Following extensive consultation and development, the CML has this week issued a new set of instructions for conveyancers acting for lenders under separate representation conveyancing transactions in England and Wales.
The new set of instructions are designed to apply when a solicitor of licensed conveyance acts only for a lender in a house purchase transaction. They will form a new part of the CML Lenders’ Handbook for conveyancers, and will take effect in England and Wales from 2nd July 2012.
Normally, the conveyance will act for both the borrower and the lender, as the interests of both are closely aligned, and it is often more efficient and cost-effective for the same conveyance to act for both parties. This is still going to be the case in most housing transactions.
However, in some instances the borrower wishes to use a conveyancer who is not on a lender’s panel of accepted conveyancers, or there is a conflict of interest and separate representation in needed. Here, it is important that there is absolute clarity about exactly what is involved in acting for the lender. It is equally important that the borrower’s conveyancer knows exactly which elements of the work they are not required to do, and which elements they are required to do when acting solely for the borrower. The new instructions issued by the CML are designed to provide this clarity.
In recent years, lenders have been moving towards a more active management of their conveyance panels. This has led to an increase in the number of cases where a particular conveyance may not be on a lender’s panel.
There are a number of reasons why a particular conveyance may not be on a lender’s panel. These include:
– Small or new firms, or firms with very low volumes of conveyancing transactions.
– Commercial considerations relating to the lender’s preferences in terms of its panel criteria
– The conveyancing firm’s capacity to deliver particular services expected by the lender
– Quality concerns
The fact that a conveyancer is not on a particular panel should not necessarily cause concern to a borrower who wishes for that person to act for them.
Paul Smee, CML director general commented:
“In most cases, the same conveyancer acts for both lender and borrower. However, where this is not the case, it is important that both conveyancers know exactly what is expected of them so that any confusion is eliminated and resulting problems minimised.”
Jonathan Smithers, chair of the Law Society’s Conveyancing and Land Law Committee added:
“"We are working with lenders to help ensure that our Conveyancing Quality Scheme supports lender confidence in operating broad panels. We hope that joint representation of lender and borrower will continue to be the norm. However, we recognise that a variety of factors may mean an increase in the number of cases where separate representation is used and we hope that the new instructions will provide some consistency in those cases. We will continue to work with the CML and other interested parties to improve the new instructions and, as a result, improve the experience for house buyers and conveyancing professionals."
June Mulroy, interim chief executive of the Council for Licensed Conveyancers, said:
"Licensed conveyancers are represented on lender panels, and also offer a high level of focus and expertise to individual borrowers who want to use their own conveyancer outside the lender’s panel. Experience of fraud among licensed conveyancers is the lowest in the conveyancing market. The new instructions provide useful clarity for all conveyancers on separate representation cases."
The new set of instructions can be found here.
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