What is HSBC thinking of?

HSBC Bank is in trouble – with solicitors, at least. You may not have seen the furore over HSBC’s decision not to use solicitors generally to carry out its residential mortgage work – so that their customers, buying property with an HSBC mortgage, can have the HSBC work done by the same solicitor that is handing the purchase work – and instead to appoint a panel of only 43 firms of conveyancers (most being solicitors, and some being licensed conveyancers) to act for it – none of them is in Kent, by the way.  If you want to see more details, try the following links: Law Society’s Gazette and Mortgage Finance Gazette and Mortgage Strategy and Mortgage Solutions but the purpose of this post is not to join the row, but to address a slightly different point.

It is clear that HSBC is completely free to instruct whoever they want to deal with their mortgage work – though they must be prepared to accept the consequences if their customers object to any inefficiencies or delays or extra costs that result.

Personally, I think that separate representation for borrower and lender is a good thing, and if HSBC’s move encourages separate representation, then I am pleased.

However, HSBC should not seek to persuade its customers to use HSBC’s (very few) panel conveyancers to carry out the customers’ purchase work as well as the bank’s mortgage work. There is (so far, anecdotal) evidence that this is the case, and it raises the question, “Why?”

HSBC’s decision to restrict its panel so severely is apparently to help it combat mortgage fraud: it believes that, if it has few firms to deal with, it can know them better and that this provides better protection against fraud.

What seems incomprehensible is how it could conceivably be in HSBC’s interests to get “their” conveyancers to do the purchase work as well. It seems to me to be a step – indeed a leap – too far, and I cannot see any possible justification. Does

HSBC benefit financially in some way? Does it think its panel firms will become more efficient – and less tempted to commit mortgage fraud – by also having to act for buyers/borrowers as well as lenders?

It seems to me that any attempt by HSBC to divert its customers away from their existing conveyancers is interference with free trade and competition, and an abuse of its strong market position.

But perhaps someone from HSBC can explain their reasoning to me: what is wrong with HSBC borrowers having genuinely independent advice from solicitors who are not on HSBC’s panel? What is HSBC scared of?


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