Estate agents and conveyancers are operating in a market where regulatory scrutiny has intensified dramatically. Complaints about kickbacks, preferential referrals, early commission payments, and “gift economy” arrangements have surged, and both the Property Practitioners Regulatory Authority (PPRA) and the Legal Practice Council (LPC) have signalled that enforcement is tightening.
A recent article by Andreas Potgieter, executive at ENS, offers an uncomfortable mirror for South Africa’s property sector. He describes a marketplace in which informal inducements – from vouchers and marketing subsidies to disguised “thank you” gifts – are frequently exchanged for transfer instructions. What is often rationalised as relationship management or client service, he argues, is better understood as unlawful gratification that undermines professional independence.
Potgieter cautions that the small favours and reciprocal arrangements that lubricate transactions are often indistinguishable from bribery, unethical fee-sharing, or touting. And although his analysis is grounded in Namibian law, the parallels with South Africa are unmistakable.
South Africa’s regulators agree. Two recent notices from the PPRA and the LPC state that complaints about kickbacks between property practitioners and conveyancers are rising sharply. They warn they will adopt a zero-tolerance stance and prosecute both sides of the transaction.
When estate agents and conveyancers are subject to FICA and FAIS
Although most estate-agency work does not constitute financial advice, the Financial Advisory and Intermediary Services Act ensures that any agent who provides advice or intermediary services relating to a financial product must be licensed as a financial services provider or operate under supervision.
The FAIS obligations form part of the broader regulatory landscape applicable to “property practitioners” under the Property Practitioners Act (PPA), which took effect on 1 February 2022.
Conveyancers are regulated under the Legal Practice Act (LPA) and do not typically fall within FAIS, because property transfer work is not a financial service. However, they may trigger FAIS obligations if they provide advice on mortgages or similar financial products. The boundaries therefore matter.
Where the two professions align completely is under the Financial Intelligence Centre Act (FICA). Both conveyancers (as legal practitioners) and property practitioners are “accountable institutions” and must comply with:
- client-identification and verification (KYC);
- risk-based due diligence;
- suspicious and unusual transaction reporting;
- cash threshold reporting;
- targeted financial sanctions screening and reporting;
- comprehensive record-keeping;
- developing a Risk Management and Compliance Programme; and
- compliance officer oversight
These obligations have become a non-negotiable part of daily practice.
‘Gift economy’ and inducements for referrals
Potgieter describes a recurring dynamic in which conveyancers offer benefits to estate agents – from vouchers to expedited registrations – in exchange for transfer instructions. He argues that such conduct is “not enterprising,” but a direct violation of professional and statutory duties.
According to him, “the label affixed to a payment is irrelevant when purpose and effect reveal an inducement”, noting that vouchers, sponsorships and early commissions “are still gratification if their function is to buy referrals or to accelerate commission contrary to the law”.
He lists the Namibian disciplinary consequences, which include reprimands, fines, suspension, striking off, and even criminal exposure under anti-corruption and money-laundering laws.
The parallels with South Africa are immediate.
In June this year, the PPRA and the LPC issued a joint communication confirming that they have received “numerous complaints” involving kickbacks between property practitioners and conveyancers. The notice defines the conduct as the allocation of professional work “in exchange for kickbacks in the form of either monetary rewards or other incentives”.
The regulators state that:
- The practice constitutes a contravention of the PPRA and LPC Codes of Conduct.
- The two authorities “will take a zero-tolerance approach” and “will be working together to eradicate this practice”.
- Conveyancers are reminded of the LPC’s Code of Conduct provisions expressly prohibiting fee sharing, touting, acting on pre-printed offers to purchase, and buying work.
- Property practitioners are reminded of section 58 of the PPA, which prohibits any arrangement in which consumers are encouraged or obliged to use a particular service provider, including a conveyancer.
