OFT urges action on broker referral fees
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The Office of Fair Trading has suggested the Government consider a ban on referral fees paid by brokers to estate agents, to combat potential conflicts of interest.
In a market study report called Home Buying and Selling published today, the OFT warned that the prospect of additional income may give the estate agent a financial incentive to deal with some buyers over others.
At the moment, estate agents can charge fees for referring buyers to other service providers - lawyers, mortgage advice - provided the seller is aware of the fees if the buyer makes an offer.
The OFT has now urged the Government to consider whether potential conflicts of interest should be removed, including a possible ban on such payments.
The paper says: “The prospect of additional income may give the estate agent a financial incentive to prefer some buyers over others. We recommend that, as part of its work on the future of estate agency regulation, Government consider further whether the potential for conflicts of interest should be removed, including a ban on such payments.”
OFT chief executive John Fingleton says: “Encouraging new business models, online estate agents and private seller platforms could put useful competitive pressure on traditional models and lead to better value for buyers and sellers.
“The Government can help this process by updating legislation and making sure regulation only applies where it is essential to protect consumers.”
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