There is often truth in sarcasm, as might be evidenced by one reader's opinion on a controversial referral practice.
"Great that somebody refers a client because they get a piece of the action vs. knowing they are referring a friend or family member because they will be taken care of by a professional," one MBN reader recently commented.
Responding to a story published on REP sister website MortgageBrokerNews.ca, one industry player argues agents could “split” the fees they collect from sending a customer to a bank with the actual client, creating a win-win for all parties involved.
“I think it could catch it on,” agent Dick Brady in Cobourg, Ont., told REP. “You definitely need to inform your client that you’re getting (a referral fee).”
Indeed, disclosure is not only key to these programs; it’s also required under law in provinces such as Ontario. Agents must provide at least three sources when recommending services for clients, and must inform those clients that they’re getting a kickback, whether cash or reward points.
Disclosure issues aside, some agents are pointing to their relationships with mortgage brokers, which could be put at risk.
“I just prefer to do it in more of a way that isn’t contractual and where I give in good faith and I get back in good faith,” says Ira Jelinek, an agent in Toronto. “When a client is looking (for a home), the first thing they need to get in order is their finances, so we need to have relationships with mortgage brokers. And sometimes vice versa, if (prospective buyers) go into a mortgage brokerage first, they need representation. It’s a mutually beneficial relationship.”
Discussions around referral fees have been renewed after an email from a National Bank
mortgage specialist promising commissions for agents who bring referrals directly to a branch was released.That National Bank employee refused to comment on the referral program.