News / General

HSBC Restricts Conveyancing Panel in the UK to 43 Firms

By SLAS Spokesperson

HSBC has set up a conveyancing panel containing only 43 law firms for the whole of the UK and there is unconfirmed information that only 4 firms will be allocated to Scotland. We have received other unconfirmed information that another major lender is about to follow suit. This, of course, has been widely predicted since other lenders started down the same road last year but then seemed to think again when challenged.

There might be an argument against this policy in respect that it artificially restricts the consumer's freedom of choice in the appointment of a solicitor by making the solicitor of his first choice more expensive by virtue of not being on the lender's panel.

More practicaly, however, the exclusion of the High Street solicitor obstructs the public policy of prevention of money laundering because the solicitor's personal knowledge of his client is the best possible defence againt the identity deception which enables money laundering to be effected.  The commoditisation of conveyancing services around a small number of big players seems likely to impersonalise the operation and to promote the opportunity for mortgage fraud. There will. for example, in many cases be no opportunity for face to face meeting between client and solicitor and a clever villain with resources can easily provide all the passports, driving licences and utility statements that his purposes require. However, once that sort of faceless dealing becomes acceptable, it may well become also the norm because of the immediate advantages of speed and economy.  Also, even when there are no villains involved, one has to consider how many problem files achieved that status in conjunction with and possibly because of there having been no or insufficient personal contact with the client for all necessary issues to be addressed.

It seems ironic that, just as we are waking up to the conclusion that the near (hopefully) destruction of the international economy was brought about at least in part by allowing banks to become "too big to fail", a small number of big players in the mortgage market are able to use their domination of that  market to implement a policy which restricts choice in the market place, promotes money laundering and drives down the standards to which customers have become accustomed. The previous placing of loans, regardless of toxicity, to meet targets and fund bonuses may come to be replaced by the throughput of conveyancing business, regardless of clients' and the public interests, again to boost profit margins and bonuses - two huge outlays which the client market has not previously required to fund.

These events turn our minds again to the measures that may be required to prevent the suppliers of mortgage funds from having a virtual power of appointment of solicitors up and down the country.

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see this link for press release 6th February
http://www.journalonline.co.uk/News/1010775.aspx

Following the latest HSBC news release (6/2/12) one firm expressed concern to me that if they decline to act, they will scupper their client's purchase and their relationship with the client and force them into the hands of the HSBC's panel solicitors who'll happily do the purchase.

I replied
"I think a stand will be required on this and perhaps some faith in ourselves to take the lenders on.
It will be a lot of hassle to HSBC if we correctly fuss about their incompetent instructions and I think we would have very good legal reason for declining to use their Certificate of Title.

Some of the LSS Property Committee are thinking towards a “classic” Report on Title (ROT), like a classic L of O, covered by the Master Policy beyond which there is no cover. This is a brilliant idea.
This may mean firms only being able to give a qualified acceptance of loan instructions which are qualified by the extent of that ROT. Beyond that firms are on their own if they give more. I wouldn’t go beyond it!!

The lenders will be unhappy at that because they prize the MP cover.
Even if some firms give that extra obligation then at least it is on their own heads and not ours!
I think we are now moving to a change of the COI Rules so a firm will be unable to act for purchaser and borrower"

Ken swinton writes :-
There are two issues here - any breach of CML Handbook is a breach of the contractual duty which the solicitor assumes in acting for a lender. The CML handbook is in addition to the common law and here there can be overlapping duties in delict and contract.

Most actions of professional negligence are in fact contractual breaches of express or implied terms of the contract. Third party claims will be delictual only. Where there are differences is in relation to pure economic loss claims.

Where there is a problem with acting for both purchaser and lender is that in relation to potential rather actual conflicts of interest and the duty of confidentiality. By disclosing confidential information regarding a potential conflict risks a claim and/or complaint by the party whose confidence has been breached and where there is no disclosure then the claim/complaint will be by the lending party. See Bristol & West v Aitken Nairn 1999 for an example of such a dilemma.

If you are not acting for the lender then these conflict/confidentiality issues cannot occur. Granting a certificate of title is not acting for the lender. The Certificate of title is covered by the Master Policy but a claim resulting from the conflict/confidentiality issue is subject to double deductibles. Advice from LSS 25 July 1995

Having a classic certificate of title which HSBC's instructions seem to exceed would be a useful step forward in restricting the unilateral gratuitous obligations granted by solicitors who are in truth undertaking unnecessary risks for no reward.

My experience of lenders is that they are interested in seeking recovery of losses and are not particularly interested in professional misconduct complaints. They will instruct agents who then claim directly against the firm which is then referred to the insurers. Again they seem to engineer the claim value to be over the self insured amount to make sure you report it as circumstances under the Master Policy.



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