The decline in the housing market has hit the legal profession in many ways, but now there is a double blow as Abbey, the mortgage lender, has dumped some 7000 solicitors across the UK including Scotland from their conveyancing business.
Letters received by solicitors, reports the BBC went something like this : "Given the low volume of transactions dealt with by your firm during the past 12 months, I regret to inform you that your panel appointment has been revoked with immediate effect"
The Law Society of Scotland claims it will damage the consumer, damage home buyers, and damage competition in the market, but in truth, the solicitors were sacked by Abbey for simply not doing enough work for the money … (even banks have to cut costs in a recession to survive, so maybe the solicitors should have charged less to stay on the panel ? – Ed)
You can read the Journal Online’s version of the story with some desperate sounding quotes from Law Society officials HERE
BBC News reports :
Abbey in snub to 7,000 solicitors
Abbey has told 7,000 local solicitors it will no longer let them handle the bank's side of the conveyancing process when they act for house buyers.
The Law Society has protested to the bank, describing its move as "grave", and is in talks with Abbey.
It means house buyers will have to pay the cost of an extra set of solicitors to look after the lender's interest.
The bank says the solicitors have not been doing enough work for it during the past 12 months.
The decision to ditch the firms from the bank's "panel" of approved solicitors came out of the blue last week.
"Given the low volume of transactions dealt with by your firm during the past 12 months, I regret to inform you that your panel appointment has been revoked with immediate effect," said an Abbey letter to one firm of solicitors in Fleetwood, Lancashire.
Extra costs
Normally, solicitors on the approved panel of any lender would act not only for the buyer who was taking the mortgage, but would be relied upon by the lender to look after its interests in the deal as well.
That would mean ensuring the mortgage money was passed to the seller or their solicitor, and ensuring that the bank's mortgage was registered as a charge on the property at the Land Registry.
If a buyer now chooses a solicitor who is not on Abbey's panel, then the bank will insist on another firm of lawyers being involved just to look after its side of the paperwork, with the extra costs being paid for by the borrower.
That could add an extra £200 to £250 to the legal costs involved.
Worried
The Law Society is trying to persuade the bank, one of the UK's biggest mortgage lenders, to change its mind.
The Society's president, Paul Marsh, said neither the Council of Mortgage Lenders nor the Building Society's Association was aware of Abbey's decision before it was announced.
"I want to assure all members of the grave importance that we attach to this matter and the actions of the Abbey National," he wrote in a letter to solicitors.
The Society said it was particularly worried about the impact on the business of small firms.
"We have written to a number of firms that have undertaken few or no transactions with us over the past year to advise them that we will be removing them from our panel," said an Abbey spokesman.
"We have put in place a process to deal with requests for reinstatement and each request will be evaluated on its merits," he added.
The slump in the property market, which has seen sales slump by more than half in the past year, has already led to hundreds of solicitors being made redundant by the conveyancing departments of some of the UK's biggest solicitors' firms.
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