The Council for Licensed Conveyancers (CLC) has announced it will conduct a thematic review into referral fees in the wake of the recently aired BBC Panorama documentary on conditional selling.
In a statement on its website, the regulator said the programme had:
“…highlighted serious concerns about conditional selling and the questionable sales tactics of certain estate agencies, which may impact the conveyancing sector by limiting consumer choice of legal advisor.”
The CLC added the issue was concerning because it represented a disregard of the requirements for pricing transparency stipulated by both the CLC and SRA for conveyancers.
The statement went on to say the CLC had ‘no evidence’ of the practice within conveyancing, but in the interest of consumer choice it would undertake a thematic review of referral arrangements, beginning in early 2026.
“The review… will look at referral arrangements (their prevalence, value and transparency) and more broadly at compliance with the CLC’s transparency rules to ensure that the client interest remains paramount.
“Ahead of the review, we strongly encourage all CLC practices, and particularly those that have paid referral arrangements, to review their compliance with the CLC’s transparency and informed choice rules. We encourage any practices that are not fully compliant currently to take appropriate steps to ensure their compliance before the review commences.
“CLC lawyers are reminded of their obligation to uphold the Ethical Principles set out in the CLC Code of Conduct, which includes the requirement to act with integrity, honesty and independence and in the best interests of clients.”
The statement can be reviewed in full on the CLC website.
The CLC’s announcement comes as its latest quarterly Confidence Tracker reveals that the majority of conveyancers are not confident about the sales process: 85% of respondents said they feel unconfident or neutral about the process, with a quarter (25%) feeling ‘very unconfident’.
Further details of the Confidence Tracker will be published tomorrow in Today’s Conveyancer.
9 responses
As I have said on Linkedin, “Why wait, client interests will continue to suffer in the interim; why isn’t the Solicitors Regulation Authority doing the same?”
Given that Connells and Purple Bricks were the subject of that Panorama episode would it not be a more decisive use of the CLC’s time to require firms to confirm whether they are paying referral fees for work to either of those agencies and to then look at the arrangements in place at those firms?
Some of the largest payers of referral fees are CLC Firms, which leads to their providing poor service and slowing up chains. If anyone on the CLC Board had practiced on a conveyancer they would know the issues caused by them, and that all proper professional conveyancers consider they should be banned.
Will be interesting to see the results of this review.
There are firms out there paying £550 to agents per matter for referrals and some of these are CLC firms. This has been the case for years and years and years. Some of the big factory firms will not be in existence without these referral fees being made. Some agents write into their instructions with sellers the quote for conveyancing and the agreement to instruct recommended conveyancers comes hand in hand with the agency agreement. Indeed some agents say that they will only provide free floor plans and professional photos if the client agrees to conveyancing!
How anyone can say this is not known about I do not know. How do people not realise that if a firm has to give up £550 as a referral it cannot operate on those figures. So they have to make it back by charging additional fees. Quotes are thus increased by 50/100%. How’s that for protecting clients?
How have the regulatory bodies not realised that if the agents stand to make so much money from these firms, pressure will be exerted to deal with matters in a certain way because at the end of the day, if they lose the referrer, the business shuts down!
The system is absolutely rotten but does anyone have the courage to stand up to the big corporate factory firms who only exist to pay agents huge referral fees?
I don’t necessarily see the issue with paying a referral fee providing this is disclosed to the client prior to them agreeing to proceed.
Obviously the decision to use a recommended firm, fee payable or not, shouldn’t affect their opportunity to purchase the property they want to buy or limit the offers a vendor receives.
There are plenty of firms that do pay a referral fee that do a fantastic job across the board – irrelevant of whether the fee is paid to a referral agent.
And let’s not forget, it isn’t just agents that are getting these but also independent financial advisors. I wonder if there will be a similar investigation into whether they are steering customers to the lenders that pay them the highest fee or solicitors that pay them a referral fee.
I agree with this. I think referral agreements on occasion can produce a better customer service and link between client and agent. I think there are some agents that do work hard to provide quotes to clients and the payment of £100/£150 is not unreasonable for the leg work they do. I think payments of anything more than that are completely unjustified and anything more than that will encourage agents to prioritise wealth over service. If the CLC brought in that rule limiting referrals to £100/£150 I would absolutely support that and I think it would improve the industry. It would absolutely put some firms out of business but if those firms have a model which relies on paying agents £550 per matter that is a flawed model, in my opinion. I repeat, I think if a firm is paying an agent £550 per matter that is NOT sustainable to run a practice so they must have to deliberately increase prices by adding on extras. This is absolutely NOT in the consumers best interest. For example, if the firm is charging £1000 and they are paying out £550 to the agent, how can a file be run on £450? There will be no profit in that whatsoever, they will be making a loss.
I do think agents have got to immediately stop an assumption that their recommended and in house team should and must be used. I think agents must immediately remove all references to conveyancing services from their instruction paperwork when taking on a listing. I think agents must immediately stop linking freebies such as floor plans and professional photos to using their conveyancing firms. I think agent’s must explicably tell clients in writing that clients are not obliged to use their conveyancing services and they can choose whoever they like.
I think Conveyancing firms must also do better at protecting themselves. They need to make sure that their clients if referred have not come via conditional selling and perhaps referral agreements must be updated immediately to reflect that and for agents to specifically confirm that the referral has not come as a result of conditional selling and the vendor/purchaser has been explicitly been told in writing that they have a choice of conveyancing services to use and they are not obliged to use their recommended services. The role of the sales progressor in a law firm has to be looked at. They are there to progress matters for a client not the agent.
Perfect response, balanced and appropriate.
Other comments have biased views. Large ‘factory’ firms do not hold up chains, in fact they push them.
Legal Fees should be charged for appropriate work done, we should all be charging outside of a fixed fee – the concept of a fixed fee is archaic and irresponsible to our profession. Lawyers should be charging for lawyering.
Why do people make such vociferous comments on this subject and then ramain anonymous ? What are you afraid of ?
Also notable some if more regular contributers on here are silent (or are they ..)
There is widespread agreement Estate Agents should be regulated but that alone won’t stop mal-practice. You only need to look at the SRA/ CLC disciplinary proceedings and every week someone is fined or has their practicing certificate removed.
I find the CLC’s statement that they have ‘no evidence’ of this malpractice very interesting, if they do just a little research I’m sure the evidence will flood in. I run my own family practice with my father who has specialised in Conveyancing for almost 50 years, he remembers when paying referral fees to agents was not permitted, why did this change? If we go back and ban referral fees we are all on a level playing field and recommendations come from the basis of quality of service not any financial gain. It is ultimately the consumer who is paying the referral fee and why should they? The SRA and CLC say there is no problem so long as it’s declared, this really misses the point, just because a referral fee is declared doesn’t make it acceptable. Many consumers, especially first time buyers don’t always understand what this means and don’t realise until it’s too late that they are paying over inflated fees because they are covering the cost of referrals. I don’t pay referral fees to agents, my client base is largely repeat instructions and recommendations, I have been told numerous stories by my repeat clients of what an agent has said to them about my firm to try and dissuade them from using us and it’s quite simply wrong but the answer is simple, ban fees. I work closely with a number of independent estate agents who don’t demand fees, they will recommend me and two or three other local firms based on our approach and customer service…..it’s basic and it works for all involved!