Scots join outcry against HSBC panel
The Law Society of Scotland has called on lender HSBC to suspend its new conveyancing panel system, which it claims will cause chaos for hundreds of property transactions north of the border.
The Society said only ‘a handful’ of law firms in Scotland are among the 43 firms on the new panel, which was launched last month.
In addition it said that the mortgage documentation issued by HSBC is ‘not fit for purpose’ as it is based on English conveyancing law and requires solicitors for both the buyer and seller to grant undertakings which may be difficult if not impossible to honour.
Ross MacKay, convener of the Society’s property law committee, said the new set up is ‘causing major headaches’ for HSBC mortgage customers and could lead to house sales being delayed or cancelled, and buyers suffering substantial penalties.
The Society says buyers’ solicitors are also being asked to carry out a lot of additional work, much of which would be avoided if the were acting directly for the lender.
Over the past two weeks, the Society says it has been inundated with calls from concerned buyers and their solicitors. ‘We pointed out that this new system was wrong in principle and a month on it is becoming clear that it is also wrong in practice,’ MacKay said.
‘It is failing homebuyers who have chosen an HSBC mortgage. There is a risk that house sales will fall through and buyers will be left homeless and sellers without payment,’ he said.
Mackay said: ‘We are therefore calling on the bank to immediately suspend the new system until there has been a full review and consultation with us to ensure that the paperwork is legally correct and workable and that the system does not penalise buyers and their agents.’
An HSBC spokesman said the lender is 'in discussion with a number of other firms' to join the initial four.
'We consider that a panel of this size is manageable and enables HSBC to carry out appropriate checks and due diligence on its suppliers. The Financial Services Authority recently conducted a thematic review of lenders’ systems and controls to detect and prevent mortgage fraud. It commented specifically on the need for lenders to know their suppliers and we consider that the introduction of a limited panel enables us to better comply with the guidance issued by the FSA.
'HSBC strongly believes that its conveyancing documentation is fit for purpose and has been drafted for use in Scotland. However, we are keen to relieve the Law Society of Scotland of its concerns and we have offered to work with them to agree documentation which both parties are comfortable with. We are continuing to complete mortgage transactions as normal, however if customers do have any questions we would encourage them to speak with their HSBC mortgage manager.'
Comments
Don't rely on other to fight this battle
On behalf of Bold Group members I obtained a letter of guidance from the SRA. We have also taken advice from a number of Qualifying Insurers. In both cases, whilst the advice is helpful (the implication is don't enter into undertakings you may not be able to fulfill) neither say whether the undertaking, in every case, is an appropriate one to give.
In the circumstances, a number of Bold Group members are no longer prepared to act for clients buying with the aid of an HSBC mortgage and are having to turn work away.
The HSBC issue is one which the profession as a whole needs to tackle, with some assistance from the SRA, the Law Society and Qualifying Insurers. The Bold Group and our members are doing just that. At least one third of our 150 member firms are now displaying HSBC warning posters and leaflets in their offices. The public have a right to know how difficult it could be buying a property with an HSBC mortgage before it is too late.
One member’s client is, with our help, taking issue with HSBC and has said:
“HSBC are at present trying to suggest that the involvement of Countrywide should save our solicitor from some of the work burden, rather than adding to it. This seems somewhat laughable, and so I am trying to have them understand why, partly because if the requirements they place are going to add work for our solicitor then that will add cost too, which I see no good reason why we (and not HSBC) should meet, as well as the potential for time delays and/or an adverse effect on the whole transaction (which in our case currently involves 5 parties). Unfortunately we had no idea about Countrywide and their potential involvement when we began our mortgage application; otherwise this whole scenario might have been avoided!”
The new HSBC rules do not benefit anyone (buyers, sellers, agents, lawyers, financial advisors etc) involved in the home buying and selling process. They add greater risk, complication, delay and stress. Take some direct action, either alone, via the Law Society etc or by joining forces with us. Rightlty or wrongly, others may not fight this battle for you.
The SRA, Law Society and
The SRA, Law Society and Qualifying Insurers help solicitors? Do get real!
Your group warning clients that it will cost more to have an HSBC mortgage is the best way to sort it-well done on that!
Wow, now this is a sticky
Wow, now this is a sticky situation here. I hope that there will be some good resolutions that come about in the very near future so that bad ripple effects do not occur throughout the process.
Sometimes when people are proactive towards the future instead of reactive then cities and countries can save themselves a lot of trouble with negative side effects.
Costs, delays and stress with HSBC mortgage!
My partner and I applied for an HSBC mortgage as the rates were attractive and there was an offer on of 'no fees'. We were told the solicitors acting on behalf of HSBC were,Countrywide' and that it would save time and money for our own solicitors, who we instructed a few weeks before and had diligently started all the searches required.
