A quarter of home owners have felt they had to use a mortgage broker recommended by their estate agents, the Financial Conduct Authority (FCA) has revealed.
The regulator has undertaken a poll of almost 13,000 adults about their experiences and understanding of financial products, dubbed the Financial Lives Survey.
Estate agents are barely mentioned in the report, except for three brief questions revealed in the notes.
Mortgage holders were asked if they felt they had to use the mortgage broker recommended by the estate agent, with 26% saying yes.
Respondents were also asked what influenced them to use an adviser at a mortgage lender and separately why they used a particular mortgage broker.
Only 6% overall said an estate agent recommended using a mortgage lender’s adviser, compared with 53% going to a bank branch or 37% consulting a lender they have used before.
Mortgage holders were separately asked what influenced them to use a mortgage broker, with 23% citing estate agent recommendations.
This may go against guidance from the National Trading Standards Estate Agency Team at Powys County Council which says estate agents should not pressure potential buyers to use associated services such as an in-house mortgage broker.
The FCA is due to issue a report on the mortgage market next spring, which is expected to touch on the relationship between brokers and agents.
Meanwhile, the Financial Lives Survey also found 15% of mortgage borrowers would struggle if repayments went up by less than £100 per month.
We all know exactly what this is driving at and I am not saying it is wrong, but there is a huge difference in the words recommend and pressure.
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I have had several reports in recent months where buyers (who’ve already sold stc and arranged their mortgage with my recommended broker) have been told their offer will not be forwarded or considered unless they speak to XXXXXX mortgage advisors. I’m logging every case and asking each client to report it. Sadly, most ‘go with the flow’ as they fear losing the property if they don’t comply. It’s heinous behaviour.
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We make all purchasers speak to our financial adviser.
It’s part of the offer process.
How can you confidently put an offer forward otherwise?
Whilst at the meeting to check their financial standing the mortgage adviser will check to see if they have the best rate and been given the best advice.
It’s a free service to both the seller and buyer.
If there are multiple offers on a property we will advise the buyer that all things being equal the buyer that uses our mortgage adviser and solicitors will stand a better chance of their offer being accepted. This is because we know and trust the third parties.
Nobody is under any obligation. They are welcome to use whoever they want.
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What if the buyer has no interest in speaking to your adviser?
Surely he can provide information to you of his financial representative without being coerced into being interviewed and sold a product by yours.
Pretty much conditional selling it seems to me.
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Of course they can refuse.
But it does not allow us to do our jobs correctly.
If we ever get anybody that refuses (which is rare, why would they?).
We just say to the seller X offer has been put forward however we have not had this verified by our financial adviser as they are unwilling to see them.
In light of this we advise keeping your property on the market until a mortgage offer is received by the solicitors.
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I would suggest that your company procedure is the absolute definition of pressure selling – but with a smile – see what I did there?
Mind you, I always recommended keeping the property visible for sale until the survey was booked, even if they were using my own mortgage advisor – because it just makes sense…
Get the buyers AIP as a start (yes I know it essentially means nothing) and get your mortgage advisor to speak to their mortgage advisor – that would work. It is also looking after the best interests of your client, rather than trying to justify inaction.
I think that a buyer that turns up without a mortgage sorted already is potentially a waste of time. I mean, come ON!
I can’t believe the number of buyers that waste time by viewing properties and then not being able to get the mortgage. The number of times I heard my negs say “Yay! Mortgage Lead!” to find out that the buyer couldn’t afford a shed, let alone a flat or a house…
I am surprised the report said just 26%, tbh.
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I think people do forgot two vital pieces of information when compiling these so could reports.
1. We work for the seller, it is our job to make sure a buyer that has an acceptable offer on a property goes through to completion. A process needs to be in place to attain this.
2. We are a business, making money is not evil.
I would never want a buyer (or seller) to be financially penalised using our services or that of a third party we endorse. And they always have the option to say no without ramifications.
It’s not pressure selling. Its looking after our client and offering our services to another party.
Perhaps we are just more skilled at delivering it than others 😉
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Arthur your hypocrisy is off the scale.
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I am merely picking words out of the report. I am not defending certain well known brands, we all know that some estate agents are more likely to “encourage” purchasers to use their mortgage advisor, but the above post does not talk about pressuring them. Much like people can get pressured to use an estate agents recommend solicitor in the hope that it will make the process smoother. You never know, some companies may even be offering people financial incentives to use their own solicitors and mortgage advisors.
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Where is the outraged brigade today?
High street agents conditional selling and misleading customers, who would of thought.
Will we get 70 comments condemning this, I highly doubt it.
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I’ll think you find we might get to that sort of level. Those of us that are good fair estate agents, dont believe in brow beating people to use their in house services, it is not a line i go down. If a buyer hasnt done much about their mortgage, the service will be offered, if they decline, we will leave it at that.
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‘Those of us that are good fair estate agents’
You highlight a very relevant point ArthurHouse02 and one which I sincerely hope the likes of dompritch and cyberduck might take a moment to acknowledge.
