Countrywide investors calm after second compliance crisis in a year

Countrywide’s ever-patient investors appear to have been unfazed by the company’s latest compliance issue, which has led to a £100,000 fine by the Royal Institution of Chartered Surveyors.

The firm’s share price closed yesterday almost entirely untouched - down just 0.02p at a closing price of 4.79p - despite news of the fine coming through during the afternoon.

The penalty, for two breaches of RICS guidelines regarding the handling of unclaimed clients’ funds by its lettings division, was only the latest punishment for a compliance issue.

Earlier this year it was revealed that Countrywide had been fined £215,000 by HM Revenue & Customs as part of a swoop cracking down on money laundering in the property sector. 

The fine was actually levied in the third quarter of 2018 but was only made public by HMRC this spring; defunct online agency Tepilo also suffered a fine from HMRC.

Yesterday’s six-figure penalty for Countrywide was accompanied by a reprimand from the RICS for the breaches over the movement of over £10m worth of unidentified client funds in the company’s lettings division - which had remained unclaimed for six years or more - to its office account. 

This involved an alleged failure by Countrywide to safeguard its clients’ funds, RICS claimed, and showed “a serious and prolonged disregard to professional obligations” set out by the institution.

A statement suggested that both the RICS and Countrywide agreed the £100,000 penalty “was an appropriate and proportionate sanction.”

There has been a spate of senior management changes at Countrywide recently, not immediately related to the two compliance problems that have not become public. 

John Hards - a veteran former head of lettings at Countrywide who rejoined the firm to help it plan for the lettings fees ban - left last month, and Paul Chapman is now known to have been promoted to become national managing director for the group’s sales and lettings businesses.

Earlier this month the agency announced that its new chief operating officer, starting in November, would be Bruce Marsh, a former Tesco finance director who will report to Countrywide’s group managing director Paul Creffield.

This story here was how news of yesterday's £100,000 fine was broken, and contains the full statements from both the RICS and Countrywide.