Posts with tag: referral fees

Letting agents must prepare for referral fees changes, says PayProp

Published On: November 4, 2020 at 9:30 am

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Categories: Law News,Lettings News

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Letting agents should prepare to disclose the third-party referral fees they receive to landlords and tenants, according to PayProp. 

The rental payment automation platform says that guidance for the lettings sector is likely to follow, as Trading Standards has made property sales-focused referral fees recommendations to the Government.

Trading Standards calls for greater transparency

In October the National Trading Standards Estate and Letting Agency Team (NTSELAT) published proposals on estate agents’ referral fees. PayProp highlights that the aim of the report is to aid the Government in creating a transparent marketplace in which consumers feel more confident in the services they receive.

The proposals suggest that estate agents should be required to disclose any fees they receive when referring clients to other service providers such as conveyancers.

The NTSELAT has called for a public awareness programme to alert consumers to hidden referral fees. It has also called for additional guidance for agents and increased encouragement of compliance by redress schemes and professional bodies.

Neil Cobbold, Chief Sales Officer at PayProp, says: The recent report from the NTSELAT covers the sales market, but it would not be surprising if any future guidance from the Government also includes the rental sector.

“Recent legislation covering the sales market, such as the new anti-money laundering rules introduced this year, has often been extended to lettings as well.”

“Agents should not assume they will be exempt from this change either and should instead start preparing for changes to the referral fees system. They can do this by disclosing the fees they receive to consumers if they are not doing so already.”

Best practices now could prevent outright ban later

PayProp points out there has been speculation that Trading Standards would urge the Government to ban agents from receiving referral fees entirely. However, the proposals currently only call for mandatory disclosure.

Cobbold suggests that if agents are quick to disclose referral fees to consumers voluntarily, Trading Standards and the Government could be persuaded away from a future outright ban.

He says: “Full disclosure and transparency from agents can allow them to keep earning important additional income from referral fees, while at the same time offering more protection to consumers.

“The NTSELAT has acknowledged that referral fees have ‘a place in business’ if they are used ‘ethically and transparently’, so it’s up to agents to make sure they follow any disclosure guidelines set by the Government to avoid a stricter clampdown further down the line.”

Time for agents to prepare for full disclosure 

Housing Minister Christopher Pincher positively received the report, saying he will now ‘carefully consider’ Trading Standards’ recommendations.

Further guidance is also being worked on for the industry by NTSELAT. The team has called on consumers to report cases of agents not disclosing referral fees.

Cobbold says: “It’s unclear how long it will take for the Government to review Trading Standards’ recommendations, particularly as the Covid-19 pandemic remains its top priority.

“However, there is a clear trend towards greater regulation of the industry, as evidenced by the Tenant Fees Act and the upcoming Regulation of Property Agents legislation. It would be prudent for letting agencies to take the necessary steps to start disclosing referral fees now so they are ready if and when the Government takes action.

“Providing a transparent service is in the best interests of consumers and should already be a key objective for professional agencies. Firms taking this approach can demonstrate their commitment to customer service.”

Be cautious with price comparison sites

Published On: September 12, 2015 at 10:55 am

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Categories: Finance News

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The Financial Conduct Authority (FCA) has recently urged caution from consumers using price comparison websites. Despite widespread promotion of these types of sites, the FCA has found that many are not meeting consumer expectations.

Fees

If a price comparison website fails to adhere to or reach basis industry requirements, they could receive a fine, or at worst, be shut down.

The FCA has discovered that one of the major issues with these sites is that they do not always compare like for like products. For example, insurers have been seen to offer a competitive price against a policy from a competitor, when in reality, features such as cover are less adequate. Therefore, consumers opting for the cheapest deal will not receive the same benefits as those offered in the competitor choice.

Money expert Annie Shaw explains that, ‘websites also make their money by referring customers to the insurers in exchange for a fee.’ This, Shaw suggests, means that they, ‘could easily be tempted to give prominence in their search results to firms that are offering the biggest referral commission.’[1]

Shaw said that this method could see websites leaving out insurers, ‘who don’t want to pay their fees but who could be offering the best deal for the customer.’ She added however that, ‘the good news is that the FCA is going to be cracking down on the comparison site firms and asking them to make changes.’[1]

Rules

For consumers utilising price comparison websites, there are a few key rules that if followed, will greatly ensure the best deals are found. The rules are as follows:

Be cautious of special offers 

These could come in many forms, such as ‘best buys’, ‘editor’s’ choices or ‘last chance to buy.’ While all of these types of deal should still be considered, consumers should be wary that they might just be heavily promoted as a result of referral fees.

Be cautious with price comparison sites

Be cautious with price comparison sites

Compare like for like

Although similar products may arise following a specific search for insurance, one may have a low premium but a high excess charge. Shaw remarks that, ‘the lower the premium, the higher the excess is the usual rule of thumb.’[1]

Cheaper may not mean better

An insurer may have low premiums as it has had a poor track record of responding fully to claims. Additionally, an insurer may be raising additional funds by making customers call a premium rate number.

All may not be as it seems

Shaw warns that, ‘comparison sites try to make your application as easy as possible, so that you go on to buy and don’t get put off by lots of niggly questions at the start of your application.’

‘That means that the site may not ask you for enough information to give you an accurate quote.’[1]

Look at more than one site

Consumers should always use more than one comparison site. Different sites will include alternative deals and offers.

It is important to remember that comparison sites only indicate a guide to what is on offer in the market. In addition, some larger insurers will not appear on comparison sites.

[1] http://www.saga.co.uk/money/news/2014/july/what-you-need-to-know-about-insurance-comparison-websites.aspx