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Free legals – heroes or zeroes? Analysis

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  • 14/01/2016
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Free legals – heroes or zeroes? Analysis
Some 1,800 mortgage products come with free legals provided by conveyancers on lender panels. Moa Aarenstrup investigates how useful they really are.

Free legals may mean borrowers avoid costs, but brokers say service is often lower than that of a hired solicitor.

Delays in processing applications, difficulty reaching conveyancers, not having a named contact and an inability to deal with complex cases were common issues brokers experienced.

They said free legal cases go through fairly quickly if they are straightforward and there was a reasonable amount of time before completion needed to take place.

However, cases that involve complicated aspects, for example leasehold purchases or ownership changes, generally took longer.

HSBC, one of the lenders providing free legals, said more work was involved in such cases and extra time to complete should be anticipated.

Heavy workloads cause delays

Several brokers said one benefit of paid-for solicitors over free legal solicitors is they only take on clients in conjunction with their workload. Some intermediaries recommended paid solicitors to their clients who were running on strict completion deadlines.

“Before we position a solicitor to a client, we tell them the time frame. Once they’ve committed, they ensure they’re resourcing correctly,” Andrew Wilgoss, independent mortgage broker at Westminster Wealth Management, said.

Brokers should monitor the process to ensure completions take place so clients are not financially disadvantaged by unfavourable rates when their current rate ends, he added.

Cases can also get stuck in ‘conveyancing factories’ where there is not enough people making decisions over applications.

A spokesperson for HSBC disagreed a free legal service would be slower. They said there should be fewer delays as free solicitors will have a good understanding of lender requirements.

Lloyd Davies, director of operations at the Conveyancing Association (CA), said lenders can entice lawyers to accept lower fees, perhaps for volume work, which can leave the level of service wanting.

Some brokers said a paid for solicitor has a higher duty of care, responding to queries quickly while free conveyancers may be hard to reach.

Mike Hodgkinson, mortgage adviser at Xact Mortgages, said not be able to reach solicitors on the phone was frustrating for clients because it meant their applications would be held up.

Free legals are ‘essential’ to remortgaging

However, Wilgoss said free legals have improved over the past 18 months, and that firms appear more ‘proactive’.

Emma Garrett, senior mortgage and protection consultant at Start Financial Services, said free legals are essential in easy mortgage transactions.

“Often the best deals include free legals. If you’re quoting something else, you’re not giving the client the best service, and you will lose them as many can’t be bothered to do legals on top of the application, payslips, and valuation.”

She argued paid solicitors’ price tags, estimated at £500 to £600, are not cheap for the work provided, as a remortgage takes little time and they do little on them.

Ying Tan, manging director at The Buy to Let Business, said it comes down to individual solicitors rather than if the service is free or not, a sentiment echoed by HSBC and Davies, who said some free solicitors provide a ‘fabulous’ service.

Tan suggested that brokers should find out who the conveyancers are before making recommendations, as they will be criticised if the service is poor.

Capacity problems always an issue

Brokers suggested starting the free legal process before an offer is made, or streamlining the process afterwards, as a way to improve service, with bi-weekly updates allowing brokers to ensure completion takes place and help resolve issues.

Davies said these requested changes were ‘bang on the money’ and that the CA has developed best practice protocols, but that capacity problems will always be an issue.

The Conveyancing Association is currently working with lenders to reduce delays and improve relationships.

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