Just a few years ago talk in regulatory circles centred around principles-based regulation and treating customers fairly. But now we find ourselves in a changed environment.
The Financial Services Authority is on its last legs and prescriptive regulation has replaced the principles-based approach.
At one point principles seemed to be the fulcrum of regulation but events have conspired against this ethos.
I raise the subject of TCF here because I believe it is still an important principle to adhere to. This makes the continuing popularity of free legals when it comes to remortgaging all the more unseemly and disturbing.
Look at the TCF outcomes the FSA wants to see regulated firms deliver and then look at the use of free legals.
You may wonder if the next big mis-selling scandal is rumbling over the horizon.
TCF outcomes include the fair treatment of customers, products and services designed to meet the needs of identified consumer groups and individuals being kept appropriately informed of the progress of their cases.
You’d be hard-pressed to find these fundamentals in play with any client recommendation to take the free legals route.
Throwing a customer into a legal bucket shop will ensure that you become surplus to requirements
First, whose needs are being met by taking this option? Certainly not those of clients because the solicitor is not acting for them. Obviously, they will be acting on behalf of the lenders paying for their services.
So what legal protection are you providing for your client by opting for a free deal? None.
And the outcome of being kept appropriately informed is not often to be found when opting for a free legals recommendation either.
By going down this route clients can find themselves languishing in the slow lane, with little incentive for their solicitor to move cases along quickly.
And given that lenders will almost always choose the cheapest solicitor, what sort of quality can your clients expect from the arrangement? Very little.
Bucket shops are cheap and not so cheerful, and the expectation is that everyone should be prepared to hang around simply because the service is free.
Meanwhile, throwing your client into a bucket shop ensures that you become surplus to requirements.
Brokers know that being kept in the loop in a free legals arrangement is rare indeed.
How will it look to a client if you make this recommendation and are then unable to provide them with even basic updates on the progress of their case?
Throw into the mix common problems such as the inability to earn income from the recommendation and broker fees going unpaid, and you’ve got to wonder why free legals still seem so enticing.
The fact is that brokers now have a range of conveyancing options that provide quality service and protection for clients while leaving control – and additional income – in their hands.
Most lender cashback arrangements cover the cost of a quality service that, importantly, allow brokers to feel confident about the recommendations they make.
This should keep the wolf from the door if, or rather when, the free legals complaints start rolling in.