Our solicitors fees have now had to go up by approximately another 50% because of the ridiculous amount of paperwork and queries involved with Countrywide who will not just accept what our solicitor has already done.They have told us we shall be the last clients they deal with who have and HSBC mortgage.
This so called 'fee free' mortgage isn't as it seems and has caused a lot of stress, anger and time delays to the whole process. Yes we could have just used 'Countrywide' solicitors but so much work had already been done and it is the principle behind this of not being a free market to choose who we wanted!
You've got this one wrong HSBC and I will certainly not be recommending your mortgages to anyone.
Undertaking
Can Mr Hailstone tell us precisely what the undertaking (or the relevant part of it) says and publish the advice which the SRA gave? The Law Society previously told solicitors to be "SMART" about giving undertakings: practitioners should not be giving undertakings which relate to things over which they have no control. If the effect of the undertaking is to give some sort of warranty as to the correctness of the valuation figure or the competence/bona fides of the valuer, no solicitor should be giving that undertaking. If the effect of the undertaking is simply to confirm that the assumptions about title which the valuer has recorded in his report are correct, there shouldn't be a problem. Clearly, both the Society and the SRA should be publishing guidance on this issue.
Issues specific to Scottish
Issues specific to Scottish law aside, isn't best costs advice to a potential client not to use you but to use HSBC's panel solicitors for free?
Delays and the HSBC panel
Aside from the fact that the best conveyancing Solicitors in the Country are now overseen by a Licensed Conveyancer, surely have Allen & Overy in charge if HSBC are intent on pursuing this madness, but has anyone Google reviewed Countrywide?!
I have had two deals, the first with Countrywide acting for HSBC, now Premier Property Lawyers.
So far my conclusion is that it would not be quicker for the borrower to go direct to the panel lawyer. It is taking so long because Countrywide are asking for two unnecessary things, their Undertakings are inappropriate, and they have missing documents.
The world has gone mad, and with it my respect for HSBC and everyone I can tell for life!
Connect2Law firms to sever with HSBC?
Are the rumors correct anyone?
HSBC do not concern its customers' best interest
I have been banking with HSBC for many decades since its name was Midland. Its services improved after changing to HSBC. However in recent years its services changed from good to bad and from bad to worst. Everyone in the bank tries to sell me something despite the products are not applicable to me. They insisted upon an unqualified financail adviser to sell to me their financial risky products. Although I lodged various complaints against the personnel for misconduct, the person who dealt with the complaint did not investigate my complaint and concluded that misconduct would never be happening to the person whom I complained about because they know each other for years. It appears that the HSBC bank is now being controlled by the 'cowboy group' who has so much power to control the bank's business direction. Last year, I just enquired the bank manager about opening a business account for my new legal practice name. Without seeing my SRA Registration, the Bank instantly opened two clients account and office accounts under an intended business name. They dont even bother to check my PII and etc. for compliance and anti-money laundry. Subsequently due to their insufficient knowledge in serving a law firm's business bank account, I have closed my business account and changed to another bank. I have also moved my personal premier bank account to another private bank becasue I fed up in dealing with the sales manager (=premier manager). It appears that each personnel working for HSBC is required by the firm to achieve certain sales target. Besides their mortgage offer is not transparent either. I advise all the mortgage applicants always look around for details in the terms instead of only look at the figures at the interest rate on the mortgage products that they advertise.
Err, HSBC is a business-it is
Err, HSBC is a business-it is there to make a profit. It is not there to look after its customers (NOT clients) best interests.
Professions are there to look after their clients best interests. The SRA/Law Society seems to believe that one can have a business which WILL look after the customers interests-one cannot-the two are contradictory. The customer of a business is presumed to be able to exercise free choice-the client of a profession is presumed to need professional advice.
The bank have created the crunch because the consumer believed they were getting professional advice-they were not. They were being sold a product which produced a profit for the seller.
Why the SRA/Law Society is unable to understand this fairly simple distinction is probably no mystery-because they also are selling a product to keep themselves in work.
Countrywide
As I understand it, Countrywide (no doubt in various different corporate forms) are mortgage consultants, valuers and conveyancers. Let us remember that the main reason which HSBC is putting forward for reducing its panel of conveyancers is that it is following the FSA's recommendations by limiting the number of people who carry out conveyancing work for it. What does the FSA have to say about a situation in which Countrywide (in one corporate form or another) could (it would seem) suggest a mortgage with HSBC, produce a valuation of the subject property and then carry out the conveyancing in respect of that property? According to this press release, HSBC appointed Countrywide to carry out its valuations in December 2010:
http://www.countrywide.co.uk/media/press-release.aspx?id=540dcd1f-16ac-4...
Does a situation in which HSBC is so closely tied to Countrywide (and vice versa) sound like good risk management, consistent with the FSA's recommendations? Does such a situation provide adequate protection for the interests of the consumer? Is one of the effects of the undertaking which solicitors are being asked to give to push most or all of the risk onto solicitors (and thus onto Qualifying Insurers or the Compensation Fund)? Have the Law Society and the SRA yet invited the FSA to look closely into all of this?
