Hidden Mortgage Fees Scam - Yorkshire Building Society

andrewsales

I'm currently arranging a mortgage with YBS and therefore forced to use one of their "panel" conveyancing firms.

It turns out, after (committing fees to the mortgage) that all of the quotes are significantly more expensive than a random quote from a local solicitor. Can I use the local solicitor? "Too time consuming for him to get on the panel" they advised.

It further turns out that in the text of my acceptance letter from one of the panel solicitors, there is mention of a referral fee of over £400, presumably paid to the lender!

"Don't worry you don't have to pay that - we do" says the solicitors. Right, so that has nothing to do with your quote being £500 more than reasonable competition, with almost double the main legal fee.

This is outrageous and nothing more than a hidden mortgage set up fee. The fee is effectively charged by the lender, but not necessarily revealed until you are committed with the lender and dealing with the conveyancer. If it were merely a matter of them using expensive solicitors, then perhaps you might expect some better service - the extra is being charged by the solicitors. However this extra goes straight into the pockets of the lender - you are simply getting a cheap conveyancing service for roughly double the legal fee.

YBS (and presumably other lenders) are not content with hiding their costs in setup fees to reduce their headline interest rates.

Now that tools like MSEs mortgage best buy calculator allow up front fees to be easily taken in account, they get to the top of the tables with more underhand tactics. Shift fees into a forced hugely inflated conveyancing cost, which they harvest via "referral fees". The law society has argued for a universal ban on such fees and I agree with them - it's deceptive.

Any similar experiences or advice to offer? Is there a way to use an independent solicitor on their panel without incurring the fee?

Thanks for reading.

betmunch

Did you get a free legals deal, then they added the fees?


Or did you get a deal with no legal incentive and this is just their cost?

benjus

There are lots of solicitors on the YBS panel - I currently have a mortgage with Accord (a division of YBS). When I bought the place I chose a local high street solicitor that I had used in the past, and they were on the YBS panel. It shouldn't be too hard to find a local solicitor that is on the panel. I don't know how the YBS panel is determined - I believe some lenders will accept any solicitor that is accredited by the Conveyancing Quality Scheme.

LJS2014

We took out a mortgage with Yorkshire Building Society last year and found the same thing with their panel. (We already had a solicitor but inconveniently they had been removed from the YBS panel a few weeks prior :mad: our sol at the time advised it could take them a couple of months to get back on it and to pick someone from the list YBS gave us to make life easier.)

We contacted a solicitor on their panel for a quote which was a couple of hundred pounds less than that stated on the YBS paperwork for the same solicitor. We appointed the solicitor directly and saved the extra cash. :T

dunstonh

his is outrageous and nothing more than a hidden mortgage set up fee.

Its not hidden as they disclose it.

The fee is effectively charged by the lender, but not necessarily revealed until you are committed with the lender and dealing with the conveyancer.

Are you saying you were not issued a key features illustration prior to application?

Your post is confusing as its not clear if you are saying that you are having to pay the legals when you thought you were told they were free.

getmore4less

Any quote by a non panel is useless for comparison as they can't do the work.

andrewsales

Thank you for the replies - to clarify some points raised:

1. I was not offered free legals - I expected to pay a conveyancer myself. However I did not expect them all to be doubling their legal fees and kicking back half to the lender I had just committed to.

2. Quotes from non-panel solicitors cannot be used to do the work, however they give you an idea of the market rate for this work - and therefore the £400-500 hidden fee by which referred conveyancers (in this case) inflate their fees by.

Dunstonh - they certainly do not disclose this referral fee in their quotes for conveyancing. The costs are presented as being entirely independent from the lender, charged by the solicitor for legal work. Only in correspondance with the solicitor is the existence of the referral fee mentioned, but even then it does not appear in the cost breakdown for the conveyancing service - it is hidden mainly in the inflated legal fee. This is deception, since half of that fee is not actually paying for legal service, but goes straight to the lender.

