Lenders are increasingly looking at additional income revenue through providing legal services via HIPs, conveyancing and wills. Karen Babington reports
At the same time, with transactions now so low, lenders are able to focus on rationalising their processes to become meaner and leaner for when transactions pick up.
An example of this was Abbey last month writing to 7,000 local solicitors to say it will no longer let them handle the bank's side of the conveyancing process when they act for house buyers.
The Law Society has protested to the bank, describing its move as "grave." However the bank says the solicitors have not been doing enough work for it during the past 12 months.
Abbey clearly didn’t want to continue to manage an unwieldy panel which has no benefit to them and other lenders are expected to follow suit.
To tackle the additional income aspect, we’ve found the enquiries have fallen into three main categories:
Home Information Packs
Most lenders have steered clear of Home Information Packs (HIPs) since the Home Condition Report was dropped by the government.
However for lenders who have estate agency subsidiaries a HIP provider is required in order to meet legal requirements.
There is no problem with a building society getting involved in providing HIPs either through the main society or through a wholly owned subsidiary. An example of this is Connells, who are part of the Skipton Group.
It is of course important for societies to be transparent in terms of fees and Treating Customers Fairly under Financial Services Authority’ rules and any society would need to be mindful of that. There will be separate requirements on the estate agency business although the principles would remain the same.
Choosing your HIP supplier, particularly since new rules came in on 6 April 2009, is crucial as estate agents can’t start to market a property without a completed HIP. There is also the issue of the HIP being compliant in case Trading Standards come knocking on the door.
So what should lenders look for when choosing a hip provider?
Conveyancing
Last year Easier2move undertook some research, which found that IFAs alone could be losing out on up to £61 million a year by failing to take advantage of conveyancing referral fees.
With an increase in customers going to lenders direct it is now lenders that are missing a trick in terms of earning income from conveyancing.
So, how much can lenders hope to receive by linking up with a conveyancing service? Conveyancers offer fees of around £100 to introducers for every conveyancing transaction earned.
In addition, referrals can be very easy to arrange. Many conveyancers such as Easier2move are integrated with mortgage sourcing systems, such as Trigold and Mortgage Brain. This allows the conveyancing instruction to take place as soon as they process a mortgage application. So, with this, instant access to conveyancing referral fees can offer new revenue, with minimal additional work.
However, these fees are not only a way to increase revenue streams; they can serve to improve your business in other ways too. By linking with a designated conveyancer, lenders will also be able to offer a better all round service standard to their clients and justify being able to reduce their panel as Abbey has recently done.
Dealing with one provider and building a good relationship, ensures you will be a valuable customer, which means that you can trust your conveyancer to offer a reliable and efficient service. This is very important as a conveyancer is centre to the transaction – allowing the transaction to go as fast or as slow as they desire.
By seeking to control the conveyancing lenders can take control over the whole of the transaction and we all know that the quicker a transaction goes through the more likely it is to succeed.
The high abortive rates in the market is one reason Easier2move launched Easier2protect last year – a unique selling point (USP) in the market. If a customer’s property purchase falls through at no fault of their own then Easier2move will reimburse their mortgage arrangement fees, valuation fees and solicitor costs (up to £750 in valuation fees, £500 in mortgage arrangement fees and £600 in legal disbursements).
Lenders and advisers benefit too as this is the first and only conveyancing service to pay out referral fees on abortive cases.
So what should a lender look for when choosing a conveyancer?
Wills
Of all the enquiries we have received from lenders in the last year, will writing has got to be top of the list.
Two-thirds of
What is the reason behind this? As the cost of making a will is relatively small it stands to reason it is lethargy – there is no call to action to make a will whereas with conveyancing, for instance, you need a solicitor to complete a house purchase.
No one can argue that is good advice for a customer to make a will. It's not really a case of why a customer should make a will but of why they shouldn't.
So what should a lender look for when choosing a will writer?
These are a few additional services which can run smoothly alongside your business and which can be implemented quickly and smoothly without affecting your core business.
It would be prudent for lenders to start looking now at what they might need from a provider in the future. Whilst the services above may not seem like priorities among a riot of rate changes and other immediate challenges, early planning is key to getting and staying ahead.
It is just one of the benefits of developing such relationships that will stand you in good stead in this unprecedented market.
Karen Babington is sales and marketing director for Easier2move, a provider of conveyancing, HIP and will writing services with 10 years experience within the mortgage and estate agency markets.
Date: 12th, May, 2009
ADVICE TO READERS
While this website is checked for accuracy, we are not liable for any incorrect information included. We recommend that you make enquiries based on your own circumstances and, if necessary, take professional advice before entering into transactions.
Enter your postcode here to find out how much your property is worth, based on Land Registry data.
RSS Feed
Delicious
Digg
reddit
Facebook
StumbleUpon