Financial advisors warned against acting as estate agents

Financial advisors who also secretly act as estate agents were today warned they may face huge penalties for conflict of interest.

Financial Ombudsman Joe Meade accused them of playing a two-card trick and said it is a constant source of grievance from disgruntled investors and house hunters.

His office recorded a 15% rise in complaints against finance houses last year.

In one case a financial advisor was ordered to pay a customer €25,000 after recommending a property in Spain without revealing he would get estate agent’s fees from the sale.

The advisor was openly using a two-sided business card offering financial services on one and the estate agency on the other.

In a second almost identical case a firm was ordered to pay a client €30,000 over the sale of a property in England.

The ombudsman, however, criticised the customer in the first case for failing to check out the true market value of the property being bought.

“This is a matter which I have taken very seriously because it is cropping up every time,” he said.

“The consumer does not know whether they are dealing with an estate agent of financial advisor and they have got this two card trick where on one side he is an estate agent and on the other side is a financial advisor.”

The ombudsman also said he was referring each case to the Financial Regulator but added plans for a new regulatory body for estate agents should help control it.

Some 4,374 complaints were made to the Financial Ombudsman’s office during 2007 and 59% of these were upheld.

A bank manager was also criticised for allowing a building firm which was doing work on his home to run up a huge overdraft.

The debt ultimately brought the business to its knees.

The company complained to the ombudsman claiming the manager was wrong to allow the overdraft and that it was treated vindictively.

There were also problems over payment for the building work.

The bank took no responsibility for the overdraft but the ombudsman ruled the relationship between the manager and company was not entirely satisfactory and the bank could not simply wash its hands.

The bank was ordered to pay €10,000 to the company account leaving a debt of €5,000.