Agents have another 12 months to make referral fees more transparent according to an update from the National Trading Standards Estate and Letting Agent Team.
Speaking at a Propertymark webinar James Munro – the head of the NTSELAT – told attendees the government had welcomed his team’s recent report on the issue, urging referral fees be made transparent upfront and without prompting by consumers.
However, as Coronavirus is politicians’ main priority, Munro says it is likely to be another 12 months before government assesses whether agents have made the issue more transparent.
Last month Housing Minister Chris Pincher responded to the NTSELAT report which recommended mandatory disclosure of such fees to ensure consumers felt confident in the services they received.
This recommendation applied to lettings agents as well as sales agents.
Other recommendations included a warning to be given to customers that they should consider shopping around, plus a public awareness programme and additional industry guidance with professional bodies and redress schemes to encourage compliance.
In a recent survey of The Property Ombudsman members, almost 60 per cent of agents said they had referred customers to external companies, and over 80 per cent of those members admitted receiving a fee for the referral.
The review by Trading Standards noted that the practice of referring customers to a preferred service provider in exchange for a fee was “regularly concealed.”
Munro told the Propertymark webinar that putting referral fees in ‘small print’ such as Terms & Conditions would be considered inadequate, and he suggested agents even go so far as disclosing fees in listings for properties.
He also revealed that next month he is seeing a demonstration of the soon-to-launch Boomin portal, which has a business model heavily reliant on referral fees and incentives to member agents; he will offer advice on how the portal should disclose its fees after he is given the demonstration.
This post has originally been featured in Letting Agent Today.