In this business, issues which at one point seemed incredibly important often get resolved to a point where we look back and a) wonder what all the fuss was about, and b) try to understand why the protagonists didn’t change their ways rather sooner.
I’m reminded of a couple of issues which once loomed large in the mortgage advice sector but now appear (on the surface) not to be an issue. First up, what about lenders’ dual pricing? I hear on the grapevine that there have been some attempts to reinstate this practice but – for the most part – it appears not to be a significant issue any more. It won’t of course be stamped out completely, but it appears the vast majority of lenders are completely aware of which side their distribution bread is buttered.
And what of retention proc fees? Again, we don’t generally have a whole of market consensus here but increasingly those lenders not paying retention proc fees are out of step with the rest of the marketplace, and advisers can certainly make their voice heard with this number by not placing business with them. It remains an issue on the agenda but, slowly and surely, we are moving towards a much better position.
But, in this market, some issues stick around because they don’t get resolved. Or they appear to be solved only for the problem(s) to bubble up again, perhaps at different firms and in different guises but with fundamentally the same raison d’être. In our sector, at least, we can safely put ‘free legals’ in the box marked ‘open and active’, and ‘waiting for a true market resolution’. We may, it has to be said, be waiting a while for that.
Just recently I saw the results of a poll which suggested over three-quarters of brokers found the ‘free legal’ service chosen by their clients to be poor, with 13% saying ‘average’, and just 11.6% saying ‘good’. It is hardly a vote of confidence in the provision of free legals, and while I freely admit there’ll be many reasons why this opinion was given, the result is not even close to being acceptable.
We’re all acutely aware of last summer’s major problems with the free legal services offered by some conveyancers who (perhaps through no fault of their own) were deluged with business, resulting in a very poor service offering for all concerned. This might have been down to one particular distributor getting it wrong, but the knock-on effect was considerable and, we might argue, is still being felt now and has undoubtedly impacted on the perception of what ‘free legals’ should offer, and what it is actually able to do.
At that time, Nationwide pulled its ‘free legal’ option and upped the available cashback to £500 – a move which many supported although as predicted this was a temporary measure because it has now reinstated ‘free legals’ albeit with a limited panel of conveyancers. The good news – at least for the time being – however is that it’s maintaining its £500 cashback and one would hope that all advisers who have been recommending this option to clients over the last six months or so, will continue to do so because the advantages of this option clearly outweigh the ‘free’ option.
Indeed, it would be interesting to hear what advisers think of the non-free option their clients would have taken during this time period. The allure of ‘free’ will always touch a client nerve but, having had experience of the cashback and using it to secure the client’s conveyancing service, surely advisers will be in a strong position to recommend what is best for the client? Which I’m assuming will be a continued recommendation to take the cashback and not deem that free is all it’s cracked up to be.
Of course, I fully understand why Nationwide might have returned to an old policy, arguing that it’s a question of choice, but if advisers are involved in this process then I would hope they’ll be able to recommend the best choice for their clients. Problems with free legals have not gone away since the middle of last year – in fact it’s arguable whether they’ll ever go away again. Far better then to put your client in the strongest position possible by choosing and using the cashback available to secure their own legal representation, that represents them not the lender, and gives them the best possible chance to complete their remortgage in the quickest time possible.
Harpal Singh is managing director of Broker Conveyancing