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Friday 27 March 2009
Borrowers of one of the largest UK lenders might face a heavy rise in legal fees as Abbey National has cut ties with 7,000 solicitors.
The Law Society that unites 100,000 English and welsh solicitors has described the move as "grave" and calls for urgent talks with the bank.
Normally, the panel of solicitors takes care of both, borrower's and lender's interests. Their services include ensuring that the loan has passed to the buyer, registering the mortgage with Land Registry, etc. Therefore, if the buyer decides to hire his own solicitor, the bank is very likely to insist on another one to take care of bank's paperwork.
For Abbey borrowers this decision means that they will either have to go with the solicitor appointed by the bank or pay an extra fee for hiring an independent solicitor.
The move was unexpected; Abbey explained its decisions by unsatisfactory level of work of law firms during the last 12 months. The decision came without prior notification to the Council of Mortgage Lenders or to the Building Society's Association. Experts believe that Abbey's decision was guided by undefined activity of several companies, which were removed from the Abbey's panel. Abbey representatives claim to have sent notifications to several firms. The president of the City of Westminster and Holborn Law Society explained that most solicitors received those letters out of the blue and did not know how to react to them.
Paul Marsh, the President of the Law Society stated that the move was of particular importance and might heavily influence small firms. That is why the Law Society plans to pay special attention to actions of Abbey National.
Probably as a result of all the critics, Abbey has allowed law firms to make a request to be reinstated. At the moment, the bank is already considering several cases on reinstatement.
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