The implementation of the new HSBC super panel by Countrywide has raised lots of practical questions from conveyancing practitioners, some of which the Law Society has been able to seek clarity on this week.
In a letter published in the Gazette Desmond Hudson the Law Society Chief Executive has written to its members. We reproduce the letter below.
One conveyancer who wishes to remain unnamed said that the action by HSBC was a “game changer” and “heralded the end of conveyancing as we know it.”.
HSBC Bank PLC Panel Management Arrangements
As many of you will be aware, the Society was contacted by HSBC on 4 January 2012 to inform us of decisions they had taken about the future management of their panel in England and Wales. The bank had not seen fit to consult with the Society prior to that time. Briefly, the bank informed the Society of its decision to create a panel of just 43 firms to service its UK mortgage customers. The completeness of the information made available to the Society left many questions unanswered, so we wrote to the bank on 11 January although we have not had a response yet.
The Society has had the opportunity to speak on the evening of Wednesday 18 January with senior officers of Countrywide who have secured a contract to act as agents or administrators for HSBC’s panel.
As a result of information that emerged, we are able to share our understanding of the following issues with the profession.
For those firms not on the panel the bank does intend that transitional or pipeline arrangements will apply so that if a transaction is underway or instructions have been issued, then your status will be unchanged for that transaction(s).
It is unclear whether the bank has put in place an appeals procedure. We have always insisted, and will continue to insist, that basic standards of fairness require lenders to have an appeals process. So, affected firms of solicitors should contact the bank and seek a right of appeal.
Moreover, Countrywide have informed us that whilst they are not at liberty to disclose the criteria for admission to the panel, the number of the panel has not been fixed at 43 firms and that other applications will be considered. Given what HSBC and many firms have told us, we are not inclined to place much reliance on the practical effects of that statement.
As we understand it, applications made to Countrywide are subject to initial screening and those firms that do not meet the screening criteria (criteria not disclosed to us) will be rejected at that point.
We are unhappy at the fact that HSBC’s agent Countrywide does not make any reference to an appeal procedure, they tell the Society that they have no mandate to operate an appeal procedure and suggested appeals should be passed directly to the bank.
Where the initial criteria are satisfied, a detailed assessment is then made. Again the details of that process are not disclosed to us.
So far as solicitors’ firms are concerned, one of the criteria applying in terms of admission to this panel will be that the firm must either be a member of the Society’s Conveyancing Quality Scheme (CQS) or in the process of becoming or working towards becoming a member of that scheme.
We understand that Countrywide are paid for their management of the panel by HSBC. We also understand that those firms admitted to the HSBC panel are required to pay an administration fee in respect of services carried out by Countrywide. Countrywide did not feel at liberty to disclose the level of these charges. Nor is it clear to us precisely what services Countrywide is providing.
It appears that these costs cannot be passed on to the client since, for the present at least, a price limiting arrangement for conveyancing services provided by those members of the panel are in place.
As many of you will be aware, Countrywide also operates a licensed conveyancing firm, which provides conveyancing services. It may not come as a surprise to you to learn that this firm has been appointed as a member of the panel.
In our conversation with Countrywide we were informed that that part of Countrywide dealing with the management of the panel played no part in the preparation of the application of Countrywide’s licensed conveyancing firm or in the assessment of that application, which was dealt with solely by the bank. Countrywide also said that they do not consider there to be any conflicts of interest in this regard.
The Law Society does not agree with such an assessment. One company in their group will be administering a panel of suppliers for the bank, in circumstances where one of those suppliers is also a company in their group. We are surprised that HSBC considers that these arrangements are acceptable, especially given the fact that many consumers will be using the panel’s conveyancing services.
Many firms of solicitors have contacted the Society in the last few days and indicated their disquiet.
The Society is satisfied that these arrangements and decisions by the bank are injurious to the bank’s client solicitors firms who undertake conveyancing and will no longer be able to do so for the bank. We also consider the arrangements to be contrary to consumer freedom of choice and that this arrangement will be counter to the long term interests of consumers.
Some of the firms who have contacted us have indicated their intention to close their banking arrangements or move their client account from HSBC. We completely understand the thinking behind such decisions, but these must be matters solely for individual firms to resolve. For our part, the Society has decided that it will ensure that none of its funds are placed with HSBC or any member of the HSBC group, and we will be taking steps to consider any trading relationships we have with HSBC or the HSBC group.
The President of the Law Society has met this week with Business Secretary Vince Cable and amongst the items he raised was the action taken by the bank, and the Secretary of State will be raising this with his colleagues in government.
The Society will also be contacting the Building Societies Association, the Council of Mortgage Lenders, the Financial Services Authority and the National Fraud Authority to share our concerns about these matters and the detriment that is being caused by HSBC’s high handed and arrogant decision.
We would also urge all solicitors concerned about this matter to contact their MP. We are making available the necessary tools prepared by the Society’s Public Affairs department which will enable you to identify your MP, and a guide to preparing letters to your MP which solicitors may find of interest and assistance.
We would also urge all of those firms who are shareholders in HSBC, or partners who are shareholders in HSBC to use their rights as shareholders to press their concern. The Society is considering making a small purchase of HSBC shares so that it may use that avenue to press its concern further.
We are also seeking urgent meetings with the relevant consumer bodies to discuss our concerns and seek their views.
This decision by HSBC is damaging both to the consumer interest and to the profession and operates in our view to no one’s interest other than the short term interests of Countrywide and HSBC.
We would also like to collect examples of where HSBC’s decision has adversely affected a client’s freedom to choose their own solicitor. Firms can send us that information at [email protected]
Finally, we have sought to raise with Countrywide concerns that have been passed to us by a number of practitioners in relation to the practical arrangements that will now apply in HSBC funded conveyancing transactions.
This matter remains unclear and unsatisfactory and we will be seeking to obtain urgent clarification from HSBC’s legal department and we will issue further guidance.