The joint notice provides further clarity on what constitutes a prohibited “arrangement” under section 58(1)(b). Examples are:
- petrol vouchers;
- payment of rent, phone accounts, tuition fees, entertainment, or holiday costs;
- “thank you” gifts;
- marketing contributions unless shared strictly pro rata, including branding; and
- pre-printed names of conveyancers on offers to purchase without prior written instruction.
The PPRA states that if a practitioner receives any such benefit, it will be interpreted as an inducement “unless the contrary is proven”. The regulators warn that the conduct “is tantamount to conveyancers ‘buying their work’” and may amount to bribery.
Consequences include suspension or striking off for conveyancers, fines of up to R200 000 for property practitioners, and the potential withdrawal of fidelity fund certificates.
The LPC’s circular: detailed prohibitions for conveyancers
The LPC’s circular issued in March highlights several specific Code of Conduct rules relevant to conveyancers:
- Rule 12 prohibits any arrangement (express or tacit) resulting in the attorney receiving work solicited by a non-attorney in return for any reward.
- Rule 14 restricts attorneys from paying commission before it is contractually due.
- Rule 17 prohibits acting on a deed of sale in which the attorney’s details are pre-printed unless prior written instruction was obtained.
- Rule 18.9 prohibits acting in association with any person whose business involves soliciting instructions.
- Rule 18.10 prohibits buying work or rewarding a third party for referrals.
- Rule 18.22 expressly defines touting, including “the payment of money, or the offering of any financial reward or other inducement of any kind whatsoever” for referrals.
The LPC warns that practitioners engaging in such conduct face disciplinary proceedings, including possible suspension or removal from the roll.
Namibia and SA: the same misconduct, the same risks
The Namibian statutory framework Potgieter references – which includes prohibitions against procuring work through inducements, early commission payments, or arrangements with intermediaries – closely mirrors the structure of South Africa’s Legal Practice Act, PPA and Codes of Conduct.
In both systems:
- Referral incentives undermine professional independence.
- Early commissions breach contractual, ethical, and statutory rules.
- Pre-printed conveyancer names erode client choice and violate code provisions.
- “Marketing support” or “relationship gifts” can constitute gratification or bribery.
- Regulators treat these practices as professional misconduct with severe consequences.
Potgieter notes that for agents, a withdrawn fidelity fund certificate is “a commercial curtain-call”. The same holds true in South Africa, where the PPA ties the legality of a property practitioner’s remuneration to strict regulatory requirements.
FICA and day-to-day compliance obligations
Both Namibian and South African conveyancers and estate agents operate within a framework of heightened financial-crime risk. In South Africa, FICA imposes detailed obligations that shape every instruction:
- verify identity, address, tax details, source of funds, and source of wealth;
- apply a risk-based approach to client due diligence;
- report suspicious transactions, cash threshold matters, and targeted financial sanctions matches;
- maintain complete records;
- appoint a compliance officer and conduct firm-wide training; and
- avoid facilitating transactions involving sanctioned individuals.
Failure to comply can lead to administrative sanctions, criminal penalties, and reputational damage. Crucially, these obligations intersect with the issues Potgieter highlights: inducements, opaque payments, and unusual cash flows frequently trigger FICA concerns and reporting requirements.
A regional consensus: keep transactions clean and client-centred
Potgieter calls for a simple solution: “follow the law”. Clients should choose their conveyancer freely; commissions must be paid only when due; conveyancers should secure instructions through merit, not “shopping voucher diplomacy”; and trust accounts must be treated as inviolable.
South Africa’s regulators – through the PPA, LPC, PPRA, FICA, and FAIS boundaries – are articulating the same message. The joint PPRA-LPC notice and the LPC’s circular demonstrate that regulators will prosecute inducements, kickbacks, and improper referral arrangements aggressively.
The reputational and regulatory risks are now too high for professionals to ignore. When incentives creep into the instruction pipeline, it is not only the transaction that is compromised: it is client trust, the integrity of the profession, and compliance with South Africa’s financial-crime regime.
And, as Potgieter warns, “what is done in the dark will not withstand the scrutiny of the light or the authorities”.
