Home buyers set for rise in legal fees as Abbey cuts ties to 7,000 solicitors

Published 25th Mar 2009

House buyers with one of Britain’s biggest mortgage lenders face a big rise in legal fees because the Abbey National has ditched 7,000 solicitors from the panel that handles its conveyancing.

The Law Society, which represents 100,000 solicitors in England and Wales, has condemned the move as “grave” and requested urgent talks with the bank.

The decision came out of the blue and has been taken, the Abbey says, because of insufficient levels of work by the law firms during the past 12 months.

It means that house buyers must either use an Abbey-appointed solicitor or pay for an extra set of solicitors to carry out the lender’s side of any house sale.

Normally solicitors on the bank or building society’s approved panel act both for the buyer taking out a mortgage also look after the interests of the lender as well.

That includes ensuring the mortgage loan is passed to the sellers or their solicitor and ensuring that the bank’s mortgage is registered as a charge on the property at the Land Registry.

It means that if a buyer chooses his own lawyer who is not on the panel of the Abbey National, then the bank will insist on another firm being involved to handle its side of the paperwork.

Desmond Hudson, chief executive of the society, has told solicitors that the decision came “without any prior notification to the society or to the Council of Mortgage Lenders or to the Building Societies’ Association".

It was based, he added, on “an undefined level of activity with Abbey over the course of the last 12 months”.

He said: “Where a firm is considered not to have had recent activity it would appear that it has been removed, irrespective of the size or nature of the firm, from Abbey’s panel.”

The president of the Law Society, Paul Marsh, also said that the development was “particularly serious” and the society was especially concerned about its impact small firms and the potentially disproportionate impact on black and minority ethnic solicitors. “I want to assure all members of the grave importance that we attach to this matter and the actions of the Abbey National.”

Mr Hudson added that the move has affected the setting up of new firms, sole practices or firms who are not instructed by Abbey for a specific period of time.

A spokesman for the Abbey said that it had 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 removoing them from our panel”.

He added: “We have put in place a process to deal with requests for reinstatement and each request will be evaluated on its merts.”

The property slump which has seen sales fall by more than half in the past year has already led to scores of conveyancing solicitors being made redundant by their law firms.

Adrian Barham, president of the City of Westminser and Holborn Law Society, said: “Solicitors across our area have been receiving these letters completely out of the blue and the consequences for clients are quite serious.

“It means that anyone wanting to get a mortgage from the Abbey will either have to use a solicitor chosen by the Abbey or, if they stick to their guns and use their own local solicitor, will have to pay for Abbey’s solicitor as well.”

“Either way, this is less than satisfactory. On the one hand, you have your choice of solicitor effectively dictated to you by the Abbey; on the other, you end up paying for two different solicitors, pushing up the costs of moving use.”

Patrick Stevens, a solicitor with a Stevens Lucas, a firm in Chirk, Wrexham, said: “What they are trying to do is blatant discrimination against the High Street conveyancing firms and indirect discrimination against ethnic minority firms who are those most unlikely to be volume conveyancers.”

At the same time, he added, the Halifax were providing free conveyancing via solicitors on its own special panel. “You may wonder how the Halifax can afford to provide a free service, having alrady lost tens of billions.”

The effect, he said, was that “my tax money is being used to enable the Halifax to provide a freer service to drive smaller solicitors out of the business. As an anti-competitive measure it takes some beating.”

In a further statement a spokesman for Abbey said: “Abbey is in active dialogue with the Law Society and is working with the Law Society to produce a further communication explaining the background to its decision to be circulated to the profession.

“As Abbey has already stated law firms are able to make a request to be reinstated and each request will be evaluated on its merits. A number of solicitor firms have already requested to be reinstated and Abbey is reviewing these cases”.

Source: ' Times '

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