On closer examination, the "issues specific to Scottish law" are not particularly specific to Scottish law: the main concerns of the Law Society of Scotland seem to be (i) the terms of the relevant undertaking and (ii) the extent to which HSBC is asking solicitors to undertake work which goes beyond that which would normally be required under the CML Handbook. This is clear from the following Professional Practice Update, which the Law Society of Scotland has recently published:
http://www.lawscot.org.uk/members/member-services/professional-practice/...
Why has the Law Society of England and Wales (or the SRA) not yet published similar guidance? If some parts of the undertaking may be difficult to honour under Scots law, they are hardly likely to be any easier to honour under English law, especially if they relate to work done by others (for example, the valuer). For any solicitor to give an undertaking which may be "difficult to honour" would be foolish: indeed, the Law Society has spent years trying to stop solicitors from giving such undertakings:
http://www.lawsociety.org.uk/documents/downloads/PE_warn_undertakings.pdf
Well, the Law Society should
Well, the Law Society should quite simply have made undertakings in respect of matters over which the solicitor has no control, unenforcable-shouldn't it?
Then nobody would have asked for them -would they?
But as ever it is more than happy for the profession to be put in situations where it has liability but no control.
Don't miss the bigger picture
We should not lose sight of the bigger picture, the ludicrously small size of the panel. We seem to be concentrating on how unreasonable the form of undertaking is, that is without doubt. However, even if the undertaking is improved we will still have a situation where a cumbersome separate representation process plays into the hands of HSBC and Countrywide. One Bold Group member sent the following to me yesterday:
“The rate my client has been quoted is the lowest on the market (2.49% variable over 12 years) and there are other "sweeteners" apparently, such as a free mortgage valuation. So she is caught between a rock and a hard place, she wants to instruct me, wants the best mortgage deal but does not want an expensive and slow etc conveyancing process. Fortunately she has not as yet signed the acceptance of the offer (the panel firm may have jumped the gun on this one!) and she is going to shop around for another mortgage deal.”
I am receiving emails on a daily basis informing me that potential HSBC mortgage customers are now going elsewhere for their loans, another email received yesterday is set out below:
“Rob-I am pleased to say we have managed to get a couple of our clients to take out mortgages with a different lender!”
One contributor to this comments section has suggested that I should publish the SRA letter. I do not feel able to do that for a number of reasons. It was sent to me, on behalf of our member firms and Bold Group members pay a very modest annual membership fee for me to provide help and advice on a number of issues.
1. Releasing the advice to all and sundry that the members have effectively paid me to obtain would not be right or fair.
2. Any solicitor firm in the country can contact the SRA direct and obtain SRA advice, which would hopefully be the same advice!
3. We want to increase the number of Bold Group members. We are now circa 150 and we are already making a difference. Just think what we could achieve, for all of our members if our numbers doubled or tripled etc.
However, in an effort to be as fair as possible, and I have discussed this with a few of our member’s, I would be able to provide any firm that joins the Bold Group, even for a temporary three month period, with, firstly, a copy of the SRA letter and secondly, another document in my possession, a copy of the list of HSBC panel firms. Why three months? Because I believe with a concerted effort we may well have improved the situation with HSBC and Countrywide in that time frame. I can be contacted at rh@boldlegal.co.uk.
Why can't the Law Society
Why can't the Law Society just issue guidance that where a firm is instructed by a lender, it is for that firm to do the work and satisfy itself that the title is good, and that a blanket undertaking from another firm that the title is good is invalid.
Asking too much? Yes, probably.
So who are the chosen few?
This has been going on for a month now and only Premier Property Lawyers and Countrywide seem to have broken cover. Both Licensed Conveyancers and subject to the strict control of the CLC. Is there a list of the 39 firms of solicitors, why are they so coy? Being lauded by HSBC as being the crème de la crème, fraud busters is surely something they should be shouting from the roof...but silence. Maybe they are thinking it was not such a good idea after all or are they being ordered to keep schtum till the storm blows over?
Lets make sure it does not blow over, join in the Law Society campaign by moving from HSBC, contacting your MP and the media to inform them of the attempt to restrict consumer choice to just 43 firms nationwide.
HSBC Panel Firms List Available
Curious, or anyone else, if you want a list of the panel firms, email me at rh@boldlegal.co.uk.
HSBC panel list available
Thanks for the offer Rob, wouldn't involve reduced membership of The Bold Group for £70 until 30 April 2012 would it? :-)
Panel list.
No, a copy is available, joining us is optional.
Did HSBC not do a Google
Did HSBC not do a Google review about them!!! Countrywide and Premier Property Lawyers
Good Lord!