Mortgage brokers are warning clients to read the small print of contracts with their estate agents, as a new entrant to the market gets its knuckles rapped for misleading advertising.
Shares in online estate agent Purplebricks tumbled 7 per cent on Wednesday (2 August) after it allegedly exaggerated claims by some of its local property experts.
Property experts warned consumers must check the small print before they take out any financial product after Purplebricks was accused on BBC Watchdog of still using advertising claims the advertising watchdog had previously ruled as misleading.
The Advertising Standards Authority last year told Purplebricks it must stop telling customers they could save an average of £4,158 by using its services.
The firm’s deferred payment services were also raised in the programme along with claims by the group’s local property experts about the number of sales and instructions they had achieved.
In a statement today (3 August), Purplebricks stated the BBC programme had “drawn attention to examples of a standard email format that inadvertently still include the [average customer] savings figure”.
The firm apologised for the “oversight” and said it had removed the reference.
It added it was confident the terms and nature of its deferred payment facility were “clear and transparent”.
The facility had been reviewed by the Property Ombudsman and Trading Standards Institute and no issues were or changes requested, it added. Just 0.2 per cent of customers had complained about the facility, according to the firm.
Of the claims that property experts had exaggerated figures, the firm said it believed the figures “fairly reflected the performance of the teams operating in those areas”.
Ray Boulger, senior technical director at John Charcol, said: “I expect a lot of consumers were not aware about the ASA ruling against Purplebricks and the company will now likely take action to address the issues raised very quickly. Negative publicity from BBC Watchdog should clean up any other issues in similar companies if there any too as they will not want to risk the bad exposure.”
David Hollingworth, director at mortgage broker London and Country, said: “There has been a significant and rapid change in the range of offerings in the estate agency market which should hopefully see it become more competitive.
“But while increased choice is a good thing for consumers it also makes it vital that they fully understand the nature of any agreement they enter in to. Comparing quotes on a like-for-like basis should help with that but there’s no substitute for reading the small print.”
Michael Bruce, chief executive at Purplebricks, said: “[We] are committed to the highest levels of customers service and disclosure and we believe this is reflected in the business’ sales growth and higher levels of customer satisfaction.
“We seek to satisfy and surpass our regulatory obligations at all time, and where we find circumstances where we have fallen short we seek to rectify these situations at the earliest opportunity.”
This afternoon Purplebrick shares were up 4 per cent to 456p.