Even if customers realise the quotes are all far above market rates, this might mislead customers into thinking they were getting a more "premium" legal service at the higher end of the fee range. In fact, they are getting a bargain basement service at a premium price.

The solicitor discloses it but at that point you are already committed to using one of the solicitors on the lenders panel, and they are all at it. The key point I take from the replies is that the same solicitor may give you a much cheaper quote for legal fee if you approach them directly ( thanks LJS2014 ).

I spoke to the solicitor on the panel who had accepted my instruction and asked what they would quote if approached independently and he said he could not comment and I could not now obtain such a quote from them. Again, hardly a fair and transparent cost structure for the customer.

On to some other solicitors then! :beer:

dunstonh

Dunstonh - they certainly do not disclose this referral fee in their quotes for conveyancing.

You dont pay the referral fee. So, that doesnt matter. You pay the legals fee (in the case of no free legals). They should disclose what you are paying.

his is deception, since half of that fee is not actually paying for legal service, but goes straight to the lender.

its not deception. In the same way that Tesco dont tell you how much the packager is getting when they sell a tin of beans or the farmer, or the factory owner or the staff member that worked on it.

Again, hardly a fair and transparent cost structure for the customer.

If you dont like their pricing then dont use them. However, it is transparent. Fair.... maybe not great from your point of view but not unfair.

betmunch

Without a free legals deal you have to pay.

You have to use someone on their panel and they will charge what they charge.

Best you can do is call all the solicitors on the panel and compare quotes.

Remortgages without free legals packages rarely come out as best buys due to this added cost

andrewsales

dunstonh wrote: »

You dont pay the referral fee. So, that doesnt matter. You pay the legals fee (in the case of no free legals). They should disclose what you are paying.

Of course you are paying the referral fee - its a large part of the legal fee, only not broken out. By the same argument you are not paying any of the disbursements like stamp duty! The only difference is they itemize those costs honestly, rather than dishonestly hiding them.

That is why the same service from the same solicitor will by quoted cheaper if you approach them directly.

I find it odd that fellow consumers find it acceptable for an "adviser" supposedly acting in the customer's interest to hand you over a set of quotes that have a hidden yet avoidable £400 fee for lender embedded in them!

its not deception. In the same way that Tesco dont tell you how much the packager is getting when they sell a tin of beans or the farmer, or the factory owner or the staff member that worked on it.

The difference is that those items are offered at best price to all customers in a transparent market.

These quotes are offered in my case by an adviser required to act in the customers best interest as if they were best price without any hint that there is a huge additional cost inherent in using this referral "service", that can be avoided by approaching firms directly. This is not a transparent market and I was certainly not given the best advice in this regard.

The product costing the hidden £400 is the referral from the quotation "service" of the lender. The cost is not revealed by the lender at the time of the offer to use that "service".

Deception. As I have said, the Law society argues these fees should be banned (they already are for injury compensation claims.)

andrewsales

betmunch wrote: »

Without a free legals deal you have to pay.

That was never in question.

You have to use someone on their panel and they will charge what they charge.

Well yes, if "charging what they charge" means charging 100% more to some customers, depending on where they come from, without telling you they are doing so.

They will charge one fee if you approach them directly, and roughly double the fee if you use a quote service from the lender. At no point does the lender tell you of this. They don't even tell you you have another option but to use their inflated hidden-fee quote. Even though the solicitors are now forced by regulation to mention somewhere in the long text the existence of a referral fee, "that you don't pay", they do not tell you that your personal quote is >£400 more than the next guy's because of this fee.

Best you can do is call all the solicitors on the panel and compare quotes.

Indeed, yet the fact that you might pay half the legal fee by phoning instead of following a quote from the lenders portal is not made clear.

Remortgages without free legals packages rarely come out as best buys due to this added cost

This is not a remortgage, it's a fist time buy. And none of the best buys I saw came with "free" (i.e. included in the interest payments/other fees) legal services. The issue of free legal services is not really relevant to this thread.