Referral Fees Overhaul – About Time!

Date Published 23 January 2019

In an industry beset with a negative image, I have never understood why it would risk further criticism by making referral fees a part of its mainstream income.

How can you, with any degree of integrity, recommend a company that is paying you for the privilege? At the point of payment, your credibility in recommending any business falls away and with it your trustworthiness.

We have, from the very start of our business, made it a priority to never accept a referral fee from any associated companies, no matter how hard they were pushed on us. We also do not recommend any business we have never worked with; how could we reliably endorse an unknown quantity?

With agencies making a very healthy income from referrals, (a Midlands agency has recently confirmed receiving payment of £5 million in referral fees from its 20-year association with a conveyancing firm), most would have thought us mad.

We, however, felt very strongly that a ‘recommendation` had to be genuine and had to have been borne out of our own positive experience of that company, not driven by the fact that they were to reward us financially.

The Collins English Dictionary states that `A recommendation of something is the suggestion that someone should have or use it because it is good`. To know this, you would have to have had first-hand experience of the company through your own dealings.

At last, the National Trading Standards Estate Agency Team has caught on and is going to issue new guidelines to agents for referral fees from next month. Their content is not yet known but there is also going to be an updated code on the issue from The Property Ombudsman. There will then be a review of the revised fees system in about a year`s time.

Whilst the powers that be are finally moving in the right direction the timeframe is woefully inadequate.

Don`t wait! We would caution you now, as a buyer/seller or service user, to ask your agent and mortgage broker what their reward is for their specific recommendation. If they own up to a monetary payment, ignore their advice and look for a more scrupulous adviser as their ‘recommendation` will in all probability not be a `good` one!

Natalie