HSBC have introduced a new mortgage system which has caused concern to some legal experts in Scotland. The experts have warned that it may place hundreds of house sales at risk.
The Law Society of Scotland have indicated that the paperwork that HSBC have introduced is based on on English law rather than Scottish law and have called for HSBC to suspend the system.
The new system requires legal representatives of both the property buyer and the seller to grant some undertakings which the Law Society of Scotland believe to be difficult or almost impossible to honour. Furthermore, the work amounts to a lot of additional work for the buyer’s solicitor.
HSBC’s new conveyancing system also involves limiting the number of firms that can be used to carry out legal work for the bank. A restricted conveyancing panel has been set up by HSBC and they argue that their documentation is fit for purpose.
Previously, customers were able to use any Scottish law firm to perform the legal work when purchasing a house. However, the changes mean that any customer who does not use one of the law firms set by HSBC’s restricted conveyancing panel will now face an additional charge.
The Law Society of Scotland have also revealed that many firms have contacted them recently over the new changes.
Ross MacKay, from the Law Society of Scotland, said: “We pointed out that this new system was wrong in principle and a month on it is becoming clear that it is also wrong in practice. It is failing homebuyers who have chosen an HSBC mortgage.”
Mr MacKay also added that HSBC should suspend the system until they can perform a full review and consultation.
HSBC suggested that the new system was brought in to help tackle conveyancing fraud and indicated that rather than customers facing an additional charge, the existing charges were being split up if they used their own lawyer.
HSBC have indicated that concerned customers should speak to their HSBC mortgage manager.