Currently the majority of Mortgage Lenders are quite happy to have the Borrower's lawyer act for it when having the Borrower enter into one of its home buying mortgages. This makes the paperwork faster, and with one set of lawyers it is cheaper for the Borrower. After all, both Lender and Borrower will be scrutinising the same legal paperwork, and who better than the Borrower's lawyer to do that as they see every scrap of legal paperwork that the Seller discloses, and they have practical knowledge sourced from their client, the Estate Agent and they will have had sight of the Borrower's private survey.
However, from today, HSBC has taken an unusual step and has now chosen to have its own lawyer act in it's home moving mortgages, still leaving Borrower to keep their conveyancer, but the Borrower must now pay the HSBC lawyer's legal fees – albeit only a token amount of £160 plus VAT.
However, in a clever move, HSBC will allow you to escape the fee if you can be persuaded to direct the whole of your chargeable legal work/conveyancing of your home move to their chosen lawyer.
But HSBC have announced that it has only selected a tiny panel of lawyer firms (reportedly just 43 in number but no public list apparently available yet) to cover the numbers of mortgages and conveyancing that they expect to handle. What is clear, is that it the panel will be managed by Countrywide.
It is reported that a fee for HSBC's conveyancing will be offered at just £399 for properties up to £100,000 going up to £549 for homes between £300,000 and £500,000. The status of the actual person you will have handling your house move (i.e whether you will get a Solicitor or Legal Executive) is not yet clear, nor is the detail of the level of service that that lower fee will give you. However, there will be perks to further tempt, such as possible free searches on a second attempt at purchase.
Low fees, and the potential for being overworked are of course always a worry and in addition, Desmond Hudson, Law Society chief executive has already questioned " does this provide sufficient consumer choice…. such a low number of firms could struggle to provide all consumers, [especially] those who struggle to communicate other than in person or those who would prefer to use a local solicitor, with the service they seek."
Mr Hudson added that he suspects HSBC is banking that "the majority of their customers will opt to use the bank's solicitor," yet leaving "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."
What has not been reported yet, is whether HSBC are receiving any sort of payment from the panel firms who will suddenly have the public's conveyancing channelled through them, which will clearly amount to a valuable source of extra work. Even Mr Hudson suggests that "being on a panel such as that will be valuable. How long will bankers resist the temptation for a quick profit by selling places on that panel and putting up costs for house buyers?"
However, it remains to be seen whether Estate Agents, Solicitors and Mortgage Advisers will consider HSBC's panel choice as an advantage or disadvantage when recommending HSBC mortgages from today.