We have been contacted by a large number of members about the undertakings that they are being asked to give by HSBC's representatives in separate representation cases.
The concerns about the undertakings are wide-ranging and include:
- a lack of clarity
- requirements which fall outside the solicitor's responsibilities
- wide-ranging requirements which would potentially prevent a solicitor from complying with their regulatory obligations
- requirements which in effect transfer the lender's solicitor's duties on to the borrower/purchaser's solicitor
Last week, the Law Society chief executive met with HSBC senior representatives to discuss the general issues arising from HSBC's decision on panel management and the question of the undertakings required by the bank's agent Countrywide.
The bank confirmed that it was aware of concerns over the undertakings and were looking to respond to the concerns raised.
As agreed at that meeting the Society has now received a copy of these revised undertakings, which HSBC advises us have now been issued to all borrower's solicitors instructed in 'live cases'. [These undertakings provided to the Society have since been revised and are those applicable as at 17 February 2012]
The bank further advised us that these are based on the draft version of the Council of Mortgage Lenders (CML) standard Part 3 documents, and this would appear broadly to be the case. It should be noted that the current draft appearing on the CML website is subject to ongoing discussion between the Law Society and the CML and may be amended further. We expect a final version to be published during March 2012.
In the event that any solicitor receives the original version (containing some of the issues described above) then we would advise them to query this with HSBC' representative and request that it sends the new version. From our initial assessment, it appears that the revised version addresses the issues that were causing the most concern.
As solicitors are under a strict regulatory obligation to comply with every undertaking given and therefore should not give undertakings about matters which are not wholly within their control, then solicitors will still need to consider very carefully whether they agree to this latest version. Every solicitor does of course need to use their professional judgement in this matter and so ultimately this is a decision for individuals, and there is of course the option of trying to negotiate the terms/nature of the undertakings.
If you are still concerned about elements of the undertakings, we would encourage firms to raise this with Countrywide and also inform the Law Society.
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