HSBC mortgage system “not fit for purpose” in Scotland says legal body

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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.

6 COMMENTS

  1. There are many ‘legal agreements used in sales across Scotland in which the agreements are ‘deemed’ to have been carried out under English Law.

    Simply cross out and initial the subsection stating this or similar.

  2. This is an example of the UK mortgage lenders’ attempts to undermine the Scottish conveyancing system.

    Some are looking at appointing English firms to do their Scottish and English mortgage work.

    The effect of this is that 1200 small legal firms and their staff are seriously under threat

    Some big commercial firms are involved in this including some who are awarded Scottish public sector contracts on a regular basis.

    the irony of all this is that as we are in touching distance of Independence the very aspect of our national life which sustained our identity, our legal system is seriously under threat

  3. I’m no lawyer but as far as I understand it, and this applies to many of the mail shots from suppliers. mobile phone, broadband etc that drops through the letterbox regularly, that these documents are produced in England.
    However if you agree to any proposal or offer and or sign anything it is deemed to be covered by Scots Law and not English ?.
    Therefore, if you have a contract to supply a service offered and agreed with an Englsih supplier that if thereafter they arbirarily make a change without first having made you aware and sought your agreement that they then have rendered the contract null and void ?.

  4. Under EU legislation consumer contracts must indicate the legal system which will apply to the contract.

    In most but not all contracts it usually states the law of the consumer’s domicile.

  5. Mortgages are not ‘fit for purpose’, since Thatcher demutialised the Building Societies (owned by their members) which led to the current crash. It was illegal to hold two mortgages at one time. It was fraud to do so. There was no mortgage repayments which could be gambled like casino cash. Money was invested wisely fi the mutual sake of all members.

  6. Is this why McGrigors merge red to try and corner the market. Restricted practices are illegal and restrict competition, which is against EU rules.

    AMB Ambro take-over should never have been allowed by Westminster. It was against th EU competition rules. Lloyds are having to sell off branches because of EU competition rules. They own to many branches.

  7. Ah! But! Just as the English think that HBOS, is a Scottsh Bank, even if Halifax is in England, and RBS is also a Scottish Bank they probably think that the Hongkong & Shanghi Banking Corporation belongs to China. Ye couldna fung thaim wi ae muckle stick.

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