Purplebricks shares recovering after criticism on BBC

Online real estate group Purplebricks was forced to respond to some serious falls in its share price on Thursday, after two BBC programmes critical of the company saw its stock fall 7% on Wednesday.

The AIM-traded group - which specialises in flat-fee, online-based residential real estate sales - was the subject of two BBC features on Wednesday, relating primarily to the clarity of the deferred payment facility available to customers, the group's compliance with a recent Advertising Standards Authority ruling, and alleged exaggerated claims by some of its ‘local property experts’ about levels of instructions and sales they had obtained.

With regards to its deferred payment offer, the BBC alleged that a number of Purplebricks customers did not understand that, by deferring payment, they were essentially taking out a loan with finance firm Close Brothers.

Purplebricks said it was confident that disclosure of the terms and nature of the deferred payment facility, provided by Close Brothers, were “clear and transparent”.

“The registration and acceptance process of the facility has been reviewed by the Property Ombudsman and by the Trading Standards Institute and no issues were raised or changes requested,” its board explained.

“The group has received complaints relating to the payment terms and facility from only 0.2% of customers.

“Furthermore, from the last 47,000 facility agreements entered into by customers only two complaints were considered by the Financial Ombudsman and in both cases neither were upheld.”

Purplebricks said the purpose of the facility was to offer customers an alternative to immediate payment on instruction, and the majority of customers took up the option.

The facility comes with no additional cost or interest to the customer, the company claimed.

“In the context of the small number of cases where customer feedback has indicated that the disclosure does not match Purplebricks' high standards for transparency, the group has nevertheless committed to enhance the clarity of its notification to customers accordingly.”

With regard to the ASA ruling, Purplebricks previously sought to quantify the levels of savings that customers might on average achieve in its marketing.

It said the claims on “up to” savings were based on publicly available data, such as the Which survey on estate agent commission levels.

“In a ruling in 2016, the ASA requested that Purplebricks no longer refer in its marketing to an indicative average saving, based on the premise that this could prove misleading,” the board explained.

“The group had in any case already decided to remove references to this figure from its marketing materials.

“The BBC drew attention to examples of a standard email format that inadvertently still included the savings figure.”

Purplebricks said it immediately removed the reference, and its board apologised for this oversight.

The BBC also aired claims that certain local property experts provided exaggerated instructions and sales figures for their respective areas.

One expert shown on hidden camera claimed to frequently list at least 25 properties per month, while the BBC said it had found his listings to be around 16 per month.

“Whilst Purplebricks has not had access to the precise data and areas being reviewed by the BBC, the board believes that the figures provided by the local property experts concerned have fairly reflected the performance of the teams operating in those areas,” the board said.

However, it added that it had committed to ensure through its ongoing training that local property experts were clear about the statistics that they use and the territories and postcodes to which they were referring.

Michael Bruce, founder and chief executive of Purplebricks, said the board and the group were committed to the “highest levels” of customer service and disclosure, and he believed it was reflected in Purplebricks’ sales growth and the high levels of customer satisfaction shows on independent review platform Trustpilot.

“The group is the most positively reviewed estate agent in the UK,” Bruce noted.

“We seek to satisfy and surpass our regulatory obligations at all times, and where we find circumstances where we have fallen short we seek to rectify these situations at the earliest opportunity.

“The Purplebricks' offering has already saved consumers in the UK tens of millions of pounds when selling their properties, and we are focused on building on this position still further.”

Purplebricks’ share price plunged a further 2% on opening on Wednesday, before beginning to recover strongly.

At 1039 BST it was up 7.5% at 471.65p.