Purplebricks: Ombudsman 'happy' with controversial deferred payment scheme

The Property Ombudsman has told Estate Agent Today that it is happy with the controversial deferred payment scheme operated on behalf of Purplebricks, which was the subject of a BBC Watchdog investigation.

The scheme involves vendors who instruct Purplebricks agreeing to enter a loan deal operated by an entirely separate company, Close Brothers Limited. 

Last evening BBC Watchdog - and, earlier yesterday, Radio 4’s You And Yours programme - revealed one case study of a Purplebricks customer who claimed not to have been told that he was entering a separate deal with another company.

If this happens, it contravenes consumer protection legislation.

It now appears that Purplebricks sought and won acceptance of the scheme from The Property Ombudsman.

A spokeswoman for TPO told Estate Agent Today last evening: “TPO has seen PurpleBricks’ ‘Terms of Service’ and are happy that these are clear in terms of the arrangements for the deferred payment option.”

However, on both BBC shows yesterday it was claimed that in the case of five undercover properties, put forward by BBC representatives acting as vendors, three of the Purplebricks Local Property Experts attending did not explain that the deferred payment scheme would involve a deal with a separate company.

Separately, Purplebricks was accused by the BBC of flouting at least one of six bans or warnings from the Advertising Standards Authority in the past 18 months - specifically, this was the claim that it was ‘saving’ customers an average of £4,158 over the cost of traditional high street agents.

Watchdog showed an email from Purplebricks repeating the claim, after the ASA ban; the BBC also made clear this email was a template and was likely to be used in an identical or similar version to many other customers of the agency.

Appearing on both You And Yours and Watchdog, Purplebricks co-founder Michael Bruce said the ASA had only found that the agency could not substantiate that saving in every case, and it did not deny that savings - implicitly of smaller amounts - were not possible.

In addition, Bruce claimed that “within one hour” of being told by the BBC about the £4,158 claim appearing on an email, it had been removed. This was in addition to it having already been removed from “a thousand” other correspondence and outlets.

He also apologised to any customer who may feel misled by the deferred payment scheme involving a separate company and vowed to sit down with Close Brothers and agree “a more transparent arrangement”.

On several occasions on both Radio 4 and the BBC One show, Bruce emphasised that Purplebricks was part of a “seismic shift” in estate agency, was more transparent than traditional agencies, and was the most favourably reviewed agency in the UK.

Purplebricks’ share price suffered a fall of just under six per cent at close of trading yesterday after heavier losses earlier in the day.