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Referral Fees: No change “for a while” but reform coming

The Trading Standards report on the future of referral fees is almost completed and will be sent to government next week.

However, James Munro - head of the National Trading Standards Estate and Letting Agent Team and author of the report - has told EAT that it will “take a while” for government to decide next steps.

Munro says the report will be a summary of findings based on NTSELAT’s assessment of referral fee transparency over the past 12 months, following the introduction of new guidelines.

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The report will include a set of options for government to act on - these are likely to range from amending existing Trading Standards regulations, which could happen within months, to an outright ban which would require legislation. 

The latter course - if chosen by government - is likely to take some years, says Munro, as it would involve substantial Parliamentary time just as priority is being given to Brexit and related trade issues.

A further option could be for NTSELAT to pursue individual agents seen to be flouting transparency on referral fees with specific investigations: if this problem grew to a wider number of agencies, a warning could come from NTSELAT to the agency industry as a whole threatening specific legislation if the problem continued.

Munro told EAT that while some agents have been hugely cooperative in telling consumers about fees - he singled out Foxtons and Hunters. But other agencies, often smaller ones, made it clear to NTSELAT that they were not informing consumers about fees. “That beggars belief” he said.

In February 2019 NTSELAT told agents that ”failure to disclose referral arrangements may render an estate agent liable for criminal prosecution under the CPRs and/or action by NTSELAT for warning or prohibition.”

Guidance sent to agents at that time outlined how they should inform consumers of any referral fees they received for recommending the likes of conveyancing, legal services or other connected services. 

That guidance was produced by NTSELAT with assistance from NAEA Propertymark, The Property Ombudsman, the Property Redress Scheme, the Guild of Property Professionals and the Royal Institution of Chartered Surveyors. 

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