The Simplify Group conveyancing debacle has finally reached the National Press with a piece in The Times Bricks and Mortar section after a Times Radio editor was caught up in it.
For anyone who hasn’t read this many hundreds, if not thousands of people buying and selling property in the UK have been locked out after a central IT platform was hacked, in this instance ruining their Christmas. Glad this is being aired nationally – hopefully we can now see what’s happening and learn some lessons outside the closed industry loop.
Reading it made me despair for several reasons.
The stressful process of buying and selling property is simply not being managed sensitively. At the moment if a property is marked ‘under offer’ the assumption is it’s sold, and the ensuing legal process is a foregone conclusion. With c. 35% of deals falling through it’s clearly not, leading to heartbreak and monetary loss as people make offers and even buy ongoing properties before their own is legally sold. Agents don’t help by plastering misleading ‘Sold’ signs with almost invisible caveats everywhere – especially on their boards, when the property is merely under offer.
The entire business of referrals used to work because any estate agent with half a brain would usually recommend a local conveyancing solicitor with a good reputation – they want someone who can perform quickly and efficiently. Expectations in return were no more than a lunch at Christmas or a bottle of something warming.
These days referrals are often only given where a significant payment is forthcoming and is particularly prevalent amongst lower priced chains who all but pressurise buyers and sellers into using their own conveyancers, chosen for how much income they’ll give away rather than their intrinsic level of expertise. This can lead to substandard service, with local knowledge lacking, and risks the IT issues the article articulates, with potentially devastating effects.
This makes my blood boil at a time when Gov’t is specifically investigating referrals in the property industry. Reckless money first strategies make no sense against this backdrop and could lead to the vast majority of sensible referrals being banned – which will help nobody. If your agent refers you to someone, please check their reviews and do not, under any circumstances, make your decision based on price alone.
Communication is the key, yet a majority of complaints to The Property Ombudsman – where I sit on their Industry Forum – are about exactly that. It’s now worse than ever despite instant messaging and datarooms available for private treaty as they are for auctions. Agents must take some blame here as it’s part of their job to manage expectations. They are not selling FMCGs and could be better informed and prepared to give the correct messages to both buyer and seller. The expectation bosses have of their staff needs managing too, along with a deep knowledge of how this specific market works – seemingly lacking in some larger chains. Applying FMCG strateg to the property has repeatedly been shown not to work.
Why, despite all the tech available and lessons learned, is the process of buying or selling getting steadily worse. Buying a property is NOT about cheap service. The clue is that it now takes almost twice as long to get a sale from offer accepted to exchange as it did forty years ago. Property is expensive and needs commensurate servicing – this entire money grabbing mentality and consolidation of service businesses is apparently doing nothing to solve outstanding problems and is blinding Gov’t to the real issues.
BY the way, agents must stop putting SOLD in huge letters on their boards with ‘subject to contract’ – or worse ‘sstc’ in tiny letters underneath – when all that’s happened is that an offer has been agreed. Revert to ‘Under Offer’ and the messaging is clear – it’s an easy starting point. The more members of the public are informed and ask questions, the better.
Comments (23)
I agree with Rob Hailstone (13.43).
Business continuity plans are supposed to allow businesses to continue operating as normal after a major event, and although we don’t yet have all the details, I am surprised the plans in this case don’t appear to have included having a totally independent back-up of the live system that would allow rapid contact with clients.
One firm I used to work in had a 75-seat offsite location with all the minute-by-minute back-up systems and equipment that allowed us to relocate and get back to a semblance of normality within a matters of hours.
It is unfortunate that Simplify was the victim in this case, and I wouldn’t wish such an event on anyone, but hopefully lessons can be learned by the group and others going forward.
In terms of referral fees, there are clearly problems with them, and hopefully the wider discussion that is currently going on around them will lead to positive change and see the best interests of clients taking priority over the commercial interests of referrers.
This article and most of the posts are a general discussion about referral fees. I can’t see any “vile comments” about Simplify, any of their group of firms or individuals.
I have nothing for respect for the Simplify ‘coal face’ workers who re no doubt busting their b***s right now and getting very few thanks for their efforts.
