Trade body the Association of Mortgage Intermediaries has told lenders to reconsider their offering of free legals as eight out of 10 brokers feel these services are getting worse.
The Association of Mortgage Intermediaries (Ami) recently surveyed brokers to gauge how they are using the 'free legals' services offered by many lenders and results found that 73 per cent only recommend free legals on remortgage.
The poll of Ami's membership also found 19 per cent recommend them on both purchase and remortgage and 8 per cent do not recommend free legal based products at all.
Eight out of 10 (82 per cent) of brokers said the service delivered by 'free legal firms' is worse in comparison to a customer’s own choice of solicitor or conveyancer.
The survey found 57 per cent preferred a cash-back option while 26 per cent preferred products with free legals.
Robert Sinclair, chief executive of Ami, said: "This survey raises a number of questions on the effectiveness of the free legal services offered to many consumers.
"It is clear that the significant majority of brokers would prefer a cashback option where lenders feel that they wish to incentivise aspects of their products.
"Ami thinks that all lenders should reconsider their offering of free legals particularly addressing the potential issues of conflict of interest and the quality of service being provided by the firms with whom they have partnered. Ami will be talking to their lender trade body contacts about these findings.”
The data also found that 71 per cent of those responding indicated they were experiencing delays and issues with those providing free legal services.
A massive 75 per cent of intermediaries thought that lenders or builders should not offer 'free legals' as this is too great a conflict of interest.
Nationwide pulled its free mortgage legals service in the middle of last year after complaints about delays, before reintroducing the service in Feburary while continuing to offer a cashback alternative.
In July last year , RBS, Lloyds, Barclays and Santander revealed they had no plans to follow Nationwide's lead and ditch free legals for remortgages despite brokers claiming problems with this option are widespread.
aamina.zafar@ft.com