There are good, bad and indifferent estate agents just as there are good, bad and indifferent operators in any walk of life you care to name.
And I have absolutely no doubt there are good, bad and indifferent LPEs in the Purplebricks outfit as well.
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Response to dompritch:‘High street agents conditional selling and misleading customers, who would of thought’.
So if a PB a customer deferred payment they MUST use PB’s conveyancing partners and Close brothers?
If they do not they then get charged £360?
Are they not being ‘coerced’?
Particularly when 3 out of 5 LPE’s forgot to mention this as highlighted on Watch Dog?
Most traditional agents defer their commission to completion of the deal – somewhat more transparent apparently.
Have I heard of people booking viewings with PB getting a phone call offering their mortgage services, – is that not browbeating?
With regard to misleading customers, I think you may recall that the ASA ruled against PB for that yesterday?
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Over an hour since Thomas Flowers well made points in the post above and not a squeak from the ‘outraged’ PB mob who get steam coming off their keyboard as soon as anyone has the effrontery to criticise their purple god.
Not even a quack from Cyberduck . . . .
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where is the rebuff to the above ” So if a PB a customer deferred payment they MUST use PB’s conveyancing partners and Close brothers? If they do not they then get charged £360? ” from Dompritch and Cyberduck….ominously silent
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To be fair dompritch134, many of us small independents have been shouting about this and condemning it for years.
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Maybe they should do a poll on what mortgages go to offer quickest in house broker or bank, actually, start with how quick you can get an appointment.
If you can go to whole of market, why would anyone want to limit their options? Basic common sense tells you that if the agents broker is doing the mortgage there is more control, they can ensure things get done when they should and the broker returns their call!
With regards to the dodgy practices used to get clients in front of a broker, there is no place for that. There should be no pressure, no catches and no stipulations placed on the client.
An agent must be confident that the offer / client they are putting forward can actually obtain the funds to complete the transaction, so unless they can prove that, we must find out.
No issue if they have an AIP, then it’s just a case of weather we can beat the deal, surely that’s what its all about? I’ve lost count of the number of people that have saved £100’s a month because they took some time to engage on the subject.
Don’t forget your buyer needs to be ready, willing and able or you won’t get paid!
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So in the 21st century, the appearance of, or actual conflict of interest still does not worry Smile Please and others. Surely our role as professionals is to act in the clients best interest at all times (a concept that I am sticking to, as best I can) ? Our fee income is entirely from sales commission without referral fees of any description, and we are proud to advertise that fact, a fact that seems to re-assure my clients and helps me sleep at night with a clear conscience. My staff are thus not troubled by referral targets, and can focus on their clients Smile Please wrote :
We make all purchasers speak to our financial adviser.It’s part of the offer process.How can you confidently put an offer forward otherwise?
In seeking merely to qualify your purchaser, as you claim, you appear to have ducked this obligation by requiring all purchasers to be exposed to another salesman for a different range of products. The Code of Practice for Residential Estate Agents Clause 10a sets out our obligations to “take reasonable steps to find out from the buyer the source and availability of their funds for buying the property….”
How can any cash purchaser, or purchaser with a pre-agreed mortgage or funding be confident their offer will be treated fairly when the opportunity for a referral fee still appears, in this day and age, to be such a pre-occupation for such agents ? How can your clients be assured of getting bid recommendations that have not been filtered to suit the agent rather than the seller ?
Sadly t’was ever thus and little progress seems to have been made.
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Superb posting scruffy. Agree 100%
Leading on from that here is one for further discussion –
Would we get better performance from staff and give clients more honest and unbiased advice if we paid sales/listing staff proper wages and ditched commission payments.
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I am at a loss to see where a conflict occurs?
We need to know the offer is genuine. They are of course made aware of potentially better rates that Halifax, Nationwide or any other bank only able to offer one companies offering.
Believe me there is no hard sell. We only want to work with people that want to work with us.
We do not like fall throughs which is why offers are checked.
We also check the full chain and speak to every link in it before an offer is put forward. Shall we just take the word of the purchaser they are under offer from somebody with nothing to sell?
Not all agents with an inhouse advisers treat buyers like CW, LSL or Sequence. – Its can be a real added service not a strong arm for additional sales.
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it is amazing to read some of the comments on here.
The Estate agents act clearly states you must make reasonable efforts to ascertain the purchasing capacity of any buyer. If you do not, then you are breaking your own rules and regulations.
Having said that, most estate agent based brokers have a limited panel and still use the phrase independent, which of course is tosh.
And again these brokers use life companies where the commission rate is as much as 250% of Lautro or 2.5 times what you would pay from the life office direct.
So you are now paying a broker fee plus inflated life commission and a limited panel.
There is one broker i know who is a certain lenders biggest introducer (the have a tower in London) and 90% of his business goes to them! Hardly independent.! Making a profit is healthy but dishonesty is not consumer friendly.
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