It is commonly known that different banks have varying service expectations to release funds, however, in this guide, we will discuss the differences in the number of days those specific banks take to release mortgage funds.  We will also discuss the importance of timeliness when dealing with financial transactions and the consequences of a delay.

How long do specific banks take to pass on mortgage funds?

Each bank will have specific service targets that they aim for in order to provide a time frame to release funds, however, on the odd occasion, there may be a complication that extends this time period. According to research by Mortgageable, the current target time frames that banks aim to release mortgage funds are as follows:

It is important to note that interest is applicable for mortgages as soon as the funds are drawn from the lender and paid to the solicitor and therefore timing is extremely important. 

How are mortgage funds released?

Mortgage funds are released on the day the mortgage holder legally becomes the owner of the property, on the completion date of the mortgage. The typical process involves the elected solicitor drawing the mortgage funds from the lender ahead of completion, to ensure that cleared funds are available for the completion date.  Solicitors often allow extra time to ensure that the funds are received in time, perhaps requesting the funds from the mortgage provider three working days ahead of completion.

Once cleared funds are ready the solicitor will make the payment for the property to the seller’s solicitor and in return, receive the title deeds to complete the process. Each transaction will need to be actioned in a timely manner, allowing time for the funds to clear.  Often each transaction will involve moving a large sum of money between banks via a specific type of bank transfer called a CHAPS, which stands for the Clearing House Automated Payment System.  There are charges for using the CHAPS service, usually between £20 and £35 per transaction.  

How long can a solicitor hold mortgage funds?

The duration of time that a solicitor can acceptably hold mortgage funds will depend on the lender’s rules. If the drawn funds are not used, either in their entirety or partially, the solicitors must return the funds back to the mortgage lender.

What happens if mortgage funds are not released on the completion date?

There could be a significant impact on the property transaction in the scenario that mortgage funds are not released in time.  In this scenario the solicitor will likely already be liaising with the lender to understand the nature of the delay, however, it is recommended that the applicant should always keep in touch with all parties to ensure that any queries can be resolved as soon as possible.

Can mortgage funds be released before exchange?

It is not a common practice for lenders to release mortgage funds prior to the exchange date, other than giving a few days grace for funds to clear.  If there is a specific need for early funds to be released, the solicitor will be required to discuss the case with the lender. However if there is a requirement that the lender cannot meet, perhaps due to an unplanned change with the transaction, another type of finance may be required such as a Bridging loan.  It would be best to seek independent financial advice in such a scenario to find the most appropriate financial solution for personal circumstances. 

Can the standard release process be sped up?

Unfortunately, the process of releasing funds cannot be sped up as there are strict rules regarding the process from various parties. Examples of which can be found below:

• Legal checks required – The source of funds will need to be established and proven ahead of the transactions taking place in order to comply with anti-money laundering legislation which came into UK law in 2017.  The objective of the legislation is to stop criminals using professional services to launder money within the UK and requires solicitors to ensure that the potential property owners have proven their identity, address and source of funds.
  

• The administration time – As discussed within this article, the lender will require administration time to process the request of releasing funds.  In addition to this, further time is required to enable the withdrawn funds to clear, following being moved between banks.

However, mortgage applicants can assist the process to run as smoothly as possible by being organised with paperwork, signing documents and being prompt to answer any queries. In addition, applicants should ensure that the monies required for the deposit, to pay the solicitor and any Stamp Duty if required are in an accessible place and have cleared in plenty of time. 

Summary 

In this post, we have explored the process involved with releasing mortgage funds when purchasing property, including the typical duration of time this takes for specific banks and the importance of clearing funds.We have also briefly covered the checks required to allow solicitors to meet anti-money laundering legislation. Should you have any queries regarding obtaining a mortgage, the mortgage process, or anti-money laundering legislation, please do get in touch with our friendly team for further advice. 

