As soon as Janice walks through the door she knows it’s the one. The spectacular view of the garden from the master bedroom, the sparkling marble kitchen worktops she has dreamt of, and the playroom which is perfect for the kids. All she needs to do is speak to her solicitor and he’ll sort everything out. The one in the office round the corner. The one who helped her buy her first flat, wrote her will, and sorted out her cousin’s divorce. But wait, she needs a mortgage from HSBC, and her local solicitor isn’t on their list.
What list? Well, HSBC have recently revealed their plans to reduce the number of solicitors on their residential mortgage conveyancing panel. Usually, when moving house, a conveyancing solicitor will manage both the mortgage documents and those concerning the transfer of the property. HSBC’s decision means that the mortgage part of the transaction can now only be handled by one of the 43 members of their conveyancing panel. Many high street solicitors are up in arms about the decision, lobbying the Law Society to protect them from this action which they believe may put them out of business.
The Chief Executive of the Law Society, Des Hudson has encouraged solicitors to write to their MPs to complain about the HSBC’s ‘heavy handed and arrogant decision’, but HighStreetLawyer believes this is missing the point. Whilst such restrictions may adversely affect the legal industry, the biggest loser in the equation is the consumer.
Buyers wishing to take out a mortgage with HSBC must use a solicitor from their panel for the mortgage conveyance, but are given the option to use their own solicitor for the conveyance of the property. Using a panel solicitor for the entire transaction will be highly incentivised by the bank, and many may be unaware that using another solicitor is even a possibility. Furthermore, customers choosing their own conveyancing lawyer will have to pay twice for this time-consuming ‘choice’, since the work is ordinarily done by one lawyer, and many checks will have to be repeated. Taking into account the cost of buying a house in the current market, and the proportion of people struggling to get onto the property ladder, this option is unlikely to appeal.
Limiting the approved conveyancers to 43 flies in the face of everything the Legal Services Act sought to achieve; competition; access to justice and better service for consumers. HSBC’s decision means that property transfers will be done by a select few legal companies, impeding consumer choice. A home is the most important and costly purchase most people will ever make, so they want to use a solicitor they know and trust. For conveyancing, locality and reliability is key. A little research into Countrywide, the administrators of HSBC’s panel gives the impression of a faceless property machine; impersonal and remote.
As if restricting borrowers to a narrow list of solicitors wasn’t enough, other worrying issues arise. HSBC have chosen Countrywide as the agents of their conveyancing panel; responsible for choosing the remaining firms and distributing work. Unsurprisingly, Countrywide’s own licenced conveyancing firm has made it onto the panel, creating an obvious conflict of interest which has been strongly criticised by the Law Society. Although Countrywide has not disclosed its selection criteria for the panel, it seems that small, local firms will not be chosen. With such a limited number of solicitors, it is anticipated that only larger firms able to churn out conveyances in bulk will be included. Is this what a buyer wants?
The Legal Services Act intended to champion consumer rights and access to legal advice. Banks requiring conveyancing solicitors to be accredited in some way is an understandable precaution, but anything more than that creates a bias which restricts consumer choice. Buying a house is an important and life-changing decision, and the consumer should be put first. What we should be asking is not ‘How will this affect solicitors?’ but ‘How will this affect Janice and other consumers?’
By Judy Benmayer of HighStreetLawyer.com
