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New restrictions to hit home buyers

Which? expresses concern over conveyancing panel

Buying a house

HSBC’s new panel could limit choice for home buyers

HSBC has just launched a new conveyancing panel to provide services to residential mortgage customers. 

However, Which? is concerned that this may harm consumer choice, and stifle competition in the conveyancing industry.

What is conveyancing?

In the context of homebuying, a conveyancer is the legal professional who deals with the transfer of legal title of property from one person to another. 

There are usually two main parts to the process – the exchange of contracts, and completion. In the UK, conveyancing is generally done either by a solicitor or a licensed conveyancer.

HSBC’s conveyancing panel

Last month, HSBC launched a new conveyancing panel in response to the FSA’s recommendations for tackling mortgage fraud. 

This panel has just 43 members to cover the whole of the UK. Of these, 39 are solicitor firms and four are licensed conveyancing companies.

Why does this matter?

Most lenders have panels in place for conveyancing and related work. However, they typically have a wide membership (for example – thousands of members), which effectively means a borrower is free to choose whichever firm he or she wants.

HSBC’s panel is very limited; and if customers want to use solicitors or licensed conveyancers who aren’t on it, they may have to pay additional fees. This is because HSBC will insist on using a panel conveyancer for its part of the legal work associated with the mortgage application.  

This means a customer will be financially penalised if, for example, he or she wants to use a regular family solicitor who is not on the panel.

More generally, having just 43 companies on the panel could seriously reduce competition among conveyancers for those HSBC customers, and therefore make it more difficult for consumers to get good value for money.

Which? has concerns

Serena Cowdy, Which? analyst, said: ‘Which? has always been concerned that lenders’ panels could restrict consumers’ choice during the home buying or selling process. This applies to using surveyors and financial advisors, as well as conveyancers.

‘However, we understand that many people, especially first-time buyers, need to be able to get professional help with moving home as easily and simply as possible – and this may be done via their lender.

‘We believe transparency is crucial throughout the process. For example, it should be made quick and easy for a consumer to compare the quality and cost of the panel firm, compared to a consumer’s own choice.

‘We’ll be raising our concerns about transparency, consumer choice and competition with HSBC.’

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