HSBC criticised by solicitors over paperwork based on English law

Published on Saturday 11 February 2012 01:10

Mortgage lender HSBC has come under fire from the Law Society of Scotland after it emerged paperwork issued to lawyers acting on behalf of clients who have taken out property loans with the bank was based on the English legal system.

The body, which represents the legal profession north of the Border, has warned that confusion surrounding the documents issued by the London-headquartered bank could jeopardise home sales and leave some buyers without a place to live.

Property lawyers have complained to the Law Society of Scotland that the paperwork uses English legal jargon and demands documents that are not relevant to Scottish property law. Some law firms have refused to complete transactions until the documentation has been altered.

New recommendations from the Financial Services Authority last year to stamp out mortgage fraud required lenders to set up a “panel” of solicitors who could act on their behalf – as well as that of the buyer – during mortgage transactions.

Previous rules allowed the buyer’s solicitor to also carry out transactions on behalf of the lender, but officials deemed that left the process open to fraud as individual lenders could not carry out due diligence on every law firm in the UK.

“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,” said Ross MacKay, convener of the Society’s Property Law Committee. “It is failing homebuyers who have chosen an HSBC mortgage. There is a risk that house sales will fall through and buyers will be left homeless and sellers without payment.”

A spokesman for HSBC said: “HSBC strongly believes that its conveyancing documentation is fit for purpose and has been drafted for use in Scotland.”

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duelaynomore

Saturday, February 11, 2012 at 03:08 PM

I'd rather be with HSBC than RBS...one might survive a bit longer than the other..besides HSBC is run by a large numbers of scotsmen anyway.

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Rabigyin

Saturday, February 11, 2012 at 11:42 AM

A spokesman for HSBC said: “HSBC strongly believes that its conveyancing documentation is fit for purpose and has been drafted for use in Scotland.” Until the first time all goes pear shaped. As the origins of Scots Law is different from English Law, how can it be "fit for purpose"? Time and, most likely, case precedent, will determine if it is so.

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bamboo

Saturday, February 11, 2012 at 09:55 AM

#2 My flat purchase with an HSBC mortgage went through without a single problem or increased fee. In particular, there was no problem in buying a flat freehold which is rare in England so they clearly do adapt to the market here. Perhaps if the solicitors thought about their clients rather than themselves, there'd be no danger of sales falling through. If you look at the deals HSBC are offering (particularly if you have a larger deposit than me) they really are excellent. Certainly worth a look

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Intervention

Saturday, February 11, 2012 at 09:11 AM

This practice has gone on for years unchallenged by the supine Law Society.

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Willie Boy

Saturday, February 11, 2012 at 04:31 AM

HSBC are basically irrelevant in Scotland and in their contempt for Scottish Law they will most certainly be both costing their clients additional fees and laying down a potential for future difficulties because of process not compliant with the Law of the Scotland. HSBC - best avoided!

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antiparasite

Saturday, February 11, 2012 at 02:07 AM

Any articles on HSBC and money laundering?

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