Paul Judkin of Judkins Solicitors in Hertfordshire has made conveyancing news by giving Today’s Conveyancer full access to his letter and plea to the Law Society Gazette for help in staying on lender panels and we feel it the matter is of sufficient importance and interest that the whole letter should be published. Please forward this article to other conveyancers using the "email" button at the foot of this article or by sharing the link to this page.
The full text of his letter to the Law Society Gazette is set out below however in a conversation last week Paul explained that whilst conveyancing is not a central service that his firm offers he has not had a single claim in the last 18 years and the justification from removing him from the Santander panel seems to lack what he considers to be "reasoned thinking". Judkins who according to Land Registry made 6 applications to it in August and were placed 4413 out of just over 7500 firms are a slightly smaller than average conveyancing practice. If firms like Judkins are being removed from lenders panels that indicates nearly 50% of all conveyancing firms are likely to be threatened by this.
Many will say that this is something that needs to happen whilst others will be up in arm about this. We are interested in the views of our readers should Judkins be supported in their endeavour to pursue lenders for their panel reduction policies and whether you have you had feedback from brokers about the communication by Santander?
As soon as we have a formal comment from Santander we will let you know but in the meantime please vote in our poll below.
Paul Judkin’s letter
"Lloyds TSB & Santander — How to select the correct solicitor
Our firm was surprised to receive a letter from the Lloyds TSB Group in August notifying us that our firm had been removed from the Mortgage Panel because as the firm had not completed an unspecified number of mortgage transactions we would not be familiar with the Lloyds TSB mortgage requirements.
This letter was particularly astonishing as there was no prior notification of the intended action, no minimum number of transactions specified, no appeal process offered and the reason itself incomprehensible.
Whilst it may be a possibility that administrators within the Lloyds TSB Group were not able to remain familiar with the mortgage requirements unless they were processing them on a regular basis to use this as a reason for a solicitor’s removal from the panel is an unjustifiable attack on his/her professional competence which must not pass unchallenged.
This is particularly so in respect of Santander who have recently written to mortgage brokers and other intermediaries with a letter entitled “How to select the correct solicitor”. The letter states,
“ Recently we have received a number of cases where the solicitor selected has not been on the panel….to ensure you are selecting a suitable solicitor we recommend that you use the search facility on our website.”
It may therefore be useful to briefly examine the solicitor’s retainer in a mortgage transaction.
The client has an offer accepted on a property and instructs a solicitor. Currently, the rules of professional conduct allow the solicitor to act for both the client and the lender in the mortgage transaction. The client is responsible for the lender’s legal costs and the conveyancing solicitor is retained by the lender to report on the security, obtain release of the mortgage advance to enable completion and subsequently perfect the security at HMLR.
A lender is entitled to protect its security and impose reasonable terms and conditions in the instructions to the appointed solicitor which may for example include quality control, system of working, number of partners, sight of professional insurance, office security measures, case management and IT systems. However it is an implied term of the retainer that any requirements imposed are reasonable and restricted to facilitating the mortgage transaction in a proper, timely and secure manner. A pre-condition requiring the solicitor to meet an unspecified number of mortgage transactions with that lender over an unspecified time (or be prevented from acting) does not fulfil these criteria and is therefore arguably unenforceable and actionable.
Furthermore the creation of a “Panel” in the case of Santander is somewhat artificial if not misleading. It is not a properly constituted panel as such, the members are not required to show a specialism nor does the panel refer work. The Panel is no more that the lender’s terms and conditions or retainer.
The current removal of Panel Members by Lloyds TSB and Santander is shrouded in secrecy. It is impossible to talk to anyone who has knowledge or involvement in policy and/or responsibility. The procedure is dealt with by administrators. In the case of Santander we were simply given an email address (which has a feel of anonymity) only to receive the refusal of our reinstatement in a letter from the Image and Processing centre! One gets the distinct impression that the refusal letters are in a standard form as they do not address the issues raised and as such the whole process is pre-determined.
Our firm is a two partner practice which undertakes civil litigation and family and divorce work. We have also always undertaken conveyancing, but we are not bulk conveyancers and offer a high quality and personal conveyancing service. We currently have three professional negligence claims against conveyancing solicitors, two of which appear to be against bulk/ factory conveyancers who charge ( seemingly to the client) very low fees which are only commercially viable because they undertake work at high volume and cannot give the time it requires. In one case the solicitors completed a new build purchase without NHBC or similar buildmark policy and the property is now falling down. In that case it was specified in the instructions to solicitors to verify NHBC or similar cover before requesting the mortgage advance. In the other claim solicitors acted for a client in a buy to let mortgage and failed to advise the client and the lender that there was an absolute prohibition against letting in the lease.
Most likely Lloyds TSB/Santander have not removed these firms from their panel as they would have completed the necessary unspecified minimum number of transactions due to the fact that they offer a bulk service. Hence the lender would be ignoring the fact that the level of service has severely prejudiced their security and it would be the solicitors removed from the panel that would be paying for these firms negligence in our P.I renewal premiums increased yet again without justification.
If it is not then an issue of security or professional competence, what is the motivation behind Lloyds TSB and Santander’s actions? It could be a way of cutting administrative costs in itself paving the way to yet more redundancies over the next year. What appears to be more sinister is the possibility that it could be a backdoor method and first step to lenders increasing their profits by entering into the conveyancing market. Whatever the reason it is a gross interference with anti competition law and not in the best interests of the client.
Whilst I am heartened to hear that the Law Society are monitoring the position closely and have a team considering options available, I am concerned that the longer the present actions of Lloyds TSB and Santander go unchallenged, the harder it is going to be for small firms to ever get back into the conveyancing market. The consequences to the public are more insidious as their freedom of choice to instruct a solicitor has already been seriously eroded overnight. In response the law Society should also consider (urgently) changing the rules to provide that a lender obtain separate legal representation in a mortgage transaction. For as long as the client pays the lender must accept (and respect) the appointed solicitor’s retainer subject only to the solicitors meeting fair criteria or “Panel” terms.
We have lost two conveyancing instructions in the last two weeks. Our fees are £650 per instruction and minimum losses are running at £2600 per month which losses will increase with economic recovery. These losses should be recovered from Santander/Lloyds TSB as part of the claim that we propose to issue. However before issuing, we think it prudent to seek the opinion of a QC and would like to hear from other solicitors who would feel able to contribute to the costs of such an opinion which we would then freely share."