Free legals came under fire this week for poor service levels, with brokers calling on lenders to either prioritise cashback as an alternative or complete before the legal process is over.
Several brokers contacted Mortgage Strategy to say they had been increasingly struggling to contact conveyancers about remortgage cases featuring free legals.
Some say they often wait on the telephone to such firms for several hours to no avail, and send emails that go unanswered.
Others report that delays can become so extensive that customers lose their deposit or do not complete their remortgage in time, leading to financial penalties.
Free legal service levels are reportedly low because conveyancers are struggling to keep up with the market as it moves more towards remortgaging.
Association of Mortgage Intermediaries chief executive Robert Sinclair says: “These firms appear to be – because volumes are picking up in the market – unable to cope with the volumes being sent to them.”
London & Country Mortgages associate director David Hollingworth says: “When you’ve got busy periods, conveyancers can definitely get overloaded. They can creak under the strain of the volumes they are taking.”
Service levels have become so poor that brokers sometimes struggle to do their job. Coreco director Andrew Montlake says: “We’ve had people hanging on the phone for literally an hour and a half before being cut off.”
One 77 Mortgages managing director Alastair McKee says of one conveyancer: “You’re on hold for absolutely ages and can’t get hold of anybody; that’s the bottom line. It can take them six or seven days to reply to an email, if they ever do.”
London Money director Martin Stewart says: “It varies from good to average to abysmal. The problem is you don’t know which way it’s going to go until the application is in.”
The low service levels can harm consumers, according to experts.
Sinclair says: “The bit that really matters is when the consumer runs the risk of losing their deposit or incurring financial penalties, or not being able to move when they want to, so this is hugely problematic.”
Montlake says: “We’ve had a client who was meant to complete but didn’t, which cost them more in interest. It’s just something we can’t recommend to clients, to take a free legal option, because it can end up costing them time and money.”
McKee says: “I’ve got a customer who’s a buy-to-let landlord who’s got two cases that should have completed at the end of April but still haven’t, because of the free legal service.”
One solution is for lenders to take more responsibility for the issues created by free legals.
Sinclair says: “Clearly if, through no fault of their own, the consumer could be disadvantaged, we may have to confront the situation where some lenders may have to complete without assurance of the legals having completed.
“I accept that leaves them with an exposed risk, but that risk is linked to the fact that they have offered this service as part of a component of their mortgage facility.”
Another solution is for lenders to prioritise cashback over free legals, letting consumers use the money to pay for solicitors.
Montlake adds: “My message to lenders would be that, actually, free legals are something they have to look at very carefully. And I would encourage lenders not to offer free legals but to offer cashback instead.”
McKee says: “If it was me at the head of a lender and I was worried about customer service, I’d be binning free legals and doing cashback, but generous enough cashback that would actually cover the legals.”
But Stewart says there is no perfect system.
He adds: “These free legal systems are victims of their own success. They are suffering from volume.
“But we’ve had clients who have paid good money to solicitors and they’ve been abysmal, so it’s all a lottery.”