Take, for instance, the recent research by Moneyfacts which outlined that a growing number of mortgage products are now being launched with incentives such as free valuations or no product fees. Good news for clients you might think until you also learn that 50% of products now also come with free legal fees.
I clearly don’t need to go into the arguments for and against free legals in the remortgage space, but go on any of the broker forums or social media like Twitter, and it won’t take you long to come across a range of both adviser and consumer complaints against the free legal process and the length and quality of ‘journey’ they had to take in order to complete. It must be remembered that the conveyancing firms are acting for the lender and not the customer, so your clients are not the focus for these firms.
Let’s just say that it tends not to be too complimentary and, while I know many conveyancing firms active in the free legal space, do all that they can, sometimes the sheer volume of business overwhelms the ambition to deliver a good service. Or, it has to be said, that service just isn’t there, and then all parties can find themselves in trouble.
The free legals issue doesn’t ever seem to go away either. There can be peaks of complaints during a certain period, but it always seems to be there or thereabouts, and I’ve met very few advisers who are ever comfortable with the process or what it offers to clients. Let’s not forget the conveyancer is representing the lender in this transaction, not the borrower, and therein lies a significant problem to be addressed.
I saw a recent poll of advisers asking what change they’d like to see lenders implement in the new year; at the time of writing nearly 60% had plumped for a better managed free legal conveyancing service, over and above issues of criteria in the self-employed space, or capital raising.
That, to me, was particularly informing of the current state of mind amongst advisers when it comes to conveyancing and the free legal process. Especially, when as the Moneyfacts research shows, lenders are actually introducing more free legal options to borrowers, not less. What was that about different sides of the market pulling in different directions?
So, we have something of a dilemma for advisers here. Increasingly lenders are pushing products into the market with free legals attached, where the word ‘free’ can appeal greatly to the borrower, however advisers know from such dealings that ‘free’ doesn’t necessarily mean ‘good’ – far from it, and therefore how do advisers square that particular circle?
The easy way is, of course, to take advantage of any remortgage cashback offer that comes with product – albeit with the rather significant caveat, that not all remortgage products offer this. If they do, then the decision should really be something of a no-brainer, because it offers the solution to free legals, that is the client getting their own representation which will benefit them and you, the adviser.
For example, by using our remortgage cashback, the client gets an appointed solicitor/conveyancer representing them not the lender, they also get their legal fees covered by the cashback, they get a better service as its not lumped in with all the other free legal cases, plus you get a direct communication channel to the conveyancer plus control over the case, which should hopefully be a smooth and quick process. Not forgetting of course, the ability to earn a referral fee from that advice and introduction.
Admittedly it’s not available with all remortgage cases, but where it is, and given the issues advisers and clients can have with free legals, then it makes complete sense to take it. I have no doubt that the client will come to welcome the advice that was provided; for everyone’s peace of mind and in order to make sure that completion date is hit, ditch the free legals and take the remortgage cashback.
