A mortgage agent is approached by a builder to act as their exclusive mortgage referral agent for new home buyers, offering the agent a finder's fee for each successful referral. What is the agent's obligation to a potential buyer referred by this builder?

Question: A mortgage agent is approached by a builder to act as their exclusive mortgage referral agent for new home buyers, offering the agent a finder's fee for each successful referral. What is the agent's obligation to a potential buyer referred by this builder?

Answer options: ✅ The agent must disclose the finder's fee arrangement to the buyer before providing any mortgage advice and obtain their consent.

• The agent is not required to disclose the fee as it is part of a standard business development agreement between the agent and the builder.
• The agent should only disclose the fee if the buyer directly asks about any referral arrangements.
• The agent must refuse the arrangement with the builder to avoid any perception of conflict of interest.

Correct answer: The agent must disclose the finder's fee arrangement to the buyer before providing any mortgage advice and obtain their consent.

Explanation: Any compensation received from a third party that could influence the agent's recommendations to a client must be disclosed. The fee from the builder creates a potential conflict as it might incentive the agent to prioritize the builder's interest over the best interest of the buyer, necessitating full disclosure and consent.