CLC says referral fees have 'legitimate role' in conveyancing

The Council for Licensed Conveyancers insists referral arrangements can be beneficial for consumers and conveyancers despite unearthing evidence of poor compliance with its rules on transparency. 

The CLC embarked on a review in the wake of a BBC Panorama investigation last year that alleged leading estate agents pressured sales people to use firms with whom they had a business arrangement. 

Stephen Ward, CLC's director of strategy and external relations, said: 'Given the strength of feeling we have encountered in our research, and the diverse opinions held by stakeholders, we feel it is important to take a sounding on our interim findings and recommendations, invite any evidence not already shared with us, and provide further opportunity for discussion with the sector having had the benefit of seeing the interim report.'

The CLC inspected 12 practices with varying levels of dependency on referral arrangements as part of its review.

The regulator's Disclosure of Profits and Advantage Code (DPAC) requires clients to be made aware of referral arrangements. Firms must be transparent about fee arrangements. Fee-sharing agreements must be in writing. Referral arrangements and fees must be reviewed periodically.

The inspection found that many of the firms lacked written agreements and some were unable to produce agreements when inspectors requested them. Disclosures to clients regarding the existence of referral arrangements were 'often incomplete or absent'. Firms' websites were 'largely non-compliant' with transparency requirements on costs information.

However, announcing the findings of the interim review, the CLC also focused on the review's finding from stakeholder engagement that referral arrangements 'can play a legitimate role in conveyancing, helping consumers access services conveniently, and supporting collaborative working between estate agents and conveyancers, provided they operate clearly, consistently and in the interests of consumers'.

Recommendations in the interim report include clarifying expectations on when and how firms should disclose referral arrangements so that consumers receive relevant information early enough to make an informed choice. The CLC will also increase monitoring of DPAC compliance.