How do you expect a paperless firm, who don’t have a computer system…. To contact clients…. When they don’t have their contact details…. Because are on the system….. that they can’t access……
What has happened is in the hands of the police, as solicitors as some of you claim to be, you will know the limitations of the information they can share, so the investigation isn’t compromised.. that’s basic stuff….
I see Lots of vile comments being made by small men, who are just bitter that a bigger firm has come in and taken over their patch…
Seeing people say things to this firm, like I hope they are out of jobs soon… is frankly disgusting and embarrassing
we should be seeing what we can do to help and support them, while preying in the background we ain’t hit.
skaye is the only one with sympathy. Well done to them! The rest hang you heads
Are you posting this on the wrong forum, perhaps? Not a single comment here is as you describe.
Or is this the only place where anyone currently reads your rantlets?
Note I say “currently”…
Banning referral fees is a nonsense.
Would it bring the prices down? Would it improve service?
if we are going down that route why not ban Tesco from making a profit from farmers?
I know several panel firms and independents that are excellent and several that aren’t. The key is the relationship between case handler and agent and nothing to do with cost or who referred the business.
Conveyancing takes longer due to many mitigating factors. Banks ask for more work, help to buy, gifted deposits etc. It’s unfortunate that Simplify suffered a cyber attack because actually what conveyancing needs is modernising from start to finish. Too many old school conveyancers clinging on the old methods that just don’t work in the modern world. For example why are searches taken up by an actual individual. We can’t just have the information on a government database? Madness
The key, surely, is the ultimate relationship between the client and the recommended conveyancer? And as to cost, the referral fee should not be so high that it leaves the conveyancer without enough income to do the job professionally and safely.
Banning referral fees is a nonsense.
Would it bring the prices down? Would it improve service?
if we are going down that route why not ban Tesco from making a profit from farmers?
I know several panel firms and independents that are excellent and several that aren’t. The key is the relationship between case handler and agent and nothing to do with cost or who referred the business.
Conveyancing takes longer due to many mitigating factors. Banks ask for more work, help to buy, gifted deposits, longer chains. It’s unfortunate what has happened to Simplify because from what I had seen they
Having a ‘Simplify’ advert level with Mr Mead’s mugshot is taking ‘product placement’ to an entirely “different” level, I would suggest…
Deal or No Deal
(an acrostic)
Sold my house! – hoorah! Hooray!
I needed a lawyer right away
My agent said “I know the folk”
PPL he said – (no joke)!
Like a lemon I went along
I wish I hadn’t….it all went wrong!
For weeks of nothing left me in doubt
You know the rest…my buyer pulled out.
I think in amongst all the fall out from this saga, one of the issues which has come to light is the huge number of chains held up from progressing. This was because it turned out the Simplify Group were the dominant party within the chains, which had been put together by Estate Agents recommending them, and pocketing their referral fees. Not to mention there were a lot of comments which suggested those referrers actively encouraged the use of Simplify, in some cases very heavily.
Does anyone seriously believe that, all things being equal, those clients would all have chosen to use Simplify? In the same way does anyone truly believe those Agents would all have recommended Simplify were their palms not being crossed with silver? Of course not, so how can anyone sensibly argue that referral fees are not a bad thing given all that has come out recently?
Not to mention that the payment of a referral fee, be it for conveyancing or in connection with the arrangement of a mortgage, creates a clear conflict of interest.
Moreover there are large Companies who still exist on the conveyancing periphery, merely to “buy” clients from Agents and then “sell” them to Solicitors. Without telling clients what or who they are dealing with. This creates an extra level of administration and fees paid by clients to ensure all the fingers in the pie are paid. I have seen cases where an Estate Agent was paid £1000 for recommending a sale and purchase through one of these Companies. The Solicitors fees were less than that, and they therefore have no choice other than to operate a “pile it high, do it cheap” conveyancing department. With the consequence of low standards. How can anyone argue in favour of that situation?
Furthermore another situation that has surprisingly so far not been discussed is the CLC policy of allowing Firms to act on both sides of a transaction. I have seen it touched on in a few comments but this is policy that is clearly open to further debate. I can only speak from experience of when I came across similar situations before the Law Society outlawed the policy years ago. It is another conflict of interest which cannot be operated fairly, and clearly needs to be looked at by the CLC expeditiously. Would all the chains held up by being dominated by the Simplify Group suffered the same fate if this policy did not exist? Again that is doubtful.
