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Possible incidence of conditional selling branded "vulture marketing"

Journalist: Newspage News Desk

ended 11. August 2023

Mortgage brokers have responded to a potential incidence of conditional selling at a major UK estate agency chain (see screengrab, bottom).

According to Rhys Schofield of the Derbyshire-based mortgage advisers, Peak Mortgages and Protection: “Absolutely, this constitutes conditional selling in that the estate agent has agreed the sale on the condition of using their own mortgage broker, something expressly forbidden by The Property Ombudsman.”

Scott Taylor-Barr, director of Leicester-based broker Barnsdale Financial Management, added: "Section 9c of the Estate Agents Code of Conduct reads: 'By law you cannot make it a condition of passing on offers to the seller that the person wanting to buy the property must use services offered by you or another party. You must not discriminate, or threaten to discriminate, against a prospective buyer of the seller’s property because that person declines to accept that you will (directly or indirectly) provide related services to them’. The content of the email, as presented, seems to cross that line."

Michelle Lawson, director at Fareham-based broker, Lawson Financial, notes that: “This practice has sadly always gone on, and it is illegal to conditional sell, however, the estate agents' power gets misused and can be detrimental to the buyer and seller both procedurally and financially as nobody checks. Agents generally prey on the naive such as first-time buyers as they know that they are unlikely to know the process. Sadly, these things are rarely reported and rarely action gets taken so this keeps carrying on. Buyers and sellers should make themselves aware of the Estate Agents Code of Conduct from The Property Ombudsman Service, which details the process and how agents should act and this would enable them to call out these agents who give other good reputable agents a bad name.”

Meanwhile, Bob Singh of Uxbridge-based mortgage broker, Chess Mortgages, was withering, describing the situation as “vulture marketing”: “This poor client is faced with losing the property just because he’s not using the in-house mortgage broker. Absolutely deplorable".

Lewis Shaw, founder of Mansfield-based Shaw Financial Services, was unequivocal: “To my mind, this is conditional selling. No matter how often we raise this issue, nothing is done about it. Certain estate agency groups either can't control what happens in their branches, or the culture is one where it's freely allowed, possibly even encouraged. We need to see proper penalties for those involved, and the FCA must take action to stamp this out. One thing is for sure: this falls foul of the estate agency code of conduct and highlights the need for financial services to be broken apart from estate agencies as clearly they are unable to self-regulate.”

Mortgage industry veteran, Pat Bunton of Bristol-based Langley House, also lamented the practice and urged the regulator to take action: “Groundhog Day. When will some of these firms actually take action to drive the rogues from their midst, or is it just commercially convenient to turn a blind eye? With Consumer Duty now in play, it’s hard to see how any organisation can conclude pressure tactics like these are in any way acceptable, even though, of course, they weren't before Consumer Duty. The FCA: are you watching?”

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12 responses from the Newspage community

