By a Newsnet reporter
Scottish house buyers may be unable to access mortgages issued by HSBC bank after the Law Society of Scotland issued a warning to Scottish solicitors highlighting serious flaws in the bank’s new documentation.
In a memo issued today the convenor of the Scottish legal body described a new system introduced by the bank as “not fit for purpose” and of being “patently designed for England”.
The Society’s warning follows the launch last month by HSBC of a new panel system comprising only four firms in Scotland which are allowed to carry out security work on its behalf and the imposition of a charge of almost £200 on borrowers who choose a non-panel solicitor to act in a purchase.
The new system is based on English conveyancing law and requires both the purchaser’s solicitor and the seller’s solicitor to grant undertakings, which, says the Scottish Society may leave Scottish solicitors exposed to unacceptable risk.
The Society’s advice is that solicitors should decline to engage with the panel firm on the basis of this documentation.
Ross MacKay, convener of the Law Society of Scotland’s Property Law Committee, said: “Now that we have had sight of the documentation being issued on behalf of HSBC we have serious concerns that buyers’ solicitors are being placed in an invidious position by being asked to deal with paperwork which is patently not fit for purpose.
“This further penalises customers of the Bank who choose their own solicitor. Regrettably it seems that a system patently designed for England is being imposed on Scottish practice, to the detriment of both public and practitioners.
“We would urge the Bank to review their panel system immediately so that customers currently buying properties with an HSBC loan are not prejudiced.”
The Society is currently in negotiations with HSBC in an attempt at resolving the situation.