Law firms are routinely giving clients
inaccurate initial estimates of conveyancing costs, according to Solicitors
Regulation Authority (SRA) research.
For its Residential Conveyancing Thematic Review, published last week, the SRA visited 40 law firms offering residential
conveyancing services and conducted detailed reviews of 80 case files. All the
firms proactively communicated with clients and provided clear information on
their complaints procedures, the researchers found, and firms were embracing
technology.
However, more than a third of the firms
gave inaccurate initial cost estimates by failing to include all the services
and fees in their initial quote—the firms missed out information such as
mortgage administration fees, electronic ID checks and administering gifted
deposits.
Moreover, some 37% of firms failed to
explain the real cost of third-party disbursements and their firm’s mark-up on
these, with some charging up to ten times the actual charge for processing the
transfer.
The research also highlighted failures to
process paperwork efficiently, not explaining the difference between freehold
and leasehold ownership, and failing to double-check that the client understood the
long-term implications of contractual obligations and fees.
Six firms have been referred to the SRA’s
internal disciplinary procedures as a result of the review.
Law Society vice president Simon Davis
said: ‘All conveyancing costs should be presented upfront and at the earliest
possible opportunity.
‘It is important to remember developers
and estate agents have a responsibility to share all relevant information with
purchasers at the very beginning of the process—including on the differences
between leasehold and freehold models of ownership. More must be done to ensure
that consumers are made aware of this distinction, and the long-term
contractual implications, before committing to a purchase.’
Figures from the Legal Ombudsman show that residential conveyancing accounted for nearly a quarter of all
complaints it handled over the past three years. In December 2018, the SRA
introduced rules requiring greater transparency on pricing and services.
