Lesson 3 – Recommendations, Paid Referrals and Connected Businesses

3.1 An independent recommendation

An independent recommendation is generally made without payment, commission or another commercial benefit.

For example:

“The Royal Institution of Chartered Surveyors provides a public directory that may help you locate a surveyor.”

This directs the customer to an independent source rather than recommending a particular business for MyEstate’s benefit.

3.2 A paid referral

A paid referral occurs where MyEstate recommends or introduces a specific provider and receives a benefit as a result.

For example:

“MyEstate recommends Brown & Co Conveyancing. If you instruct them following our introduction, they will pay MyEstate £150.”

The payment does not necessarily make the arrangement improper. The risk arises when it is hidden, unclear or used to pressure the customer.

3.3 A connected business

A connected business may be:

• Owned by the same individuals;
• Part of the same corporate group;
• Controlled by a MyEstate director;
• Operated by an employee or relative;
• A franchise partner; or
• Involved in a reciprocal commercial arrangement.

Customers should not be given the impression that a connected company is an entirely independent recommendation.

Example disclosure

“MyEstate Insurance Services is part of the same group of companies as MyEstate. MyEstate may receive a financial benefit if you purchase a policy from that business.”

3.4 Preferred-provider panels

MyEstate may maintain a panel of approved providers. Staff should understand:

• How providers are selected;
• Whether they pay to join the panel;
• Whether MyEstate receives referral fees;
• Whether the panel is regularly reviewed;
• Whether the customer may use someone outside the panel; and
• Whether the agent’s recommendation is based on quality, commercial benefit or both.

“Preferred provider” should not be used to conceal the existence of a paid commercial relationship.

3.5 Staff incentives

Employees may receive:

• Bonuses;
• Commission;
• Vouchers;
• Prizes;
• Performance points; or
• Other rewards for referrals.

These incentives can create conflicts between:

• The customer’s interests;
• MyEstate’s commercial interests; and
• The employee’s personal interests.

Employees must follow MyEstate’s incentive and conflict-of-interest policies.

3.6 Recommendation wording

Staff should avoid saying:

• “This is the best conveyancer” without evidence;
• “You have to use our broker”;
• “The seller will prefer your offer if you use our services”;
• “This company is completely independent” where it is connected;
• “There is no cost to you” without explaining the provider’s charges; or
• “We do not receive anything” where MyEstate receives an indirect benefit.

Lesson 3 key point

A recommendation becomes commercially significant when MyEstate, its staff or a connected business benefits from the customer’s decision.