Solicitors' firms regulated by the Law Society of Scotland will once again be able to apply to HSBC bank for membership of its conveyancing panel, following talks with the Society.
Five years ago HSBC caused an outcry in the profession when it announced that it was cutting its panel of legal firms approved to act in mortgage business to 43 for the whole of the UK, only four of whom were believed to be Scottish. Although HSBC only had a small share of the Scottish market, there were fears that it would push to expand and/or that other lenders would adopt a similar policy.
For intending HSBC borrowers, the effect was that if they wanted to instruct their own solicitor in their house purchase, they would have to instruct an HSBC panel solicitor separately to deal with their mortgage loan.
Now, however, following discussions with the Society’s Property Law Committee regarding their current panel membership arrangements, HSBC has recognised that customers prefer where possible to use a conveyancer of their own choice and has agreed to extend its panel membership for purchase transactions in Scotland.
A statement issued by the Society today confirmed that HSBC is "moving to an open panel approach for purchase cases across all jurisdictions, whilst ensuring that it is in line with FCA guidance".
As regards implementation it explained: "HSBC will work collaboratively with Legal Marketing Services Ltd (‘LMS’) to manage their wider transactional conveyancing panel. The bank has used LMS as their remortgage panel manager for nearly 10 years and this further alliance will consolidate LMS as HSBC’s sole panel manager going forward.
"The implementation will be in two phases. Phase one will be in early October 2017 for intermediary business, and phase two will see the transition of all other purchase cases in November 2017. As the implementation is in two phases, HSBC will continue to work closely with its existing providers, one of which is Decision First, until phase two is implemented. HSBC would like to thank them for their service and professionalism over the last five years."
The basic requirement for a law firm in Scotland to become or remain a member of the panel will be that the firm is regulated by the Law Society of Scotland. Firms will be asked to provide additional information in order to be confirmed as panel members. LMS will provide further detail of the process over the next few weeks.
Smaller firms will face some limits on transaction value. Sole principal firms will only be able to handle loans up to £350,000; those with fewer than four principals will be allowed up to £2m loan size. Firm of four or more principals will be able to handle larger loans provided they have at least £5m professional indemnity insurance cover.