Consumers warned on property 'double agents'
Friday January 11 2008
FINANCIAL services ombudsman Joe Meade has warned consumers to be wary of mortgage brokers who also act as estate agents.
Mr Meade issued the warning yesterday after revealing he had forced two mortgage brokers to pay out a total of €55,000 for failing to be open about their conflicts of interest.
He also referred the cases to the Financial Regulator and said he would publicise every case he deals with where brokers fail to disclose they are financially involved in a property they arrange funding for.
Mr Meade said he had so far awarded a total of €116,000 against five mortgage brokers for failing to be up-front about their interests in deals they were advising consumers on.
He said brokers found to have a conflict of interest tended to have a business card with their details as a mortgage brokers on one side and their details as an estate agent on the other side.
"They do not disclose that they have a conflict of interest," he said yesterday, after publishing details on a selection of cases he had adjudicated on in the past six months.
However, he warned that consumers were often gullible and guilty of entering into deals with such brokers without properly checking out the deal and the integrity of the broker.
Mr Meade explained that often consumers were being encouraged to buy foreign properties from conflicted brokers, who would arrange the finance and also act as selling agents for the developers.
The consumers were being encouraged to "flip" these properties -- selling them quickly to make a profit before having to make the final payment.
But often the properties would not sell and the consumers were forced to finance the full sale price. In a number of the cases dealt with by Mr Meade, the properties were overvalued because of expectations of a quick profit.
The new property regulatory structure should help cut out much of this practice, Mr Meade told the Irish Independent. But he stressed people need to be aware of what is happening.
More than 4,300 complaints were made to the ombudsman last year -- up 15pc on 2006. The ombudsman upheld 2,690 complaints in the period from July to December 2007.
He said where disputes arose over contracts made online or over the phone, he would be disposed to finding in favour of customers where financial services providers had no concrete proof of transactions.
- Charlie Weston Personal Finance Editor
