Mortgage advice firm launches campaign against conditional selling

Mortgage advice firm launches campaign against conditional selling

A mortgage advice firm has launched a campaign against conditional selling in a bid to put an end to “intimidation tactics” by some estate agents when trying to get clients to use their in-house brokers.

Access Financial Services has put together an email template for brokers who feel threatened by the practice, which can see them cut out of the deal process if clients feel they should drop them in favour of an in-house broker.

The letter is designed to be initially sent to the estate agent.

Article continues after advert

The broker can attach a decision in principle certificate and proof of deposit funds to prove that their client can afford the house purchase.

Often, estate agents will justify a meeting with their in-house broker on the basis that they need to verify the client’s affordability for the mortgage.

If the estate agent either does not respond or continues to “pressurise” the client, then Access FS said it advocates the broker to report the estate agent to the Property Ombudsman. 

Evidence of the breach, the broker said, can include the letter sent to the estate agent and one from the client describing the pressure they have been put under.

Considered an 'undesirable practice' in the rules governing estate agent business, in extreme cases, estate agents which fail to pass on offers when required to do so can face a formal warning or a banning order from the regulator.

The Estate Agents Act 1979 also states that every offer must be put forward to a seller irrespective of which mortgage broker the buyer uses. 

Independent advisers have previously said that these sales tactics left vulnerable clients in tears, left properties on the market for longer than they needed to be and, in some cases, put off buyers entirely.

Chief executive at Access FS, Karl Wilkinson, said his brokers have experienced the effects of conditional selling by “a minority of estate agents”.

He continued: “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.”

Wilkinson said he often hears estate agents claiming they 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,” he said.

“While the majority of estate agents operate within the code and have a positive relationship with many mortgage brokers, it is time we stamped out the bad practice of the few who damage things for the rest.”

Earlier this year, FTAdviser was made aware of eight instances where agents - all belonging to estate agency Connells - had exhibited various forms of conditional selling.