The Stage

Rogue agents face tougher penalties under government plans

Published Wednesday 11 November 2009 at 15:20 by Matthew Hemley

Employment Agency Standards, the government body which investigates complaints against agents, could be given the power to hand out monetary penalties, after a review concluded “persistently non-compliant and rogue businesses are rarely sanctioned effectively” by the department.

The criticisms of EAS, which is a division of the Department for Business, Innovation and Skills, were published in a report looking into the regulatory performance of EAS, which was carried out earlier this year and published this week.

It found that EAS - which can currently issue warning letters to agencies guilty of misconduct or consider prosecuting repeat offenders - “has insufficient powers to address rogue businesses”.

Critics - including Equity - have previously complained that the limited powers EAS has mean agencies found guilty of charging illegal fees continue to do so, because there is no immediate threat of action against them.

The review of EAS found that the department “uses its inspectors well to warn businesses of potential breaches of regulations” and added that it makes “good use of warning letters”.

However, it added: “The review team felt more could be done to comply with the principles relating to those businesses that persistently break regulations. The highest risk businesses are currently very difficult for EAS to identify and therefore rarely have the most severe sanctions imposed.”

The review also said the sanctions in place are “not wide ranging as they are either mild or severe with little graduation in between”.

The government is tomorrow due to publish its plans for new legislation to tackle up-front fees, in an attempt to crack down on rogue agents continuously breaking the law.

In this, it is expected to acknowledge that EAS needs more powers, and that EAS could gain these under the Regulatory Enforcement and Sanctions Act 2008.

BIS is likely to report that these powers could “include monetary penalties, restoration notices and stop notices in addition to EAS’s existing powers to issue warning letters, prosecute agencies or prohibit directors from being involved in the running of an employment agency”.