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Trading Standards boss warns estate agents over in-house referral fees

James Munro of NTSELAT says government is mulling over how to ensure agents' client understand how referrals work.

Nigel Lewis

NTSEALT referral fees

National Trading Standards Estate and Letting Agency Team (NTSELAT) boss James Munro has fired a warning shot over the bows of estate agencies who earn referral fees referring customers to in-house conveyancing, surveying and other property-related services.

His warning came during a Propertymark webinar giving member agents advice on the current guidance relating to referral fees, which are a political hot potato at the moment.

The government is currently mulling over his team’s recommendations on referral fees, which include making sales and letting agents report much earlier when and how they earn income from lucrative mortgage, conveyancing, and surveying recommendations.

“My team is less interested when agents earn a commission from working with a supplier to enable a transaction, and more focussed when they take half of a £500 fee for doing very little work other than referring a customer to a supplier,” he says.

Scathing

Munro was particularly scathing of larger agents who refer clients to internal mortgage and conveyancing services without revealing how the price a client pays for a fee could include intra-group or inter-company referral charges.

“It gets difficult when the same company has an in-house service, but we’re trying to encourage people to shop around so yes, internal fees earned need to be disclosed,” Munro says.

During the lively Q&A, Munro also warned agents that hiding fee arrangements within small-print T&Cs is not acceptable, reminding agents that buyers, sellers, landlords and tenants need to understand how fees will be charged up-front ‘as early as possible’ including within online and print listings too.

Industry reaction

Sean Hooker imageSean Hooker, Head of Redress at The Property Redress Scheme, says: “Agents have to understand that the recommendations have stopped short of calling for a full ban on referral fees so it is in their best interest to cooperate fully with the voluntary disclosure and be as transparent and upfront as possible.

“This means not trying to get round the guidance by trying to hide these fees in plain sight in their terms and conditions or in small print or using jargon and legal speak to confuse or mislead a consumer.

“The redress schemes worked very closely with NTSELAT, the trade bodies and the Government to help draw up their guidance which should be followed to ensure nothing is hidden.

“We will therefore look very dimly on complaints where an agent has been less than open and there is even the possibility that a criminal offence is committed under consumer protection regulations and a case will be escalated by us to James and his team”.

 

Watch the webinar in full.

November 20, 2020

One comment

  1. Is this really the most pressing issue facing the housing market right now?? I’m not sure the folks at NTSELAT have enough to do if they think this is the best use of their time. Do they understand also that the law firm has a professional, mandatory, obligation to advise the client that a referral fee has been paid to an estate agent? This must be placed in the formal Client Care Letter to the client. Since the customer is in fact the customer of the law firm, not the estate agent, for the conveyancing, why does the estate agent have an obligation to advise on the fee?

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