Desmond Hudson, Chief Executive of the Law Society has posted an open letter to the profession on its website
regarding the HSBC lender panel agreement which was announced on Wednesday
. The Law Society has kindly allowed us to republish the letter.
Thursday 17 May 2012
I am pleased to inform you that the Law Society has reached an agreement with HSBC regarding its residential conveyancing panel. While continuing its campaigning activities the Law Society had, following an approach from HSBC, also engaged in discussions with them with the intention of reaching a solution that is suitable to our members, consumers as well as HSBC. We believe that together we have achieved that aim.
Following those talks, HSBC will now introduce a two tier lender panel which will see all firms with the Law Society’s Conveyancing Quality Scheme (CQS) in the second tier of the panel and able to act for both lender and customer on a joint representation basis. CQS firms do not need to apply to be on the panel but are automatically part of the second tier.
HSBC had initially created a panel of only 43 firms that could act on a dual representation basis, meaning that there were much higher incidents of separate representation.
Following HSBC’s agreement with the Law Society customers can now choose a CQS firm safe in the knowledge that HSBC will also be able to instruct that firm reducing delay and additional work.
The first tier will feature firms, including the initial 43, who have signed up to the criteria of the discounted fees structure overseen by Countywide and the no sale, no fee deal.
The second tier firms will not be bound by these criteria.
The third option remains available for borrowers who wish to choose another firm of solicitors or conveyancers not in the two options above. In this instance, as was previously the case, the borrower will pay £160+VAT for a panel firm to complete the legal work required by HSBC.
HSBC has committed to providing its customers with a detailed and balanced explanation of all these options. Obviously these changes will take some time for the bank to introduce, but HSBC has committed to having this new tiered approach in place by August 2012.
There was some reluctance to welcome CQS sole practitioners onto the second tier, but we highlighted the value of sole practitioners and the high standards of CQS sole practitioners prompting HSBC to go some way in acknowledging that by allowing CQS sole practitioners to act for both the bank and the customer in cases where the mortgage value is £150,000 or less. The Law Society and HSBC will continue to work together to improve this arrangement.
In practice this means that HSBC has gone from a panel of 43 to one of more than 1,400 (2,000 CQS outlets) by aligning itself with CQS in that way. This is not only good news for consumers but for CQS members. There is no doubt this solution gives HSBC mortgage customers wider choice and it has been achieved by the collective effort of the profession and influence of the official representative body, the Law Society.
The Law Society ensured that the impact of HSBC’s original policy remained high on the agenda with an effective national, regional and social media and public affairs campaign, but what gave that campaign so much additional resonance was the way in which you, our members, responded to this issue and I am encouraged that when required solicitors can act in unison. Using the Law Society’s tools, such as the template letter to MPs, and the echoing of the Law Society’s media messaging by members in their local media, together we helped HSBC to commit to tackling the problem.
I would like to thank all those members who took part in the Law Society campaign and would ask that you also pass on our thanks to your clients, many of whom, at your encouragement, provided us with information to support the campaign.
Undoubtedly, those efforts played a major part but we were also working with a bank which was actually keen to listen and work with us to find the right alternative.
From the Law Society and the profession’s view, this augers well for the future. We needed to pull together. We did. The Law Society, as the representative body was able to coordinate a campaign, to channel members’ views and to provide a point of contact for the bank when it was ready to enter discussions, to secure a better solution to its own challenges.
We deliberately left the door open to HSBC and it paid off.
Of course, in an ideal world all solicitors who carry out residential conveyancing would be able to act for both lender and customer on a joint basis, but times have changed and that was never an option for HSBC or any other lender anymore. A trend that is emerging is that CQS is becoming established with lenders. With HSBC now backing the scheme wholeheartedly, Santander requiring CQS for new applicants to its panel and recently Clydesdale and Yorkshire Bank also requiring CQS membership for lender panel work, not having CQS risks reducing the chances of panel membership.
I believe that there is much more that the CQS can offer to assist HSBC and the wider lending community in its desire to improve the experience for the house buyer. The scheme was designed in order to develop rather than stand still, and I look forward to working with HSBC and other lenders to develop CQS so that we can deliver this support at no cost to the bank or its customers.
Desmond Hudson, Law Society chief executive
The CQS was launched in January 2011 and by September Santander
announced it was to make membership of the scheme mandatory for lender’s panels. This has been followed in March by Clydesdale and Yorkshire
banks. With this latest news from the HSBC there does appear to be a movement by lenders recognising CQS as a way of managing panels.
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