Earlier this year, Mortgage Strategy published an article on conditional selling, highlighting the widespread and appalling mistreatment of customers.

At the time, (February) UK Moneyman managing director Malcolm Davidson told MS that what was needed to force change was a Panorama-style investigation. Lo and behold this summer BBC’s Panorama decided to go undercover and show how both home buyers and brokers were being undermined.

The Panorama investigation certainly attracted a great deal of interest with a clear spotlight on some of the biggest culprits, including Connells and Purplebricks.

One of the quotes from the BBC programme was … “excluding buyers who are not using in-house or linked advisers, while not ‘actually’ breaking the law, is breaking the spirit of the law.”

The question is does the ‘spirit of the law’ have any clout at all?  And can a national TV exposé make any difference?

Davidson certainly thinks so. “Yes, I’m always hopeful.

“I think it’s now beyond doubt that certain agents can’t be trusted to self-regulate and it’s time to formalise that to bring the disreputable ones into line. I actually think there is a marketing opportunity for the many ‘good guys’ in the estate agency sector to evidence their ethical credentials by referring to the BBC show.

“They could say: ‘no doubt you will have seen the Panorama show highlighting conditional selling. just to make you aware, here at XYZ agents we don’t disadvantage buyers who do not take up mortgage services from us and your offer will be treated just the same as everyone else’s’.

Conflict of interest

It is fair to say that Panorama did a good job in outlining the contradiction that conveyancers are not allowed to act for both buyers and sellers of a property, as it creates a conflict of interest – since buyers and sellers have opposing objectives.

However, the law currently allows a single company entity to own an estate agency, which acts for the seller, while simultaneously owning a mortgage brokerage, which acts for the buyer. Those consumers interviewed on the programme were not properly informed on this conflict of interest.

At the end of the documentary there is a brief mention of the government looking at tightening regulations on estate agents, while in the meantime urging all buyers to report agent sharp practices.

This seems light on specifics and Davidson sees a weakness here since many will be scared to report for fear they will miss out on buying a new home.

“The agents in question know these clients are highly emotionally-charged and exploit this. They are not called out by customers who give in and do the mortgage with them as a rule, only those whose offers are rejected”.

Boon Brokers managing director Gerard Boon agrees that self-policing and abiding by the ‘spirit of the law’ is just not working. He believes there is only one clear option to prevent the clear conflict of interest.

“The quickest way for regulators to quash conditional selling in the housing market is to ban any financial affiliation between estate agencies and mortgage brokerages. These parties should still be allowed to refer business to each other, but there should be no financial gain in doing so.”

He adds: “Due to the evidenced conflict of interest, companies and any subsidiaries should not be allowed to conduct estate agency and mortgage brokerage services simultaneously.”

The Association of Mortgage Intermediaries (AMI) chief executive Stephanie Charman takes a similar line.

“We would welcome appropriate regulation in this sector, which can help drive consistency and accountability across the industry. Ensuring there is a level playing field for all advisers, where no one is unfairly disadvantaged by referrals or commercial pressures.”

She said consumers must be able to make informed choices about the services they use, particularly for mortgage and protection advice, without fear that it could negatively impact their ability to buy or sell a property.

Charman concluded: “We would urge all estate agencies to review their processes and practices, taking an active role in fostering a culture that ensures they put the right customer outcome at the heart of what they do.

“AMI will continue to raise industry concerns, promoting the need to make meaningful change with a fair, transparent environment that puts consumers first.”

Finova Broker commercial director Matt Harrison also takes the view that reform must come from the top.

“The FCA has a critical role to play here. We need more than quiet enforcement—we need visible, proactive leadership. The regulator should take clear steps to educate consumers about their right to choose their own adviser.

“This could include public-facing campaigns, improved disclosure requirements at the point of sale, and ensuring agents clearly explain that clients are not obligated to use in-house services. Empowering buyers with this knowledge from the outset would be a game-changer.”

So, what happens next? Public opinion would certainly suggest that something needs to happen. Boon Brokers surveyed 1,000 recent buyers and sellers across England (after Panorama was aired). It found that 78% of respondents believe estate agents should not have direct associations with mortgage brokers.

And what of brokers, are they doing enough to force change and are they motivated to do so?

Davidson thinks so.”I think brokers have done a wonderful job not only bringing this matter to the nation’s attention but keeping it on the agenda after all these years. It’s important now that the momentum is maintained.”

As for the BBC’s decision to go undercover on the issue following the MS story, he says: “Who knew we could be such influencers!”