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Pat Bunton
Mortgage Practioner & Industry Expert at LiveMore & Langley House
Groundhog Day. When will some of these firms actually take action to drive the rogues from their midst, or is it just commercially convenient to turn a blind eye? With consumer duty now in play, it’s hard to see how any organisation can conclude pressure tactics like these are in any way acceptable, even though, of course, they weren't before Consumer Duty. The FCA: are you watching?
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Michelle Lawson
Director at Lawson Financial
This practice has sadly always gone on, and it is illegal to conditional sell, however, the estate agents' power gets misused and can be detrimental to the buyer and seller both procedurally and financially as nobody checks. Agents generally prey on the naive such as first-time buyers as they know that they are unlikely to know the process. Buying a property is highly emotive and agents can control that desperation by making these 'demands' as well as benefit financially themselves, which is often not disclosed. Sadly, these things are rarely reported and rarely action gets taken so this keeps carrying on. Buyers and sellers should make themselves aware of the Estate Agents Code of Conduct from The Property Ombudsman Service, which details the process and how agents should act and this would enable them to call out these agents who give other good reputable agents a bad name.
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Bob Singh
Founder at Chess Mortgages
Vulture marketing. It’s the only way estate agents know. I should know - I used to work in an estate agency in the early 90’s. Whilst we “qualified” clients we never made it a condition. As we see here, times may have moved on but these sharp practices remain. Until the law changes or huge fines are imposed there will be no change in the status quo. This poor client is faced with losing the property just because he’s not using the in-house mortgage broker. Absolutely deplorable. The corporate agents have pressure from above as they’re often owned by financial services concerns so this type of behaviour falls foul on many levels and should be clamped down on.
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Nicola Schutrups
Managing Director at The Mortgage Hut / William James Wealth Management
This is absolutely shameful, especially in a time when it's important consumers get the absolute best value for money, not forcing them to pay fees and potentially get a worse mortgage product with their limited panel. These are the type of bad behaviours that other industries stamped out in the 1980s and 1990s, however, the industry regulators in both property and financial appear to still be asleep on this or unwilling to take robust action. If Connells' expectation is to make a certain income figure from a transaction they should do it in an open and transparent way, not by stealth charges and bad behaviours.
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Darryl Dhoffer
Founder at The Mortgage Geezer
Until the Property Ombudsman crackdown on "in-house" services, I'm afraid these practices will continue. Prep clients with the following lines from the Property Ombudsman Code of Practice for Residential Estate Agents: By law you cannot make it a condition of passing on offers to the seller that the buyer must use services offered by you or another party. You must not discriminate, or threaten to discriminate, against a buyer because that person declines to accept that you will (directly or indirectly) provide related services to them. Discrimination includes but is not limited to the following:
• Failing to tell the seller of an offer to buy the property.
• Telling the seller of an offer less quickly than other offers you have received.
• Misrepresenting the nature of the offer or that of rival offers.
• Giving details of properties for sale first to buyers who have indicated they are prepared to let you provide services to them.
Send it to the Branch Manager.
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Steven Morris
Advising Director at Advantage Financial Solutions
Of course, it's conditional selling. The agent has clearly stated that the client's offer was 'based on' (aka condition of) using the agent's in-house broker and now the offer would need to be 'reconsidered' on the basis the client now isn't. There isn't scope for subjectivity here, the Trading Standards guidance is crystal clear in section 9d: "By law you cannot make it a condition of passing on offers to the seller that the buyer must use services offered by you or another party. You must not discriminate, or threaten to discriminate, against a buyer because that person declines to accept that you will (directly or indirectly) provide related services to them." If you ever wondered how estate agency-linked mortgage brokers, generally brands whose name starts with a "C", stay in business, despite their terribly limited panel of lenders, the explanation is easy; because of conditional selling. It is literally their business model.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Section 9c of the estate agents code of conduct reads: "By law you cannot make it a condition of passing on offers to the seller that the person wanting to buy the property must use services offered by you or another party. You must not discriminate, or threaten to discriminate, against a prospective buyer of the seller’s property because that person declines to accept that you will (directly or indirectly) provide related services to them" The content of the email, as presented, seems to cross that line. If not, it certainly sails very close to it and, especially with Consumer Duty now upon us, I'm not sure how comfortable I would be, as a regulated financial services professional, receiving leads that have been obtained in this manner. We absolutely can and should do better than this, both in terms of the estate agents and their in-house financial adviser.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
Absolutely, this constitutes conditional selling in that the estate agent has agreed the sale on the condition of using their own mortgage broker, something expressly forbidden by The Property Ombudsman. How about the estate agents are just honest that they probably accepted this client's offer over the others because they'd earn more cash through doing the mortgage and probably pushing their own awfully reviewed conveyancing services. The estate agent will say this was an 'isolated incident' and trot out the usual corporate lies, but how many 'isolated incidents' does it take to admit that you run a business that just doesn't care about the rules?
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Jonathan Miller
Director at 365ifa
In the last four weeks, I have seen the very same practice from the Sequence Group, with two of their brands in different parts of the country. Both clients remained strong and fought the process, with one client avoiding an agent's introductory fee of £539 for the 'in-house' solicitor referral. I understand we are all in the same business and the market has changed, but after seeing this screengrab, the process mirrors our cases, which to me would indicate this policy is national rather than local. I feel that if an agent reassures their clients by putting links to The Property Ombudsman on their website, then they should follow this up by adhering to the rules set out in their Code of Practice.
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Ian Middlemass
Head of Operations at Pia Financial Solutions
The emphasis on "better chance" could be seen as coercive, creating a dependency on the in-house broker's services. This situation might be viewed as exploiting the buyer's vulnerability for the agency's gain. Market pressures might indeed be contributing factors to the rise of conditional selling. Agencies, in an effort to secure deals and streamline processes, are resorting to these tactics. The combination of financial pressures and the desire for smoother transactions is to push buyers towards in-house brokers. To address this issue, industry bodies, regulators, and agencies should collaborate to ensure transparency, fairness, and the protection of buyers' rights. Penalties should reflect the seriousness of the offence, ranging from fines to suspension of licenses for repeated offenders. Establishing clear guidelines and codes of conduct for agency-broker relationships, along with regular audits, could deter such practices.
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Anil Mistry
Director and Mortgage Broker at RNR Mortgage Solutions
For several years, a prominent High Street chain brand has persistently engaged in this behaviour. It is now imperative that the relevant authorities intervene decisively and initiate measures against this firm. The autonomy of the buyers in selecting their preferred mortgage services and conveyancing should be upheld without any compulsion to engage with the firm in question.

A robust response is warranted, potentially including substantial financial penalties. The ramifications extend beyond the purchasers, potentially affecting sellers as well. This is particularly evident in scenarios where a motivated and proceedable buyer, opting not to utilise the estate agent's in-house broker, faces rejection of their offer for this reason. This practice is unequivocally unjust and raises ethical concerns.
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Gareth Davies
Director at South Coast Mortgage Services
This is without question conditional selling and I guarantee most brokers will instantly know who the guilty firm is. The trouble is that very little seems to get done over it. Ever. Morally how can you insist on a buyer using a restricted (and expensive) service over an independent advisor, purely just for a bit of extra commission? You can't always blame the individual sales negotiator either though, these immoral practices are pushed from the managerial level. It's about time estate agency was regulated in the UK.