The Society of Licensed Conveyancers (SLC) has written to the Chief Executives of the Council of Mortgage Lenders (CML) and the Building Societies Association (BSA) calling for transparency in the way that mortgage lenders approach the selection of legal firms to represent them in the home buying process. Currently the approach that lenders adopt is acting as a barrier to the natural evolution of the conveyancing landscape and stifling innovation and entrepreneurship. This cannot be in the consumer interest or indeed the smooth operation of the property market.
Mortgage lenders quite understandably wish to manage risks in the legal process and decide who should represent them in the execution and recording of their mortgages. However the criteria by which they select who should and who should not be members of their conveyancing panel are completely opaque.
This means that law firms have no idea why an application to join a panel, or indeed renew panel membership may not be successful. This stifles their ability to take measures to meet the criteria in the future and indeed creates a barrier to mergers and acquisitions by firms thus stifling innovation and the natural development of the conveyancing marketplace. It is also a major inhibitor to the establishment of new firms.
SLC Chairman Simon Law said: “Whilst nobody challenges the right of lenders to decide who can represent them in the home buying and remortgage process, the lack of transparency in respect of the criteria they employ is proving a restraint on the natural development of the conveyancing marketplace. It is difficult to read this obfuscation as demonstrating anything less than a total lack of trust in the legal profession. The implicit suggestion is that lawyers would deliberately falsify information to get on lenders panels. This would be fraudulent behaviour and as our members are subject to the rigorous regulatory regime of the Council for Licensed Conveyancers (CLC) would put their livelihood at risk. Whilst we cannot speak for the efficacy of other legal professionals we would assume that their respective regulatory environments would provide similar protection.”
The SLC has called on the two trade bodies to review the current practices of their members with a view to embracing a policy of total transparency in respect of their lawyer panel criteria.
Law added: “When lawyers are not on lenders panels, the much higher cost to consumers of what is known as separate representation in the home buying process must make it in the public interest that lenders make panel membership as inclusive as possible. By making their selection criteria known lenders would achieve this objective.”
