Nothing is really free in this market

Nothing is really free in this market

As we reach the end of the year, it’s time to reflect on the past 11/12 months to determine how that time has panned out, whether we have hit our start of January targets, and look ahead to what 2018 might bring.

In the conveyancing sector it has undoubtedly been an incredibly busy year with many aspects of the process, the service, its consumer satisfaction rates, etc under intense scrutiny. There is plenty to cover but in my opinion, for advisers offering conveyancing advice, there are probably two key areas which have dominated the news agenda.

First up has to be the ‘free legals’ situation, which didn’t just explode over the summer but seemed to take on a life of its own, as advisers (and their clients) appeared to fight daily battles with firms in order to get free legal case through to completion. Now the finger of blame has been pointed clearly at certain panel managers who accepted work they never should have, held onto those cases far too long, flooded the volume conveyancers with those cases, and then perhaps sat back and wondered why service capitulated so drastically.

In a sense there is blame to be issued throughout the chain, but the whole problem was a response to the record levels of remortgage business being written, the determination of a number of lenders not to look beyond a free legal service, the panel managers who failed to cope with the volume, and perhaps last of all, the conveyancing firms who took on those cases.

However, when it comes to the latter group, what option did they have, and I actually wholeheartedly support their attempts to deal with this issue, because without their intervention, the panel managers concerned would have been up a certain creek without a certain panel, and then what would the clients have done?

But if this situation proved anything – and I believe a level of control has been brought to proceedings now – it’s that ‘free legals’ alone are never going to be the answer. Advisers and, dare I say it, lenders are cottoning on to the fact that there has to be a choice for borrowers when it comes to their conveyancing – how else would you explain the big increase in the number of cashback deals available in the marketplace and the increased cashback across those products?

The latest Moneyfacts research shows that while back in May there were 939 cashback deals with an average cashback of £366, at the start of November this had increased to 1,249 deals with an average cashback of £407. It’s a significant increase and a significant move in providing non-free legal options, especially for those advisers who may well have felt their fingers were burnt over the summer.

We’ve talked a lot about putting clients (and advisers) back in control this year when it comes to conveyancing, and with such levels of cashback available to cover the cost of the conveyancing – certainly through our own cashback remo product – then one wonders why aren’t more choosing this option. The lure of the word ‘free’ will always ensure a large number of takers, but when it comes to getting the work completed on time, then I would suggest this will garner more brownie points for advisers.

This also leads us to the other big issue of the year – referral fees – and again by opting for the cashback option, advisers have the chance to bolster income, secure the client’s legal representation, and discreetly bypass the free legal option. There is always a somewhat ‘hidden’ debate about what level of referral fee is appropriate – and that is clearly for the individual firm to decide – but needless to say, I think it’s patently obvious what is appropriate in this day and age, and what might be construed as profiteering at the expense of a client the adviser no doubt wants to keep for a long time, as well as their referrals? Let’s not be greedy about this, as in the long run it’s probably not going to do you any good.

So, if 2017 has taught us anything, it’s that we are not beholden to the ‘free legal’ offering – indeed you might want to casually point out to your clients that nothing is really free in this market and they might wish to look at utilising the cashback option. But, also that there’s no reason why you shouldn’t be securing income from your conveyancing advice, and that combining these two elements through a quality distributor, is likely to make your job easier and your client’s lives happier. And who wouldn’t want to achieve that?

Harpal Singh is managing director of Broker Conveyancing