The Association of Mortgage Intermediaries (AMI) has surveyed its membership to ascertain how intermediaries are using the ‘free legals’ services offered by many lenders.
Only 73% of brokers say they recommend free legals on remortgage, 19% on both purchase and remortgage, and 8% do not recommend free legal based products.
82% of brokers told AMI that the service delivered by free legal firms is worse or significantly worse (52%) in comparison to a customer’s own choice of solicitor/conveyancer.
In contrast, 57% stated they preferred a cashback option (26% preferred products with free legals).
71% of those responding indicated that they were experiencing delays and issues with those providing free legal services.
75% of intermediaries thought that lenders or builders should not offer “free legals” as this is too great a conflict of interest.
Respondents commented “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”. “Not able to get through by phone, missing completion dates – terrible”. “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”. “I prefer cashback products then I can choose which remo solicitor we use.” “Certainly on a purchase a client should choose their own legal representation.”
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.”
