In its study, Home Buying and Selling, the department said the practice gives estate agents a financial incentive to favour one buyer over another to the disadvantage of the seller.
At present, mortgage advisers can pay estate agents a fee for referring buyers to them. The OFT has now urged the Government to look at a possible ban on such payments.
The property ombudsman Christopher Hamer said it was unfair that estate agents could pass information on to brokers.
He added: “There is an issue if an agent receives a fee from a mortgage broker which might have a bearing on his dealings with buyers and sellers. It could lead to a flow of information passed from an agent to an adviser which the seller may not be comfortable with.”
Andrew Montlake, director at Coreco, said conflicts of interest can occur when an estate agent is referring to an in-house broker.
He added: “There is a case that brokers could receive favouritism if they pay more to an agent than another broker or if they are attached or affiliated in some way to an estate agent. It is less of a problem with independent brokers who will provide clients with impartial advice.”
Andy Pratt, chief operating officer at Alexander Hall, said his company would welcome clarification on fees.
He added: “There is a possibility of bias, but if it is managed correctly, there is no problem. The best interest of the consumer must be taken into account and if they do not understand the practice of referrals, the practice should be managed with due diligence.”
Although the OFT recommended that there should be a relaxation on certain rules to improve competition, it said further regulation of estate agents was unnecessary.
It said the existing legislation on estate agents under the Estate Agents Act 1979, which sets out the duties that agents owe to clients in areas such as handling money and giving details of charges, was comprehensive.
However, the report said new business models such as online estate agents were needed as they would add competition to traditional estate agency models and lead to better value for buyers and sellers.
The news is expected to be welcomed by Google and Tesco, who are both rumoured to be close to unveiling online estate agency services.
