Law society slams banks for bond registrations hoarding
Pini Bothoko | Wednesday July 23, 2025 10:06
According to the society’s notice dated July 16th 2025, several financial institutions are compelling property buyers seeking mortgage financing to use the bank’s panel attorneys not only for bond registration which secures the bank’s interest in the property but also for the property transfer process, a distinct legal service that has historically been the choice of the buyer or seller.
The LSB says the practice violates Section 31(1) (b) of the Competition Act of 2018, which prohibits “tying and bundling conduct” by dominant market players.
The provision forbids companies from making the purchase of one product or service conditional on the purchase of another unrelated one.
“This practice leverages dominance in one market to restrict competition in another,” the Society stated, warning that the Competition Authority is empowered to investigate such conduct, which can attract penalties of up to 10% of a company’s annual turnover.
While the society concedes that banks are within their rights to require bond registration be handled by attorneys from their own panels, it insists that forcing buyers or sellers to also use the same attorneys for property transfers is unjustified.
“These are separate legal processes that can, and traditionally have been, handled by different attorneys without causing operational difficulties or increasing risk to financial institutions,” LSB said in a statement.
Addressing consumer harm and market impact, the society warns that the banking practice is not just a legal technicality but has real-world consequences for consumers.
Amongst the key concerns raised are losses of trusted legal advisors which LSB stated that clients are forced to abandon lawyers they know and trust through the arrangement.
“Lack of service choice: consumers are denied the ability to choose attorneys based on service quality, price, or reputation. Higher Costs: with limited competition, legal fees could rise and service standards could fall. Infringement on Sellers' Rights: Sellers lose their right to choose who handles the property transfer under their power of attorney,” further reads the notice.
The society also highlighted the wider market impact, saying the practice creates an “artificial oligopoly,” where only bank-approved attorneys can access a lucrative portion of the conveyancing market.
“The result is a closed market that suppresses competition, blocks emerging firms, and entrenches a small group of law firms with exclusive access to mortgage-related work. The artificial restriction of consumer choice in legal representation undermines market efficiency, consumer welfare, and the professional independence that is essential to the proper administration of justice,” the society warned.
Furthermore, the society called on banks to immediately cease the practice and urged the Competition and Consumer Authority to investigate the matter as a breach of the Competition Act.
The LSB said it has taken a position that banks may continue to require panel attorneys for bond registration, which directly concerns their security interests. Moreover, they the society took a position that consumers should be explicitly informed of their right to choose their own transfer attorney when applying for mortgage financing.