private citizens a rare opportunity to dabble as perpetrators in the rip-off game by proxy, which is both exhilarating and a wee bit shameful.



For most of us, the only things we will ever sell on our own accounts are our house, our car, and our labour. In these transactions, our only ally is the estate agent. The second hand car salesman has a simple business model. He buys our used car from us for as little as possible, pointing out the mileage, the condition of the bodywork, the state of the engine all as reasons why we should consider ourselves lucky to get half what he is offering. He then sells the car, having given it a polish and vacuuming, pointing out the mileage, the condition of the bodywork, the state of the engine all as reasons why the purchaser should consider themselves lucky to only pay half what it is worth, which is twice what he paid us. This salesman transfers ownership of the car from us to him, at the lowest possible price, and from him to the purchaser at the highest price – dissembling at all times in his own interests.


When we sell our labour, our employers tell us about the hard business conditions holding down their ability to raise our salaries, about how the employment market is very slack and pay rates are being driven down, and our competitors are making inroads into our client base by dropping their prices, and that we should hold on for next year when there will be bonuses all round assuming we work longer and harder and the Bank of England doesn’t raise interest rates and the oil price stays on a stable track. The employer is pulled in many directions including shareholders’ interests, keeping the company balance sheet strong, incentivising the staff, incentivising himself. Of all the levers he has to pull, the one controlling staff costs is most readily to hand. Raising the wage bill is not high on the employer’s "to do" list. Even our colleagues will see a pay rise for us as a drain on the cash that could be paid to them. In the negotiation for salaries we have no allies.


But when we sell our houses, our interests are most closely aligned to the salesman – the estate agent. The estate agent takes a percentage cut, so the more we get the more he gets. We hold control of the property until the moment of sale, giving us the whip hand, with the ultimate sanction of pulling out if we doubt his service. Even when we are buying our houses, our own and the estate agent’s interests are intertwined – both of us wanting things to move quickly to completion enabling us to move in, and the agent to take his commission and move on to the next sale.


Estate agents’ little white lies, such as the seasonal effect, may be misleading. There is actually not much correlation between the peak months of the years 2002-05, with peaks appearing in different months each year. But this little lie is arguably not much more then the dentist telling you it won’t hurt a bit. The reason you are having your tooth pulled has no more to do with how much the extraction process hurts, than the reason you are selling your house has to do with the time of year. Once you’ve decided to do it, then just do it. 

Even the nuisance value of flyboarding, or the fraud of inventing or withholding purchase offers to manipulate the parties is not judged by the regulators to be the cause of significant unjustifiable harm. A report by the DTI, providing an impact analysis of imposing further regulation on estate agents (URN 06/2045) stated that if none of the OFT’s proposed changes were made to the current regulatory regime, then “the overall detriment to consumers is likely to remain at approximately £21 million per annum”. £21 million in a market valued by the Inland Revenue in 2006 at £324 billion, with 1.775 million property sales. Putting in the OFT’s additional regulation would only benefit consumers by an amount that is peanuts relative to a multibillion pound market.


So, where do we find those uncounted millions of consumer detriment? Anyone who owns a house desires to see its value rise. We are all hoping to squeeze an extra £10,000 when we come to sell. If the estate agent misrepresents our property in the advertising, no-one knows that better than the owner of the property. We don’t shout out if the Estate Agent skates over that damp patch, crumbling roof, or bit of woodworm when he is showing potential buyers around our houses. After all, we tell ourselves, all that stuff is the buyer’s responsibility. Not spotting the problems isn’t our fault, but the fault of the buyer’s surveyor. Caveat Emptor – let the buyer beware!

Estate Agents also lie on behalf of the buyer. The Estate Agent seeks a quick sale. Getting an extra £5k on the sale price is great news for the seller – but only adds £100 commission for the Estate Agent, which is hardly worth the effort. And it’s easier to talk the seller down than to talk the buyer up. So sellers are given stories of imaginary buyers offering £30k less than the quoted price to lower their expectations and bring the price down.


All salesmen are in the business of spinning a story to make a sale. However, only one does it on the behalf of ordinary people - the Estate Agent. In this most major transaction between private individuals, the estate agent levels the field of dishonesty. Like a diplomat lying for his country, the estate agent lies for his clients. In politics and businesses, where many people are employed, the wheelers and dealers get to their positions by a process of natural selection. Those who can do what is necessary - without compunction - to get an advantageous deal become the negotiators and salesmen, leaving the rest to do the background work. If it weren’t for the estate agents, we private citizens would have no-one to rely on except ourselves. A large part of the private citizenry find telling total whoppers difficult, while a smaller part finds it no problem at all and will eagerly take every advantage they can misappropriate. If it weren’t for the estate agent maintaining the balance, all the best houses would be occupied by the worst rotters. And what would that do to property prices!


So why do we despise the poor Estate Agent? Buying and selling a house is one of the few times in our lives when we are at the sharp end of a really big deal. Sure, we may work in companies doing big stuff, but for that we only receive our meagre salaries. When we do a house sale, hundreds of thousands of pounds move through our own bank accounts. Ours!


Perhaps the real reason we look down on Estate Agents is the very knowledge that when buying or selling our houses he is lying on our behalf, and that we are complicit in this.


It’s one thing to be cheated by your bank, or to pinch stationary or take a sickie from your employer. When your bank manager talks you into buying an overpriced loan, he feels he does it for the bank and not for himself. Neither he nor you regard it as a personal injury committed by one human against another, comparable to a mugging. And when you take a day off ‘sick’ to watch the cricket, you feel the company won’t really miss you and you will catch up tomorrow. There is a psychological distance in a dodgy transaction between a company and a person.


But when we trade our houses, the other party is very similar to us. After all, both buyer and seller are moving into/out of the same house. They want to live in the same sort of area, have a similar sized family and priorities, and similar budgets. So there would be a greater sense of hurt being cheated by ‘one of us’, and greater guilt in the cheating of a brother citizen. Most people feel bad about sinning. Pinching a penny chewing gum from the sweet jar at the age of 5 can leave a guilty memory for decades. Profiting by extra thousands of pounds, or escaping a dilapidated property or evil neighbours, by selling your house under a smokescreen could leave even deeper guilty scars, but for the use of a proxy perpetrator of the con.


Hence our need for a scapegoat – the Estate Agent. Someone for us to pile our sins on, and send out, scorned and reviled, into the wilderness. When we see the Estate Agent, we see a glimpse of our guilty selves – and perhaps that is what we actually find so distasteful.

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