The move comes as part of a larger wave of opposition to the trading platform, as peers Santander and Barclays also block payments to Binance. Back in June, the Financial Conduct Authority (FCA) issued a warning against Binance, banning the trading platform from conducting any regulated activity in the UK, and advising consumers to be wary of advertisements that promised a high return on crypto assets investments. The FCA ordered Binance to remove all forms of advertising and promotions by 30 June.

NatWest has said it has seen high levels of cryptocurrency investment scams targeting customers across retail and business banking, a trend particularly prevalent across social media platforms. To protect its customers, the UK bank said that it was temporarily reducing the maximum daily amount that a customer can transfer to cryptocurrency exchanges. NatWest is also blocking payments to a number of cryptocurrency asset firms, where the bank notes some customers have already suffered fraud-related harm. However, despite the changes, NatWest has stated that customers will still be able to accept cryptocurrencies as a form of payment if they wish to do so. 

Using Single Sign On (SSO) technology, Xero users will have direct access to NatWest’s Rapid Cash service, which provides businesses with a flexible line of credit to cover unpaid invoices for up to £500,000, offering greater flexibility and a fast solution to temporary cash flow difficulties. Rapid Cash will be the first working capital product to have this level of integration with Xero in the UK.

The move is part of the bank’s intention to introduce broader connectivity between its suite of digital banking services, and other major providers in the business banking sector.

New Zealand based tech company Xero provide cloud-based accountancy software targeted at small and medium sized businesses. Born-in-the-cloud, Xero is an easy-to-use platform for small businesses and their advisors around the world. In the UK, Xero provides 536,000 businesses with connections to a thriving ecosystem of 800+ third-party apps and 200+ connections to banks and financial service providers.

NatWest launches the new feature today having also introduced a similar level of functionality with its accountancy software business FreeAgent several months ago, which over 100,000 UK sole trader and small SME customers now use. The bank acquired the Edinburgh based fintech in 2018, which continues to operate as an operationally independent entity.

Andy Ellis, Head of NatWest Ventures, said: “We’re pleased to be able to begin offering our innovative new services, such as Rapid Cash, to users of Xero from today. Businesses increasingly tell us that they want simple, easy access to our products and services. By offering our solutions directly through the platforms that customers use to manage their business day to day, we’re making it easier for them to get the support they need - whether that’s funding, products or our expert advice.’

Edward Berks, Director of Platform Business, UK & EMEA, Xero, said: "Small businesses have historically fallen behind larger firms in accessing the best financial services. This means they often struggle to access capital which can threaten their very existence. So it's great to see the playing field level out through innovations such as NatWest Rapid Cash."

NatWest is a sponsor at this year’s Xerocon event, taking place at the London ExCel between 12-14 November, where the bank will be exhibiting its key digital ventures with attendees.

The security of banks’ and other financial institutions’ websites has been in the spotlight recently, notably in the case of NatWest bank which was involved in a public discussion regarding its site. Below Jacob Ghanty, Head of Financial Regulation at Kemp Little LLP, discusses the legal implications of website security, along with the potential consequences and of course some solutions to follow up on.

Importance of bank website security

With the diminishment of the physical branch networks that UK banks have maintained traditionally, banks’ online services are a fundamental means through which they deliver core banking services to their customers.

In the case of NatWest, a security expert identified that the bank was not using an encrypted https (Hypertext Transfer Protocol Secure) connection for a customer-facing website (in contrast with its connection for online banking services). The security expert suggested that hackers could redirect site visitors away from NatWest to other sites using similar names. NatWest stated that it would work towards upgrading to https within 48 hours.

Legal obligation to protect customer data

This type of issue is not new and has affected other banks as well. As long ago as 2007, the Information Commissioner’s Office (ICO) named and shamed 11 banks for unacceptable data security practice.

From a data privacy law perspective, under current legislation (the Data Protection Act 1998 (DPA)) organisations are required to have appropriate technical and organisational measures in place to protect data against unauthorised or unlawful processing, and against accidental loss or destruction of or damage to personal data (data security breach). The DPA does not define "appropriate technical and organisational measures" but the interpretive provisions state that, to comply with the seventh data protection principle, data controllers must take into account the state of technical development and the cost of implementing such measures. Moreover, security measures must ensure a level of security appropriate to both: the harm that might result from such a data security breach; and the nature of the personal data to be protected.

