Proposals by National Trading Standards that homebuyers and sellers should be told about third party referral fees in the estate agency sector would lead to more shopping around and potentially better outcomes, brokers have said.
NTS had said “typical arrangements exist” in respect of referrals including for financial services, such as mortgages.
As well as disclosing such fees, NTS recommended customers should be advised to shop around for a third-party provider that offers the best value and service.
Aly Kassam, director at Easier Finances, welcomed the proposal.
Mr Kassam said: "My view on estate agents referring to mortgage brokers and solicitors is there is a bit of a conflict of interest, as the agent is retained by the vendor.
"Agents receiving fees, effectively from both ends of the deal can’t be good for the consumer."
Barry Ireland, financial adviser at The Finance Roome, said knowledge of referral fees would cause many customers to take a referral “less on blind faith” and check the market to some degree.
Mr Ireland also said: “The prospect of [an estate agent] potentially having to justify the suitability of their mortgage broker recommendation in light of customers’ questioning financial inducements, has a good possibility of causing them to re-think referrals to firms who work with only a limited pool of lenders or have a poor track record of meeting customer needs.”
He added the move would see brokers who offer a limited service find it more difficult to obtain business.
Andrew Brown, managing director at Bennison Brown, said agents should be transparent but could still recommend a broker.
Mr Brown said: “The estate agent should confirm to the client there are many brokers who can potentially help them, recommend they use a broker who is whole of market, and to encourage clients to do their own research to find a brokerage with a good reputation.”
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