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Society warns over HSBC mortgage documentation

6 February 2012

Scottish solicitors acting for purchasers obtaining a mortgage from HSBC Bank should beware documentation issued by the bank if it is separately represented by an HSBC panel firm, according to the Law Society of Scotland.

The Society has seen documents issued which are based on English conveyancing law and practice, and require both the purchaser’s solicitor and the seller’s solicitor to grant undertakings, some of which may be difficult to honour. It also requires the purchaser’s solicitor to undertake a considerable amount of additional work which would not be required if that solicitor was acting directly for a mortgage lender under the CML Lenders Handbook.

The Society’s advice is that solicitors should decline to engage with the panel firm on the basis of this documentation, as it exposes them to unacceptable risk.

Last month HSBC announced a new panel system comprising only four firms in Scotland which are allowed to carry out security work on its behalf. Borrowers who choose a non-panel solicitor to act in a purchase will be charged an additional £192 as the panel firm's fees.

Ross MacKay, convener of the Society's Property Law Committee, said: "Now that we have had sight of the documentation being issued on behalf of HSBC, we have serious concerns that buyers’ solicitors are being placed in an invidious position by being asked to deal with paperwork which is patently not fit for purpose. This further penalises customers of the Bank who choose their own solicitor.

"Regrettably it seems that a system patently designed for England is being imposed on Scottish practice, to the detriment of both public and practitioners. We would urge the bank to review their panel system immediately so that customers currently buying properties with an HSBC loan are not prejudiced.”

Have your say

Your comment

Elizabeth Mackinnin

Monday February 6, 2012, 12:59

Quite apart from the obvious nonsense of this proposal, could it not be considered a restrictive practice. Is it the ultimate intention that all purchases throughout the country be dealt with by the panel of four otherwise the transaction becomes more costly for the client? How does this equate with providing the public with more competitive choices and where does that leave the conflict of interest rules?

Mahendran Chetty

Tuesday February 7, 2012, 20:40

Hi there,

I am a property buyer in Scotland and caught in the deadlock between HSBC and the solicitors. I am due to sell and buy in 48 hours and don't know what will be the fate of my family. I will be essentially homeless in 48 hours. This is ugly. The bank and solicitors keep the customer for ransom. Who should I approach to resolve the situation? Need help.


Monday February 13, 2012, 16:04

I'm in a similar situation to Mr Chetty below. Having signed the missives, my solicitors have now stated that they will not deal with HSBC. It took me ages to get a mortgage approved and now I am in a no mans land with a mortgage approval from a bank the solicitors will not deal with. Can anyone offer any advice?