News In Focus
Suspend panel system, Society tells HSBC
The Law Society of Scotland is calling for mortgage lender HSBC to suspend its new conveyancing panel system to prevent "chaos" in hundreds of property transactions.
Last month the bank announced that it was cutting its panel of legal firms approved to act for it in mortgage transactions to 43 legal firms, only four of which are believed to be based in Scotland, with borrowers being charged an additional £160 + VAT to cover the bank's cost if they chose to instruct other solicitors. Previously any law firm in Scotland could carry out work for both the purchaser and mortgage lender.
The Society has since been critical of mortgage paperwork issued by HSBC to borrowers' solicitors, which it believes is not fit for purpose due to being based on English law and requiring undertakings of the borrower's firm which go beyond what the Society regards as proper practice and may be impossible for Scottish solicitors to honour. It says this is causing major headaches for the bank's mortgage customers and could lead to house sales being delayed or cancelled, with buyers suffering substantial penalties.
The Society says that over the past two weeks it has been "inundated" with calls from concerned buyers and their solicitors.
Ross MacKay, convener of the Society’s Property Law Committee, said: "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. 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.
"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."
A spokesman for HSBC said: "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."