Ask a member of the public whether they would be happy if the estate agent selling their property was also being paid by the buyer and they’d be uneasy at the very least.
Ask whether they would mind being kept in the dark about the whole thing and you’re likely to get a categoric ‘yes’, possibly accompanied by a choice expletive.
Yet, in the commercial property market, the practice of double-dipping, where the same firm acts on both sides of a deal, has become more widespread.
Property Week has called for action in the past to tackle the problem and it is encouraging to hear that this has pushed the issue up the agenda and that many firms are now taking action internally.
But nobody is disputing that more needs to be done.The practice may well be commonplace in the US, but that doesn’t make it right here.
Neither is it something we just have to accept as a consequence of consolidation in the industry. Conflicts of interest are harder to manage at larger firms with large client bases, but not impossible.
As the surveying industry’s governing body, the RICS is surely the right organisation to take the lead on this. However, it has been slow to act so far. Some say this is because it wasn’t fully aware of what was happening, which suggests it is not as plugged in as it could and should be to key parts of the industry.
Others have been more critical, describing the industry body as “toothless”.
Eye-watering fines
Has it now finally grasped the nettle? As we report this week, the industry body has responded to calls from senior industry figures for more robust guidance and will be publishing UK specific guidance tackling double-dipping and other conflicts of interest in commercial property next year.
All that remains to be seen is how clear and definitive that guidance is.
If RICS fails to make clear the need for disclosure of any suspected conflicts to all parties, there is a risk these practices will only become more entrenched and that the issue will attract the scrutiny of regulators.
Don’t think it won’t happen. It would only take one legal case where a firm succumbs to the temptation to maximise fees by engaging in unscrupulous practices to catapult the issue into the public eye and lead to heavy-handed regulation.
The eye-watering fines being handed out by US regulators to leading global banks should serve as a timely reminder of the dangers of failing to self-regulate effectively.
In the past week alone, the US Department of Justice handed Deutsche Bank a $14bn (£10.5bn) fine for mis-selling mortgage securities and US senators have called on Wells Fargo’s chief executive John Stumpf to resign after it was fined $185m for opening bank and credit card accounts without customers’ permission.
Bankers are today’s bogeymen. Let’s make sure surveyors aren’t tomorrow’s.
No comments yet