If a buyer presents themselves to an estate agent with little idea about the process it’s not surprising they would take their advice – a trusted source and one that will be clear about what you need to do.
And for the vast majority of agents out there – certainly those that we work with at Paradigm – this is exactly the type of service you will get. All above board, helpful and providing a clear and transparent process to all.
But not all agents are that way inclined and it’s become pretty clear from both anecdotal evidence and new research from the FCA that customers are being mis-led by some agents, especially when it comes to the provision of mortgage advice and where they can access it.
Trading Standards guidance
Now, of course a recommendation is just that, but one also has to wonder how certain agents are presenting this recommendation to customers.
I’m sure you’re all aware of instances of clients being told by agents that unless they used that adviser, then their offer might not be put forward or they would have little chance of securing the property they wanted.
All lies of course, as you will know, and it goes against guidance from National Trading Standards that says agents should not pressure potential purchasers on associated services.
But this can be also be a further issue for both mortgage advisers, and their clients, because a number of in-house mortgage advisers within agents often have to work to a limited panel and are therefore not representing the best level of choice to the client.
This practise seems particularly prevalent in the new-build environment where developers ‘insist’ on purchasers using not only their affiliated mortgage advisers but also their solicitors as well.
Thousands of pounds of ‘discounts’ or ‘stamp duty help’ are up for grabs if they do, and while the process might be thorough, it would leave a bad taste in the mouth for those individuals who do not necessarily want to use a firm they’d had no dealings with up until that point.
Treating Customers Fairly?
As a mortgage intermediary community I’m not so sure that we have pushed the message out to consumers that they are not required to take the recommendations on offer, even if they are made to feel like they are.
Understandably, people get very nervous about property transactions, and once you have your heart set on a property, you want to do as little as possible to jeopardise this.
The minority of agents who pressure-recommend in this way, or developers who do the same, prey on this nervousness and a fear of rocking-the-boat in order to secure the business of those clients, who could end up with deals from a limited choice and therefore not the most suitable for them.
It will be interesting to see the FCA’s own report into these types of activities when it is published next year, as one wonders whether they chime with treating customers fairly and a regulatory process which is all about transparency and not pushing incentives in order to make the decision for them.
In the meantime, it’s imperative that the advisory community, and our trade body representatives, go on the front foot to ensure clients are aware that they do have choices and that those choices extend beyond those recommended by both agents and developers.