Do solicitors make commission from insurance they sell?

ijrwe

I'm near completion of a house purchase for which I'll be receiving a mortgage. My solicitors insist that chancel repair liability insurance is required, but my lender has made no mention of it whatsoever, even in sections of the provided materials that deal specifically with insurance requirements. I also know from reading around online that plenty of people with mortgages do not have CRL insurance and were not compelled to take it out.

The solicitor has told me that they'll be purchasing a ~£50 insurance product for me, and haven't explained its nature or extent, or length of term, or anything like that. Nor was I offered any other products - of which there are several, I know. It's just been added to my completion statement and bill - which I currently plan to pay except for the CRL insurance cost, while we settle the matter.

It seems strange, I feel that they're just forcing it on me to get a few £ in commission. I don't believe them when they say it's compulsory (Why didn't my lender say anything? Why doesn't everyone have it?), and even if it was then I don't see why I can't have a say in which product I pay for. For all they know, I might want to spend £300 on it instead and get super-dooper £10,000,000 cover in perpetuity.
Why can't I choose my own, like buildings insurance, which is compulsory and obviously far more important (since it actually insures against a real risk...)


I have to be careful with how many questions I ask them - like estate agents the solicitors do not work for me (or the seller), they work for themselves, first and foremost, and as a clueless mortal I'm in a weak position to object to anything they insist.


If the lender asked for it, I'd pay up. Very reluctantly and dismayed at how people make their money, but I'd pay.


btw please don't just tell me £50 is "a small price to pay" etc. If it is that to you then I'll happily PM you my bank details and you send it over


EDIT:

Things I've learned so far
> Solicitors probably don't take commission on the insurance, or if they do they must declare it.

> The insurance is not easily available to individual customers, only through solicitors.

> Only one lender casually mentioned CRL insurance in their materials, and doesn't express a requirement.

> The Council of Mortgage Lenders Handbook doesn't express a requirement:
http://www.practicalconveyancing.co.uk/content/view/10332/1132/

ACG

Of course you can ask them questions. Whos paying them? Theyre being paid to do a job, if theyre telling you something is compulsary ask them why and ask them where it says in writing its compulsary. If they cant show you anything, ask them to put it in writing.

chances are theyre making a few quid out of it but a £50 one off policy wont be making them a lot, maybe £5-10 - hardly enough for them to get into an argument over unless it really is compulsary.

The only insurance that is compulsary usually is buildings insurance.
You then have contents, life, income protection, critial illness and unemployment which are all upto you to take out if you want to.

Thrugelmir

ijrwe wrote: »

(Why didn't my lender say anything?

The solicitor is representing the interests of the lender not just you. So will comply with any requirements that they require.

ijrwe

Thrugelmir wrote: »

The solicitor is representing the interests of the lender not just you. So will comply with any requirements that they require.

Yes, I realise that - but since I will be the policy holder and it basically has nothing to do with the solicitor in the long run, why is it going through them? Why is it so different to buildings insurance where I just have to sign a form promising I will take it out, and the lender is happy? Why has the lender spoken to me explicitly about other insurances but not at all about CRL insurance?

The solicitor and lender will both know that CRL insurance is a massive con, so neither are honestly concerned that I absolutely must have it or the church will eat my soul and burn the house down, so the way that it's being pushed as a non-transparent non-optional extra through the solicitor seems quite strange. If anything, buildings insurance should be done that way...


I suspect that the lender hasn't indicated to the solicitor that it's required, but the solicitor is just assuming they'd want it, since it's "best practice".

Thrugelmir

ijrwe wrote: »

The solicitor and lender will both know that CRL insurance is a massive con,

Protects the lenders interest in the property. As simple as that. A lender isn't going to risk thousands of £'s for the lack of a one off indemnity policy.

ijrwe

Thrugelmir wrote: »

Protects the lenders interest in the property. As simple as that. A lender isn't going to risk thousands of £'s for the lack of a one off indemnity policy.

It's a fantasy risk, they of all people will know that.

Anyway it's beside the point - if the lender actually does require it then, like I said, I'll pay it. But as it stands I have no reason to believe they actually do, and I want to hear it directly from them. Without upsetting my solicitor, who wields great power over me at this point.

Yorkie1

You will not receive anything in your documents from the lender about chancel liability insurance. So do not conclude from the absence of reference that it is not required.

This issue is raised between the lender and its legal representative, which happens also to be your solicitor. You are not party to - and have no right to be party to - the communications between the two of them which relate to that relationship.

By all means ask your solicitor on what basis they say you must have it. If they say that the lender is requiring it, then I think you have to put aside your belief that they are lying to you and doing this to make a quick buck. Do you really think they would risk their entire livelihood and professional standing for the sake of a few quid? It would be professional suicide.

For what it's worth, not all solicitors will charge commission on this. I believe that Richard Webster, a solicitor who frequently posts on here, simply passes the cost on.

Goldiegirl

When I worked for a major lender, this chancel repair liability would crop up from time to time, maybe one in three hundred mortgage applications.

Your property you want to buy is probably on land previously owned by the church, and there is still a liability for people living on the land to pay for the upkeep of the church.

The solicitors would write to us to advise us of the situation, and would suggest the liability insurance policy as a way forward. We would write and confirm that this was an acceptable way to proceed.

So your lender requires that you take the policy - they won't proceed unless you follow the solicitors recommendation. The solicitor is protecting the interests of both the applicant and the lender..

It is very unlikely that you would have have the claim on the policy, but if you did, you'd be glad had it, as the liability can be tens or even hundreds of thousands of pounds

Why don't you just ask your lender about it, they won't tell you solicitor that you asked

ijrwe

Goldiegirl wrote: »

It is very unlikely that you would have have the claim on the policy, but if you did, you'd be glad had it, as the liability can be tens or even hundreds of thousands of pounds

Has there been a single case of CRL insurance being claimed upon? The only case of CRL being invoked was the one that gave birth to whole "industry" in the first place.

I'd sooner take out alien abduction insurance, tbh.

Why don't you just ask your lender about it, they won't tell you solicitor that you asked

I've tried - I must try again.

Goldiegirl

I have no idea how many claims there have been, and as I said it's unlikely that the church would exercise their right.

But it's the whole point of insurance to protect against the unexpected.

If you are feeling annoyed now, just imagine how annoyed you'd be in a few years time if the church slapped a claim on you for £100k. And you wouldn't even be able to claim negligence from the solicitor or lender because they want you to have the insurance.

Why not pay a few quid for peace of mind - or if you think it's totally unacceptable, find another property.

ijrwe

Goldiegirl wrote: »

I have no idea how many claims there have been

None, I bet. None whatsoever, and there likely never will be. I'll be happy to be proved wrong, though - it would make me less cynical about it al.

But it's the whole point of insurance to protect against the unexpected.
If you are feeling annoyed now, just imagine how annoyed you'd be in a few years time if the church slapped a claim on you for £100k. And you wouldn't even be able to claim negligence from the solicitor or lender because they want you to have the insurance.

Thankfully this kind of "reasoning" doesn't have any effect on me. Simply considering the worst-case-scenario consequences and acknowledging that there is, in theory, some chance - philosophically - of it happening. That doesn't persuade me in the slightest, though it seems to work on most people.


Yes you may not like to pay me £20 right now for alien abduction insurance, but £20 is a small price to pay in the long run and you would never be able to fund the intergalactic rescue mission yourself, if the unthinkable happened. Can you afford to not pay?

Why not pay a few quid for peace of mind

I already have peace of mind over CRL - it doesn't concern me in the slightest.