A recent decision by the Law Society Council (LSC) could have a serious impact on legal firms involved in the mortgage process.
The ruling will allow solicitors to accept investment and services from non-lawyers and third parties in return for a share of their profits so long as overall ownership of a solicitors’ practice remains with the solicitors. This could allow mortgage lenders to invest in the solicitor firms on their panels and derive profits from this, but there is confusion as to whether this will cause their independence to be called into question.
David Hollingworth, mortgage specialist at London & Country, said: “Whether or not it will affect the value to borrowers is debatable.”
But despite a warning from the Office of Fair Trading that it may be in breach of competition law the LSC rejected a proposal to allow the payment of referral fees in cases where an introducer offers marketing and referral services.
A report in the Law Gazette claimed that if it was eventually overruled it could cost conveyancing firms between £200 and £400 in referrals on every case.