HSBC introduces 'approved solicitors panel' for conveyancing

Published 12th Jan 2012

Customers can no longer use legal representation of their own choice when getting a mortgage through HSBC


Homebuyers who take a mortgage from HSBC will be forced to use one of a panel of 43 firms chosen by the bank to do their legal work, or face paying more for their conveyancing, after a change in the lender's rules.

Previously, customers could choose their own legal representation and the firm would act for HSBC too. However, following warnings over mortgage fraud from the National Fraud Authority, which puts the cost to the industry at £1bn a year, and an instruction from the Financial Services Authority telling lenders they need to know the firms they work with better, HSBC has announced this will no longer be an option.

Instead, borrowers can opt to have one of the panel do their legal work too, at a fixed cost, or choose to use their own solicitor and pay a separate fee of £192 (£160 plus VAT) for HSBC's lawyer. In most cases that will be more expensive than using the panel.

HSBC is not the first lender to become picky about who it allows to do its legal work in new mortgage cases. Lenders have been reducing the panels of firms they will work with for some months, and in September 2011 Guardian Money wrote about how some large lenders such as Santander and Nationwide were culling their panels.

However, none have admitted to reducing the number of firms with which they will work quite as dramatically as HSBC, and the Law Society has questioned whether it has enough firms on its panel. Chief executive Desmond Hudson said: "Although HSBC has a relatively small share of the mortgage market, such a low number of firms could struggle to provide for all consumers – those [customers] who struggle to communicate other than in person or those who would prefer to use a local solicitor with the service they seek.

"The disabled, those living in rural areas or even those wishing to simply use their family solicitor will either have little choice but to opt for the same solicitor as HSBC – one of their panel firms – or pay twice over, for their own solicitor as well as HSBC's legal fees."

The bank said it would consider applications from firms who wanted to be added to the panel, which will be managed by Countrywide. And the bank insisted the move would benefit consumers. Peter Dockar, head of mortgages at HSBC, said: "Our new panel arrangement will spare customers the time and hassle of searching for a firm to do the important conveyancing work on their new property.

"Customers who choose to use a firm on the panel can benefit from agreed conveyancing costs as well as valuable guarantees should the seller pull out."

The firms on the panel are all approved through the Law Society's conveyancing quality scheme, and HSBC spokeswoman Suman Hughes said that while previously it "couldn't guarantee the consistency" of conveyancing firms, using the panel "guarantees a better service".

The bank will offer customers a fixed fee to cover the cost of its legal work and their own, on top of the usual costs for stamp duty, searches and other disbursements associated with a move. This will range from £399 on a property costing up to £100,000 to £549 on one costing between £300,000 to £500,000. Customers who are selling as well as buying can get a separate quote for that work to be done by the same lawyer.

Eddie Goldsmith, chairman of the Conveyancing Association, said he believed the cost would persuade most customers to use the panel, and that he expected more lenders to follow HSBC's lead.

"Ultimately, it could be good news for consumers as it means that the firms that stay on lenders' panels will be those who offer high quality standards and a superior service," he said. But he added that in the short term there would be "inconvenience and extra expense" for customers who wanted to use the solicitor of their choice.

Source: ' Guardian '

View All Latest News