UK Finance Designator: HSBC Bank plc
HSBC Solicitor Panel Assistance:
What are the two main areas of negligence claim resulting from the UK Finance Lenders’ Handbook brought by HSBC against solicitors on the HSBC conveyancing panel
Whilst specific information is not available in respect of claims by HSBC the CML in their ‘Response by the Council of Mortgage Lenders to the Law Society of Scotland Consultation paper’ 2012 stated that In discussion with solicitors in Scotland who act for lenders in negligence matters they have highlighted two areas which are resulting in claims. These are
- Failure to disclose back to back transactions – where the proprietor has owned the property for less than six months; and
- The funding of the balance of the purchase price. Again, we would reiterate we have no evidence to suggest that these are the two main areas of concern for HSBC.
Am I obliged, being on the HSBC conveyancing panel, to carry out a flood search?
HSBC make no specific obligation to carry out any of the searches listed. The UK Finance Lenders’ Handbook simply states that ‘you must ensure that any other searches which may be appropriate to the particular property, taking into account its locality and other features are carried out’.
Please note that most ‘less usual searches’ are not optional as far as HSBC are concerned if they are ‘appropriate’. Most lenders will not require environmental searches (you should Check Part 2 of UK Finance Lenders’ Handbook to be sure), but you are obliged to explain risks and availability to the client.
Ground stability, Plansearch, flood searches as well as the searches are optional--but only to the extent that you have allowed the borrower client to make an informed choice. Regardless of whether there is a mortgage, if you have not advised the client that these (and other) searches are available and the risks they cover, then you will be liable if the client suffers loss through not conducting one. Does your ROT and Ts and Cs cover this situation?
A leading search provider lists over 65 conveyancing searches. Do you know what they are and when they may be relevant? If you are unsure as to which searches are appropriate based on location, call your search provider or call one of the leading search companies.
I understand that HSBC could request or audit my files because I am on the HSBC conveyancing panel. How should I respond in the event of such a demand?
We can't comment specifically on HSBC. Many major lenders are now introducing ‘file auditing’ as standard practice in relation to completed matters. This raises questions of confidentiality in relation to the borrower and the purpose to which the results of such audits will be put. The starting point is to remember that the file does not belong to your firm, it belongs to the ‘client’. But, of course, we will normally have two clients--the buyer and the lender--and you will owe a duty of confidentiality to each. So basically, you have to separate the file and only send the lender the parts solely relating to the lender. But, of course, this should be correspondence pertaining to the lender, mortgage instructions etc.
The emerging convention is that lenders include authority to disclose in loan application forms to counter this problem. Mortgage Express v Sawali,  EWHC 3054 (Ch) indicates that such provisions are valid. Please click here for more information about that case.
Does my firm face suspension from the HSBC conveyancing panel if I have not sent the deeds on a purchase within a certain period of completion?
One might ordinarily expect HSBC via their Part 2 conditions to address this issue, but the Handbook is silent on deadlines to send deeds. You need to look at the Terms of HSBC’s Conveyancing Panel Appointment that you previously signed. For a number of banks, these Terms have a clause such as this one: ‘To keep us informed of the reasons for any delay in your being able to send the title deeds and documents we require to us within 3 months of completion or evidence of proof of registration within that period’. (We will send reminders if the deeds have not been received but will not acknowledge receipt of deeds). It is imperative to keep HSBC updated. Law firms can often compound their problems by not communicating with the lender when there is a delay or problem.
Do HSBC publish the conveyancing panel size and the number of conveyancing firms dismissed each year?
With lenders and solicitors working so closely together, it is surprising that there has not been greater demand for the introduction of transparency regarding not just the figures for the HSBC conveyancing panel but for all lender panel listings.