Referral Fees Between Estate Agents and Conveyancers: What the CLC's Interim Review Reveals
The debate around referral fee arrangements in the property industry has intensified in recent months, and the Council for Licensed Conveyancers (CLC) is now weighing in with some carefully considered interim findings. While the regulator acknowledges that such arrangements can deliver genuine benefits for consumers, it has made clear that the current state of documentation and transparency across the sector falls well short of acceptable standards. For anyone buying or selling a home in England and Wales, understanding what referral fees are, how they work, and what the regulator expects of firms is increasingly important.
What Are Referral Fees in the Property Industry?
A referral fee arrangement typically occurs when an estate agent recommends a conveyancing firm to a client — the buyer or seller of a property — and receives a financial payment in return for that recommendation. These arrangements are not illegal, and they have long been a common feature of the residential property market. The logic, in theory, is straightforward: estate agents develop working relationships with conveyancers they trust to deliver timely, efficient service, and they are compensated for directing business their way.
However, the concern — and it is a legitimate one — is that without proper transparency, consumers may not realise their conveyancer was chosen not purely on merit, but partly because of a financial incentive paid to the person who recommended them. This creates a potential conflict of interest that, if left undisclosed, can erode trust and may not always result in the best outcome for the client.
The BBC Panorama Investigation That Triggered the Review
The CLC's review did not emerge in a vacuum. It was launched in direct response to the BBC Panorama investigation titled Undercover Estate Agent, which aired in 2024 and shone a spotlight on questionable practices within the estate agency and conveyancing sectors. The documentary raised serious concerns about how referral fees were being handled — or, in many cases, not being disclosed at all — leaving consumers in the dark about payments being made behind the scenes when they were simply trying to navigate one of the most significant financial transactions of their lives.
The investigation prompted widespread public and regulatory concern, making it clear that a thorough examination of current practices was not just desirable but necessary. The CLC moved swiftly to commission its review, and the interim findings now provide the first formal indication of where things stand.
What the CLC's Interim Findings Actually Say
The CLC's interim review delivers a nuanced conclusion. On one hand, referral fee arrangements are not condemned outright. The regulator accepts that, when managed properly, they can work in consumers' favour. A well-established relationship between an estate agent and a reliable conveyancing firm can speed up transactions, reduce miscommunications, and give buyers and sellers access to professionals who already understand the local market and each other's working processes.
On the other hand, the CLC is clear-eyed about the problems it has identified. Firms are not doing enough to ensure that referral arrangements are properly documented. In practice, this means many arrangements lack written agreements that set out the nature and value of the fees being paid. Without this paper trail, it becomes very difficult for regulators to assess whether clients are being treated fairly or whether the arrangement is genuinely serving their interests.
Beyond documentation, the CLC has flagged that full transparency with consumers remains inadequate across too many firms. Clients have a right to know when a referral fee has been paid in connection with a recommendation they have received. They should be told the amount, who paid it, and who received it — and this information should be communicated clearly, not buried in the small print of a lengthy terms and conditions document.
Why Transparency in Conveyancing Referrals Matters So Much
The stakes in residential property transactions are extremely high. For most people, buying a home is the largest financial commitment they will ever make. They rely heavily on the professionals around them — estate agents, conveyancers, mortgage advisers — to act in their best interests. When undisclosed payments are flowing between those professionals, the foundations of that trust are compromised.
Transparency is also a cornerstone of the regulatory frameworks that govern licensed conveyancers. The CLC's code of conduct requires firms to act in clients' best interests, avoid conflicts of interest, and communicate openly. A referral fee arrangement that is not disclosed to the client sits in direct tension with all three of those obligations.
What Consumers Should Do Right Now
If you are currently buying or selling a property, or if you are planning to do so in the near future, the CLC's findings serve as a timely reminder to ask direct questions of the professionals advising you. Specifically, you have every right to ask your conveyancer whether they have a referral arrangement in place with the estate agent who recommended them, and if so, how much was paid. A reputable firm should answer this question without hesitation and provide the information in writing.
- Ask your conveyancer whether a referral fee was paid and by whom.
- Request written confirmation of any referral arrangement connected to your transaction.
- Check whether the firm is regulated by the CLC or the Solicitors Regulation Authority, both of which have transparency obligations.
- If you feel information is being withheld, raise a formal complaint with the relevant regulatory body.
What Comes Next for the CLC's Review
The CLC has made clear that these are interim findings, and that the full review is ongoing. Firms operating in the conveyancing sector should treat the interim report as a clear signal to audit their own referral arrangements now, rather than waiting for final conclusions. Those that cannot demonstrate compliant, well-documented, and fully transparent practices may find themselves facing regulatory scrutiny.
For the wider property industry, this moment represents an opportunity to rebuild consumer confidence. Referral arrangements do not need to disappear — but the opacity that has surrounded them for too long must. When consumers can see exactly what is happening and why, they are better placed to make informed decisions, and the professionals serving them are held to a higher standard. That, ultimately, is what regulation is for.
The CLC's work in this area is a welcome step, and the property sector would do well to treat its findings not as a threat, but as a roadmap for the kind of transparent, client-focused practice that should always have been the norm.