The Conveyancing Task Force has called for the elimination of referral fees in the property sector, describing them as an “unseen surcharge” on homebuyers that distorts market competition.
The taskforce joins the Law Society in demanding an end to the practice, which has provided a significant income stream for estate agents who refer clients to conveyancing firms. The payments, typically exchanged between estate agents, panel managers, introducers and conveyancers, operate largely outside public view.
Market distortion concerns
According to the taskforce, referral fees create incentives for recommendations based on commercial gain rather than client need. “Too many homebuyers are steered towards firms not because they offer excellence, but because they have paid for the introduction,” the organisation stated.
The taskforce described the fees as “an opaque commercial mechanism” that shapes where consumers are directed for legal advice, arguing this has “distorted choice, compromised independence, and eroded trust in the integrity of the conveyancing process”.
The issue adds to mounting challenges in the property market, where transaction costs remain a concern for buyers and sellers alike.
Phased approach proposed
Despite calling for their eventual elimination, the taskforce acknowledged that referral fees are deeply embedded in the conveyancing market. It warned that an immediate ban could destabilise firms and reduce consumer access to services.
Instead, the organisation proposed treating referral fees as “inherently high-risk commercial arrangements” subject to mandatory safeguards and consistent regulatory enforcement. Firms would be required to demonstrate that client interests, rather than commercial relationships, drive their recommendations.
The taskforce outlined a “medium-to-long-term transition” during which referral fees should “progressively reduce and ultimately fall away as the market shifts towards models that reward quality, independence and public trust”.
The call for reform comes as the property sector faces increased regulatory scrutiny across multiple areas, with industry bodies and regulators examining practices that may disadvantage consumers.
Industry implications
The proposed changes would significantly impact estate agency business models, particularly for firms that have relied on referral income to supplement commission revenue. The taskforce’s recommendations would require regulators to enforce ethical duties in practice rather than policy alone.
The organisation emphasised that any new framework must ensure recommendations are based on service quality rather than financial arrangements, marking a potential shift in how conveyancing services are marketed and selected by homebuyers.
