Referral payments facing possible ban

LEGISLATORS are facing increased pressure to curb controversial referral programs between conveyancers and real estate agents, amid long-running claims the fees hurt homebuyers. 

Referral payments paid to real estate agents are legal in the most populous states of NSW, Victoria and Queensland, as well as the ACT and Northern Territory, while in Western Australia, South Australia and Tasmania the practice is banned. 

The fees have long been dogged by criticism, including that real estate agents demanding payment from conveyancers creates a conflict of interest that prioritises business over the conveyancer’s knowledge, skills and quality of service. 

Griffith University retail and consumer expert Graeme Hughes said, after years of issues, momentum was building for a nationwide ban.  

But he conceded it was a “slow burn”. 

“We are seeing increased noise from professional bodies,” Hughes told AC. 

“The Australian Institute of Conveyancers and various law societies have become more vocal, calling the practice unethical and a race to the bottom.” 

Consumer groups were driving a push to treat the fees similarly to conflicted remuneration in financial planning, changes enacted after the financial services royal commission.  

“Furthermore, 2026 AML/CTF Reforms and new Anti-Money Laundering and Counter-Terrorism Financing Tranche 2 rules coming into effect in March and July 2026 are forcing real estate agents and conveyancers to be much more transparent about their business relationships,” Hughes said.  

“This may indirectly make secret or complex referral arrangements too risky to maintain.” 

Hughes said if a ban was not achievable, then the reform drive would likely shift to mandatory standardised disclosure.  

This would see a referral fee disclosed on a one-page consumer warning sheet, instead of being “buried” in a lengthy contract, he said. 

Another approach involved “hard caps” that would “limit the dollar amount of a referral fee to a nominal admin fee of perhaps $50 to remove the profit incentive”.  

“Finally, there is a call for increased audit powers to give fair trading and consumer protection agencies the resources to conduct mystery shopper audits of real estate offices.” 

He warned getting action from policy makers remained a difficult task, pointing to the lobbying power of the real estate industry.  

The sector is historically among the biggest contributors to political campaigns, he said. 

“While states like Queensland have banned donations from property developers to reduce clientelism, the broader real estate sector still holds substantial lobbying power,” he said. 

The push would also likely face political pushback on the basis that strengthening consumer protections was “an attack on small business marketing rights”. 

“Legislators also frequently default to the belief that disclosure is a sufficient remedy. This assumes a rational consumer who has the time and mental bandwidth to analyse every line of a contract,” Hughes said. 

“The high-stress environment of a property transaction often leads to information overload. Most consumers do not effectively process the fine print when they are emotionally and financially overwhelmed by the primary purchase.” 

In Victoria, All Hours Conveyancing’s Shakila Maclean condemned the practice as causing conflict of Interest, undermining consumer choice and reducing transaction transparency. 

“Many buyers and sellers do not understand how referral fees influence recommendations, particularly where disclosure is minimal or unclear,” said Maclean, who is also president of the Australian Institute of Conveyancers Victorian division. 

“Obligations exist, for example professionals must disclose referral benefits, but they are not always followed and enforcement is limited,” Maclean added. 

She echoed Hughes’ comments, saying that there was growing awareness and concern within the conveyancing profession and consumer advocacy circles about referral fees. 

The industry leader said stronger rules and enforcement would help protect consumers but warned that “industry resistance” remained a stumbling block to action. 

There was also the “enforcement burden” to consider, with regulators lacking “resources to monitor and enforce disclosure and ethical obligations effectively”. 

She said the state body was so concerned about the issue that it launched a petition calling for a ban.  

The petition, which claims many conveyancers are pressured to pay hundreds of dollars in “kickbacks” to real estate agents, has more than 1000 signatories. 

Clients were coerced into using ‘preferred’ conveyancers without full disclosure of the financial arrangements and, in many cases, the fees are not disclosed to the clients at all, turning these payments into illegal “secret commissions”, according to the petition.  

Maclean said adding to problems for buyers was that even “where disclosure is required, how and when it must be given varies, so poor compliance persists”.