A petition calling for a ban on referral fees paid to estate agents has failed to meet its target of 500 signatures.
The petition was set-up by Julie Close, in response to the cyber-security crisis at Simplify Group, which has seen its conveyancing brands hit by major IT problems, with all their websites down for the past month.
The petition set-up by Close, who works for a firm of licensed conveyancers, argues that the payment of referral fees to estate agents “is not in the best interest of the public”. It closed yesterday, having attracted 361 supporters.
Thousands of property purchasers remain in limbo with transactions not being processed.
Simplify has arrangements with a number of estate agencies to refer business to them. But the payment of referral fees in conveyancing has been the subject of debate for several years.
In October 2020, a report from National Trading Standards’ estate and letting agency team called for mandatory disclosure of referral fees, instead of a ban.
The petition stated: “The payment of referral fees denies the consumer choice. The Payment of referral fees allows for an environment where estate agents can apply pressure or manipulation to use the ‘Pet’ conveyancer.
“The buyer/seller are not given the time or opportunity to explore the market; look at reviews or gain other quotes and make their own choice on who is best to serve their interests.
“Often there is no transparency and full disclosure that a referral fee is involved and the amount being paid.
“The payment of referral fees to gain conveyancing business denies investment into improving systems, training and delivery of quality services.
“Instructions should be gained by delivery of a quality service, repeat business and recommendations from previous users. It will necessitate that the conveyancing companies to become more ‘Client Focused’ rather than looking at other opportunities to buy business.”
You can view the petition here.
Sadly this petition was too narrow in focus, and missed the spot through poor publicity.
I would like to think there are at least 500 independent agents who would have supported such a petition if it embraced all referral fees, but perhaps Julie categorised us as turkeys being invited to vote for Christmas. Julie had her own beef in relation to conveyancing but it extends far further and little has been done so far.
Without rehearsing the same old arguments that my colleagues have heard me rant about over many years, it is my view that the pursuit of referral fees as an additional income stream has harmed estate agents’ reputation and has quickly discouraged many younger entrants from either joining or staying in our industry.
It is not an earned income, it is derived by channelling relatively naive purchasers into a belief they will get preferential and presumably best service. With the evident conflict of interest it is clear they are not, 9 times out of 10.
Two examples: a local multi-chain “independent” aggressively touts its financial/mortgage services through a named provider, offering a second class service to those who choose to avoid it. It then has the gall on its webpage to declare that no referral fees are paid by said provider. Well, isn’t that re-assuring ? Until you discover the named provider has exactly the same directors as the agency.
: a client used a “recommended solicitor” for their farm purchase a few years back, and this year wanted to sell off part of the land and buildings in a simple mortgage-free transaction. Approaching their recommended solicitor they used for its purchase, they were told that due to the relationship they had with the agent who originally referred them, they had to concentrate and prioritise their work exclusively so “could they call again in a few months ?” Seeing such a letter from “their” solicitor, and with whom they had persuaded to create a relationship for the future, simply beggars belief.
If the purpose of paying referral fees is to gain access to a wider client base available via such arrangements, you would imagine that having secured and paid for such new clients, a little service might be available to them, particularly if no referral fee need be paid for the subsequent work.
Transparency, acting in the client’s best interest at all times, and referral fees might be able to work together, but there is insufficient convincing evidence of it so far.
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I do not think it has discouraged anyone from being a EA.
Most people would not even know it was something that happens before they were in the business. I doubt they would care anyway.
What has discouraged people is the long hours for low wages.
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