Estate agents who refer customers to other businesses but do not make it clear that they are earning a fee, retainer or gift in return for the referral are open to prosecution, the National Trading Standards Estate Agency Team (NTSEAT) has warned.
In its latest briefing document it says that under the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) failure to tell clients about such referrals may lead to a criminal prosecution.
It also informs agents that they may be in the last chance saloon, warning them that unless they start being transparent about referral fees, the government may ban them altogether.
Estate agents are now expected to include details of any referral fees in their standard terms and conditions sent to vendors, and within sales particulars sent to potential buyers.
“The disclosure must be made in a way which is clear, intelligible and unambiguous and have no lesser prominence in documentation than other important terms, conditions, or information,” the briefing document says.
“Plainly the most important information in deciding whether to accept a service is the price of that service.
“Any practice by an estate agent which hides the real price of a service is capable of being found to be an unfair commercial practice under the CPRs.”
Mark Hayward (left), Chief Executive, NAEA Propertymark, says: “We have long called for greater clarity and transparency on referral fees.
“It’s essential that if you are referred for financial or legal services by your estate agent, you understand that they are receiving a commission, and how much this is.”