Mortgage brokers have called on The Property Ombudsman and the Financial Conduct Authority (FCA) to do more to tackle conditional selling. 

Conditional selling is when estate agents put pressure on home buyers to use their in-house mortgage broker rather than letting them use an adviser of their own choosing.

Lodestone Mortgages & Protection founder and director Craig Fish says he “fears” there is more to come “as agents start to see a downturn in purchase transactions and try to maximise revenue and profit from as many avenues as they can”.

“There is nothing wrong with agents recommending mortgage advisers that they work with, but to not put offers forward unless a client speaks with the agent’s broker, is disgraceful, dishonest and illegal, and it needs to stop.”

Fish highlights that he has experienced conditionally selling twice in the past month, and on both occasions, “I lost the client as they felt pressured to use the agent’s broker”.

Last week, Access Financial Services launched a support campaign to give brokers the tools to fight back against conditional selling. 

The campaign comes after Access FS says a significant minority of estate agents use ‘intimidation tactics’ to ensure they get the home buyer’s mortgage business and commission from the house sale.

The letter has been designed to be sent initially to the estate agent making them aware of the various parts of the Property Ombudsman’s Code of Practice for Residential Estate Agents that demonstrate this practice is against the law. 

However, Harmony Financial Services director Imran Hussain says: “Not enough has been done to stamp out this practice and until it is, it will continue and the only person who loses out is the client.”

“It makes a mockery of the house buying process and most agents who are doing this have a terrible proposition and inflated protection premiums.”

Riverside owner and mortgage broker Lewis Shaw suggests that the industry “must be careful not to mislabel things”.

Shaw comments: “There’s nothing wrong with an estate agent or a member of their staff taking the necessary steps to check the validity of a prospective purchaser’s offer.”

It’s required under the Property Ombudsman code of conduct that “at the time that an offer has been made and is being considered by the seller, you must take reasonable steps to find out from the buyer the source and availability of their funds for buying the property and pass this information to the seller. Such information will include whether the buyer needs to sell a property, requires a mortgage, claims to be a cash buyer or any combination of these”.

Shaw explains: “Estate agents are also compelled to undertake anti-money-laundering checks or risk having their collars felt. There’s also nothing wrong with estate agents offering ancillary services.”

He suggests that the biggest problem is “a lack of enforcement and punishment by The Property Ombudsman and FCA”. 

“This malpractice will continue until there is a much bigger stick, especially when the carrots are so valuable. All we can do as brokers is call it out when it happens and begin to name and shame so consumers can make an informed choice on who they do business with,” he adds.