A new campaign designed to help brokers manage conditional selling by estate agents has been launched by mortgage advice firm Access Financial Services.
The letter campaign aims to stop conditional selling, whereby estate agents put pressure on home buyers to use their own in-house broker, rather than an independent adviser, as they look to secure the purchaser’s mortgage business and the commission from the property sale.
Access Financial claims that some buyers were occasionally told that their property offer would not be put forward to a vendor if they did not use the estate agent’s mortgage broker, which is against the sector’s Code of Practice.
If accurate, although no evidence has been provided, the practice would also be a breach of The Property Ombudsman’s Code of Practice for residential estate agents to carry out a conditional sale by pushing buyers to use their adviser services.
Access Financial Services has created a free letter template for mortgage brokers to use which is intended to be sent to the estate agent. It lets them know that the practice is against the rules.
If the estate agent does not respond or continues to pressure the buyer, then Access Financial Services encourages brokers to report the firm to The Property Ombudsman. This will need to include evidence of the breach including the letter describing the pressure the buyer has been put under.
Karl Wilkinson, CEO of Access Financial Services, said while most estate agents operate within the Code, it was time to rid the sector of the practice.
He continued: “Our own brokers have experienced the effects of this conditional selling by a minority of estate agents. It can cause clients distress and, at times, it prevents clients from being able to work with brokers they have a long-standing relationship with.
“As well as helping our own advisers, we wanted to offer our support to others in the industry who continue to suffer from this dubious practice. Now more than ever, as we head into recession, it is important for both brokers and estate agents, to support each other so that buyers can benefit from the best advice.”
Wilkinson added: “We often hear estate agents claim the need to financially qualify a buyer despite that buyer already holding an agreement in principle. While it is completely legal for estate agents to endorse the use of their in-house mortgage adviser, it is illegal for them to insist that a client uses them.”
That practice has been going on for years but not as blatant as in the past due to TPO code of practice. But just like everything in life, some found a way around it, to keep doing it the old way. An agent has a duty of care to qualify a buyer under the code of conduct. How does one do that? You put them legitimately in front of your in-house mortgage advise! Its then down to their training and ability to retain the business in-house. Nothing illegal and actually very good business practice so long as you don’t cross the line. Having first foot in the door is always going to be more successful than the rest of the FS industry trying to cold call a customer, particularly if they are giving the same advice. But when you read the small print, who actually is getting the best deal …. the customer? Charges for service/commissions often put the customer back to an in-house estate agent (not always!). I’ve heard this argument before, but do not believe it is as rife as it was decades ago. Sour grapes comes to mind from people always at the back of the line?
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
So what you’re telling me, is that these fixed-0% fee online agents who make their income using “additional services” are actually a bad thing for the industry?
…. Nooooooooooo, surely not!?
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Ding, ding, ding – we have a winner. Totally agree.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register