Don’t risk cutting corners. Do the due diligence work.

The Property Ombudsman (TPO) offers the following advice relating to the possibility of a fraudulent reference – check, check and check again.

Their message is that it’s all too easy to be taken in by something that looks genuine. One of their case studies reads like a whodunnit, with false trails laid by crafty tenants and sloppy detective work by the letting agent concerned, whose complacency prevented the referencing provider flagging up potential issues of affordability.

The TPO code is clear and concise on referencing and pre-tenancy checks. One of the key principles is that letting agents must be diligent. Another is that references must be appropriate to the circumstances of the application and ‘in line with criteria agreed with the landlord.’  To us, those conditions seem perfectly fair and reasonable, but unfortunately, not everyone shares the same standards when it comes to diligence.

In the case concerned, the agent’s standards fell below the required TPO code in several areas, but a cursory glance at their procedures wouldn’t have revealed the depth of their shortcomings. They appeared to be ticking all the right boxes, but their failings cost the landlord over £7,000. When the complaint against them was investigated and upheld they were judged to have ‘acted with complete disregard for the best interests of their client, the landlord.’

There were two applicants in the case. Proof of identity was obtained for both, but the agent fell down on proof of address for one applicant, and a credit check was therefore impossible. The agent misled the referencing provider by advising them the rent was to be paid in full and in advance. Therefore, employment and income checks weren’t carried out. One of the two applicants provided a faked reference from a ‘current landlord’. Wage slips were a copy and paste exercise, and employment status was out of date. It was, in short, a catalogue of errors, fraud and omission. The referencing providers were effectively prevented from doing their job, but the landlord was assured that every check had been carried out.

And that is what’s frightening about this case. On the surface, there have been lots of checks. in practice, those checks didn’t reveal the things they should have. The agent didn’t exercise due diligence, didn’t take steps to validate information provided by the applicants, asked for an inappropriate reference and failed to carry out basic affordability checks.

The last clause of the TPO code is as follows:

11g You must provide the landlord with all relevant facts (subject to compliance with data protection laws) relating to the application to enable the landlord to make an informed decision, regardless of whether the tenant has met, or failed to meet, the referencing criteria.

We’re well equipped to help agents meet the requirements of this clause. We’re known for our thorough approach to fact-checking and for the variety of referencing types we offer. We take what we do very seriously because we know the risk landlords face if standards slip or details aren’t carefully validated.

Agents do need to be diligent, but that requirement applies to every stakeholder in this sector. That’s why we echo the TPO advice: check, check and check again for fraudulent references.

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