Strong regulation seems to be a recurring theme.
Hi S.kaye. I don’t think Ed is saying that referral fees are to blame for the cyber security incident (I have been told it could happen to anyone), but it has brought referral fees (and other issues) into focus, albeit unintentionally. Part of the problem is, that not all referral fees are as transparent as they could/should be, and sometimes they are extraordinarily high.
Like I said earlier today; I suppose that one deciding factor for agent recommendation should be, would I recommend that conveyancer to my friends of family? If not, then is it fair to recommend them to a stranger?
Very good point Rob. My beef is just that every time anyone seems to say anything negative about the industry, referral fees always rears its head, as if that has anything to do with it. It might be an element, quite possibly, but it shouldn’t be the primary reason. The main reason (as I have been harping on about for years and years and years) is not enough investment of training and supervising of staff (at all levels – even partner level dare I say it). I can say this from first hand experience, as a person who does lots of interviewing. Many people do conveyancing, but not many have the technical knowledge that they should… Rant over.
As a conveyancer myself, I have huge sympathy for their company. Its actually very upsetting, as this is my industry too! A cyber attack should not be wished on anyone. I especially have sympathy for all the staff there, and for all the stress they must be going through and some really unpleasant public comments online. The cyber attack is not the staff’s fault. And I fail to see what referral fees has to do with anything. If you think about other industries that receive referral fees, we say nothing (probably because we don’t know about them, or care about them). The real problem (and the elephant in the room) is the fact that some conveyancing firms’ fees are too low. You then get what I call the “Ryannair effect”, i.e. a cheap service, but you/we/they complain when a private jet does not arrive to take us to our destination. What do you expect?!. Don’t blame a cyber attack on referral fees. Don’t blame cheap conveyancing fees on referral fees either. I am not saying the blame should be placed on the consumer, for opting for the cheapest service, but lets all take a step back. The cyber attack could happen to any of us. Let’s stop this perpetual dumbing down of the industry and the whole “cheaper is better” approach. Having choice in any sector is a good thing. If anyone had complaints before the cyber attack, then invite the elephant (in the room) to be interviewed….
I agree that cyber attacks can happen to the best of us, and like you would not wish them on anyone, however, the delay in contacting clients and remedying matters has opened up the can of worms in the market generally, including the payment of referral fees.
The personal injury sector saw the banning of referral fees many years ago for many of the reasons why they should now be banned in the property sector (lack of independence, not acting in the best interests of clients, etc).
I agree that the fees for conveyancing should go up to match the work required in transactions, but while there are conveyancing factories that “stack them high and sell them cheap”, this is unlikely to happen!
And what happens if referral fees stop, but the “stack them high and sell them cheap” continues? How would having removed referral fees have helped? The consumer ultimately has the choice… The new “transparency” regime makes referral fees public. Yet the public can still opt for the cheaper option, referral fee or no referral fee. Whenever anything goes wrong in the conveyancing sector, so many people cite referral fees as the main cause, which makes my blood boil, because they always use that as the veritable scapegoat. It never deals with the underlying issues, because its so easy to blame referral fees on the “issues” the industry has. I have been in the conveyancing industry for over 20 years. Trust me, referral fees has nothing to do with the woes I encounter, day to day, in my job! If banning referral fees causes firms to take on less work and manage work better, and supervise staff more closely, and train staff much better, I will be setting up camp outside No. 10 to ban the referral fees myself.
I’d suggest that the two points are interlinked. The ‘stack them high model’ relies on referrals to maintain the volume of work required to be profitable. Without the guaranteed pipeline that comes with it, Firms would be less comfortable in maintaining a lower fee.
That said, a referral fee ban sounds great on paper, but don’t expect those profiting (on a large scale) to simply give that revenue up
I think it is “speculation” to assume referral fees are a driver to a firm’s rate of capture of work. I wonder if all the successful property firms, up and down the land (there must be many) are solely reliant on referral fees? I very often encounter new introducers who want no referral fee, just a good service…. What is more valuable, a deal going through (and an agent getting their commission) or a mere hundred quid or so. I think a poll of most agents would say their profits are driven on deals completing, not a little referral fee. Perhaps not a ban of referral fees at all, but a quota of the amount of work one very large agency portal can send to just one conveyancing firm, i.e. control of that “monopoly”!? Too controversial?
