"AMI thinks that all lenders should reconsider their offering of free legals particularly addressing the potential issues of conflict of interest and the quality of service"
AMI recently surveyed its membership to ascertain how intermediaries are using the 'free legals' services offered by many lenders.
Comments from brokers included: “the standard of service is generally poor”, “lenders are aware the service is abysmal but they still continue using these firms and that is reprehensible”, and "firms don’t have one legal adviser dealing with a case, it’s whoever picks up the phone... post is regularly lost... I have to warn the client the process will be bumpy”.
71% indicated that they were experiencing delays and issues with those providing free legal services and 75% thought that lenders or builders should not offer free legals as it is too great a conflict of interest.
73% of brokers said they only recommend free legals on remortgage and 8% do not recommend free legal based products at all.
57% preferred a cash-back option, compared to 26% who preferred products with free legals.
Robert Sinclair, chief executive of AMI, said: “This survey raises a number of questions on the effectiveness of the free legal services offered to many consumers. It is clear that the significant majority of brokers would prefer a cashback option where lenders feel that they wish to incentivise aspects of their products.
"AMI thinks that all lenders should reconsider their offering of free legals particularly addressing the potential issues of conflict of interest and the quality of service being provided by the firms with whom they have partnered.
"AMI will be talking to their lender trade body contacts about these findings.”
