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On free legals: ‘As helpful as a chocolate teapot’ – poll result

  • 09/02/2018
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On free legals: ‘As helpful as a chocolate teapot’ – poll result
The latest Mortgage Solutions poll asked brokers how they viewed the service levels of 'free legals' offered alongside remortgage deals.

The results showed that 75.4% of brokers found the service to be poor, 13% said average, while 11.6% of respondents said good.



Sally Laker, managing director at Mortgage Intelligence, said that given the industry discontent with free legals over 2017, the results are “as expected”, and argued that better service level agreements need to be in place.

“Free legals are a regular option with lender products, and over the years have generally worked well as a cost-effective option for the client,” said Laker.

She continued: “However, when demand overshoots capacity it creates a domino effect on broker cases, and takes time to fix, which just exacerbates the problem.

“This reflects badly on the brokers, when they have offered a great service only to be let down by the conveyancing.”

Laker said that improved service level agreements with lenders could create contingency plans for when case levels reach capacity, which would avoid log jams and keep brokers updated.


A two-piece puzzle

Rachel Dixon, a Leamington Spa-based mortgage consultant, argued that while free legal firms carry problems such as case delays and communication problems – poor service levels are also the responsibility of the lenders.

“Looking at the results, I think that this would probably sum up the frustration that brokers are feeling right now,” said Dixon.

She continued: “We had a big issue where you couldn’t even ring these free legal firms as they didn’t answer their phones, or worse still – we were kept holding on a phone lines for close to an hour, only to get through to a call handler who was as helpful as a chocolate tea-pot.

“At times free legals can work well, but anything more than a straightforward like-for-like transfer is usually where the problems start.”

However, lenders are also responsible, said Dixon, because they decide how much business to distribute to how many conveyancing firms.

“Another issue, and probably is the biggest – is lenders’ mismanagement of how much business they take in,” said Dixon.

She continued: “If they only have a couple of free legal firms on their books, but have taken record amount of business in that month, of course there’ll be problems.”

Dixon added: “This is what happened in the run up to Christmas last year. Certain lenders took on way too much business at year’s end – year’s end came and these mortgages didn’t complete.

“We do our bit as advisers, we win the business, get the mortgage to offer in a quick time, but this is let down by the back-end service.”


A free lunch

Likewise, Sebastian Riemann, financial consultant at Libra Financial Planning, pointed out that quality may not always be possible with ‘free’ services.

“Free legals have always been an issue,” said Riemann, “the free legal firms are rarely in sync with brokers, where they feel they don’t need to keep us in the loop or up to date.”

He continued: “Not having a direct influence over the number of instructions has a knock-on effect whereby it can quickly escalate to them being inundated.

“It could well be that due to the amount being paid by the lenders the quality is simply not deliverable.”

Riemann added: “Lenders have always drifted in and out of taking on too much business, resulting in service standards dropping.

“However, they do have the ability to moderate this through the pricing of products.”


A matter of choice

Arron Bardoe, director at Temple Capital Finance, said that while large free legal firms may lack accountability and do not appreciate the brokers’ role in helping their clients – service problems could be addressed by providing more choice to brokers and clients.

Bardoe commented: “All the investment [lenders] are making in delivering a faster and slicker service is being lost by poor free legal providers. Millions of pounds of IT and process investment plus a lender’s reputation can be lost in a second due to a poor conveyancer.

“That said, while we have experienced exceptionally poor service from some providers, they do not control the whole market and they do manage to process some cases well.”

To improve service levels, Bardoe said lenders could consider cashback alternatives, using smaller conveyancing firms, or using a panel manager that oversees a wider range of free legal providers.

Bardoe said: “Lenders should always offer a cashback alternative of £250+ for all their products, as this pushes the onus of the conveyancer service back on the broker away from the lender.

“I cannot see lenders ever being able to get rid of a free legal service as it affects sourcing,” he continued.

“Many of the smaller conveyancing firms provide an excellent free legal service, but they are under-utilised by lenders and panel managers.”

“The resolution may be to move away from contracts with 1-3 firms, and instead use a panel manager who should be actively looking at workloads and service levels,” Bardoe continued, adding that “lenders could include their panel in the portal, so brokers can choose a firm rather than just ticking free legals and hoping for the best.”

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