From a financial services regulatory perspective, banks are subject to a requirement in the Prudential Regulation Authority Rulebook to: “…establish, implement and maintain systems and procedures that are adequate to safeguard the security, integrity and confidentiality of information, taking into account the nature of the information in question. … a firm must have sound security mechanisms in place to guarantee the security and authentication of the means of transfer of information, minimise the risk of data corruption and unauthorised access and to prevent information leakage maintaining the confidentiality of the data at all times.” Breach of this and related rules (including a requirement to implement adequate systems and controls to monitor and detect financial crime) would leave banks open to disciplinary action.

The importance of an HTTPS connection

Any data sent between a customer’s device and a website that utilises https is encrypted and accordingly unusable by anyone intercepting that data unless they hold the encryption key. Without https protection, hackers could, in principle, alter a bank’s website and re-direct users to a fake or “phishing” website where their data could be stolen. Phishing sites are designed to appear like a bank’s own website to lure customers to disclose their personal data. Many such sites are quite sophisticated (incorporating fake log-in mechanisms, and so on) and present genuine risks to customers’ data.

Legal and financial consequences for banks who fail to protect their customers’ data

From a data privacy law standpoint, the ICO has the power to impose financial penalties on data controllers of up to £500,000 for a serious breach of the data protection principles. For example, in October 2016, the ICO imposed a £400,000 fine on TalkTalk for a breach of the seventh data protection principle.

The EU’s General Data Protection Regulation (GDPR) will take effect from 25 May 2018. The GDPR will impose stricter obligations on data controllers than those that apply under the DPA.  The GDPR will significantly increase maximum fines for data controllers and processors in two tiers, as follows: up to 2% of annual worldwide turnover of the preceding financial year or 10 million euros (whichever is the greater) for violations relating to internal record keeping, data processor contracts, data security and breach notification, data protection officers, and data protection by design and default; and up to 4% of annual worldwide turnover of the preceding financial year or 20 million euros (whichever is the greater) for violations relating to breaches of the data protection principles, conditions for consent, data subjects’ rights and international data transfers.

Key next steps for banks to protect financial and customer data

There are several obvious steps that banks can take to protect financial and customer data including carrying out a cyber security audit, maintaining adequate detection capabilities and putting in place recovery and response systems to enable them to carry on in case of an unexpected interruption.

There are number of useful sources of information in this area including: the FCA’s speech in September 2016 on its supervisory approach to cyber security in financial services firms; various ICO guides on information security; the FCA’s Financial Crime Guide; and the FSA’s Thematic Review Report on data security in the financial services sector of April 2008.

RBS and NatWest have announced they will be opening 34 of their busiest branches this coming Bank Holiday, May 4, 2015.

Bank holidays became law in the UK in 1871 to give workers time off, which meant that other businesses, dependent on banks, followed suit. However, modern-day life means that customers are demanding greater branch access. RBS and NatWest will trial the bank holiday opening next week, with a view to opening even more branches on future bank holidays if the trial is successful.

Jane Howard, Managing Director of Branch and Private Banking for RBS and NatWest said: “Customer behaviour is changing and as we work hard to become number one for customer service, trust and advocacy in the UK, we are continually looking at ways to adapt and improve service for our customers.

“Many of our customers have busy lives but are off work on a bank holiday. At a time where many people are thinking about buying a house, we're breaking with tradition and opening our busiest branches where our customers need us. Whether that's for a mortgage or just to reflect on their finances, we're here to help. “

The 34 branches will be open from 10.00am – 3.30pm and will provide the usual banking facilities and the majority will also have their mortgage advisers available to discuss customers' mortgage requirements.

NatWest is due to open a new Canary Wharf Crossrails development in the next few weeks and this will be the first of the bank's branches opening permanently on bank holidays.