Do solicitors make commission from insurance they sell?

WestonDave

In answer to the original question - solicitors should not be making commission on chancel insurance, and if they are they should be declaring it and returning it to the client, because if they get an SRA (Solicitors Regulatory Authority) audit of their practice, its something that does get checked and will land them in the brown stuff!

It does unfortunately come into the part of todays society where everyone wants to cover their own backside. If you (generic you as a population) don't get the insurance and at some point an issue arises, the solicitor fears that they will get sued either by you or by the lender if the issue renders their security worthless so its far easier to deal with that risk at no cost to themselves by getting insurance in place at your expense. Not nice but its a side effect of the litigious society that we live in, and the fact that lenders are increasingly sabre rattling about looking to solicitors as a potential source of redress if their loans go bad. With limited availability of loans, lenders know you can't go elsewhere to someone more relaxed so its easy enough for them to get their backside covered.

ijrwe

I think the next step is to phone the lender and ask directly. I have a week or two to sort things out before completion so hopefully I can get an answer in time.

If the lender says no, not required, then that's that.
If they say yes, required, I'll ask the solicitor for more information about their recommended policy, why no details were provided until I asked, and why I'm obliged to take that policy instead of another.

WestonDave

I suspect the answer to "why that policy" will be simply "because that's the provider we use". Not so sure about chancel insurance but I know with some of the other indemnity policies, solicitors sign up with a provider, and then get the ability to issue the insurance themselves (effectively then telling the insurer that they have gone on risk with reference to Mr Smith's purchase etc) rather than having to go through underwriting and wait for the insurer to issue the policy which might be too long to wait in a pressured situation. Its not a form of insurance that you can easily go out and get other quotes on - at very least you'd need a specialist broker so whether with their cut on it it would represent any saving isn't clear.

ijrwe

I phoned the lender today - the first girl I spoke to had never heard of CRL insurance, and she put me on hold while she spoke to the people who deal with insurances and so on. Returning, she told me that buildings insurance is the only insurance they require.

I'll go back to my solicitor and see what they say.

Yorkie1

ijrwe wrote: »

I phoned the lender today - the first girl I spoke to had never heard of CRL insurance, and she put me on hold while she spoke to the people who deal with insurances and so on. Returning, she told me that buildings insurance is the only insurance they require.

I'll go back to my solicitor and see what they say.

Did you ask them a general question, or did they pull out your file and examine it in detail?

If the former, then the answer is, really, meaningless in the context of your particular purchase.

Thrugelmir

ijrwe wrote: »

I phoned the lender today - the first girl I spoke to had never heard of CRL insurance, and she put me on hold while she spoke to the people who deal with insurances and so on. Returning, she told me that buildings insurance is the only insurance they require.

That's precisely why a lender uses a solicitor to protect their interests.

There's a high probability that you'll never claim on your buildings insurance. So by not insuring that would you save even more money.

ijrwe

Yorkie1 wrote: »

Did you ask them a general question, or did they pull out your file and examine it in detail?

If the former, then the answer is, really, meaningless in the context of your particular purchase.

I can't say if they examined it in detail but they definitely had my file up - I had to verify my name/address/DOB etc. I also advised her that my solicitor had suggested it was required and I wanted to hear from them whether this was the case.

The phone operator may well have not known much about anything, but the people she went off to talk to (for 5-10 minutes), even if they didn't look at my case carefully, would surely have answered "well, sometimes" at least?

Thrugelmir wrote: »

There's a high probability that you'll never claim on your buildings insurance. So by not insuring that would you save even more money.

Correct. But it's required by my lender, so I'll be taking it out. I'm not making a fuss about it because it's for risks that are orders of magnitude more likely than a CRL grab.

jamie11

Do solicitors make commission from insurance they sell?

Does a bear !!!!! in the woods?

Richard_Webster

Do solicitors make commission from insurance they sell?
Does a bear !!!!! in the woods?

Lot of constipated bears then....

No we don't get commission. If we did we would have to tell our clients and get their informed consent to keep it.

As I have said before the problem with things like Chancel Insurance is that it isn't 100% clear in the CML Handbook (that sets out the detialed legal stuff we have to check for lenders) that all lenders require it. The way I read what little informaiton there is, is that it is required. If a client getting a mortgage asks why I tell them they have a choice - either pay £10/£15 for a policy or wait around for weeks until I get an answer to a letter to his lender asking for clarification of their policy in this respect!

ijrwe

Richard_Webster wrote: »

Lot of constipated bears then....

No we don't get commission. If we did we would have to tell our clients and get their informed consent to keep it.

As I have said before the problem with things like Chancel Insurance is that it isn't 100% clear in the CML Handbook (that sets out the detialed legal stuff we have to check for lenders) that all lenders require it. The way I read what little informaiton there is, is that it is required. If a client getting a mortgage asks why I tell them they have a choice - either pay £10/£15 for a policy or wait around for weeks until I get an answer to a letter to his lender asking for clarification of their policy in this respect!

Is the CML handbook available for the public to view in the same form as what you guys (and lenders) see?

Also, let's imagine a lender did require it. They would then surely require proof (or at least a signed statement or something) that I was going to take it out, before they would release the funds. It would surely be clear in that case - as they'd not lend me the money without it.

I suspect that if I flat-out refused to pay for the CRL insurance and the solicitor agreed to go ahead regardless, the lender wouldn't even know or care and my loan would be released just the same, surely?