There is an important distinction to be made between small scale referrals (local agent refers a few cases to local solicitor) and large scale referrals (corporate agent refers hundreds of files monthly to firms). The latter is so large it is an industry of itself and any solicitor on that panel is guaranteed work from it. Without referral fees, that work would not arrive at that solicitor, so it is absolutely a driver of that individual Firm’s workload.
“I think it is “speculation” to assume referral fees are a driver to a firm’s rate of capture of work.”
Are you being serious here? I seem to recall something like 45% of PBs listings were signed up on the ‘Pay Later’ option… which required the homeowner to use their “conveyancing partner” or pay £360 to be able to use another conveyancer – and seemingly now requires the entire fee to be paid to “unlock” the client from their previous agreement.
At north of 60k listings per annum (“the good old days”, as ‘bricks will come to refer to that ‘purple patch’ period in their history) that’s a rather large chunk of business heading in one direction – do the maths. Even now, at numbers WAAAAY below those heady, mahoosively profitable days, you are still looking at half to two thirds of those figures.
And that’s only ONE AGENT feeding into ONE conveyancing group. If you don’t know who else is – in your area at least – then you need to lift your head out of the sand and take off the rose-tinted blinkers you’re wearing.
“Reckless money first strategies make no sense against this backdrop and could lead to the vast majority of sensible referrals being banned” – not all referrals need to be banned Ed, only those that involve the payment of a fee; referrals should be based on the quality of the conveyancer, not how deep their pockets are!
I have reviewed many property referral agreements and it is those where a fee is paid that are the most non-compliant; they play on the commercial needs of the conveyancer to get new work (lack of independence), hold clients to ransom if they want to use their own conveyancer, and put the best interests of clients behind those of the referrer!
That the Simplify saga is still running without any answers being provided to the rest of the profession, let alone to clients, is something of a national disgrace in conveyancing circles. The people that run these Companies should be hanging their heads in shame over the whole fiasco – not once have I seen any of the faceless heads of these Companies make any public pronouncements, no explanation and no apologies. I hope they all find themselves out of a job in the near future, the way they have left their staff to take all the heat and face all the complaints and abuse is disgraceful. Missing in action.
Even the Conveyancing Association, never backwards in coming forwards with a good press release to show their members in as good a light as possible, have been conspicuous by their absence. Unfortunately the Law Society abdicated responsibility to take action years ago so they will not do anything about the mess, whilst the CLC have simply been shown as inept and obsequious and will be desperately hoping they can sweep the whole situation under a very thick carpet as soon as possible.
In an ideal world one would like to think there would be a high level enquiry given the large number of questions this all asks, and the plethora of flaws which have come to light with the approach and the working practices of these factory conveyancers, the referral fees they pay, and the complete lack of a serious Regulatory Body to protect clients strong armed their way. You would hope at best the Simplify group will break up, referral fees will be outlawed, and the CLC will cease to exist, with all conveyancing brought under one professional Regulatory Board made up of conveyancers who actually know the professional way in which their peers should operate and will take action when those standards are not met.
Do I think the above will happen? No I don’t, pigs do not fly and too many vested interests will ensure it does not. Clients do not seem to matter, standards certainly do not. So until the next time…..
Rab C Halestorm
Made me chuckle, even if a little cheeky:)
Well said Ed, but the rot set in a long time ago.
Mid 80s, I was getting a lot of work from a local agent in Bristol. No referral fees paid, but pretty much a 24/7 service by me. He sold to a local businessman (think del Boy perhaps). He summoned me to the office and made it very clear that unless I paid for the work it would dry up. I declined his kind offer, and the work did indeed dry up. Except when it was for him, his family, his friends or was unusual or complicated.
I suppose that one deciding factor for agent recommendation should be, would I recommend that conveyancer to my friends of family? If not, then is it fair to recommend them to a stranger?