Paul Bassett on the campaign for Sep Rep

Paul Bassett has launched a campaign for mandatory separate representation for buyer/borrowers and lenders. The campaign is called ‘Big Banks Bad for Local Business’ You can follow the campaign on twitter and banksbad4biz.wordpress.com. He set up the campaign as he felt that lenders were not acting in the interest of the consumer, the High Street or indeed his own business. 

Paul qualified as a solicitor in 1981, spent his early career in London before moving to Cornwall in 1995, where he was a partner in a West Country firm until he left in 2006 to set up his own firm A P Bassetts Solicitors based in Lostwithiel. 

What made you decide you wanted to set up the campaign?

Santander. Back in 2010 we were on all the big lender panels, and then Lloyds took us off their panel which was obviously a fairly heavy blow. The reason they gave for doing so was risk of mortgage fraud. This effectively started this ball rolling as they removed hundreds of small firms from their panels as they weren’t doing their required number of transactions. They said that we wouldn’t be familiar with procedures and wouldn’t know what the process was, that we’d be a mortgage risk because of fraudsters being able to take advantage. I don’t think they were intending to say that we were actually dishonest in dealing with the clients and taking money off the banks by fraud intentionally. I can’t accept that it’s because of mortgage fraud that the panel culls are being done. 

This effectively took out the small firms from the market. That’s when seprep became something we dealt with. I spoke to other local firms, who were still on Lloyds panels at that time. They were quite happy to deal with us on the basis that they would deal with mortgage matters and we would deal with the client and the seller. Say I charged £600. I contacted them; they would charge £150 for dealing with the Lloyds mortgagee’s certificate of title. So I would meet the client, deal with the seller, do all the searches and enquiries and send everything over to them by email and post and they are able to do the certificate of title and get the funds through. I charged my client £450 and the other solicitor charged him £150 or the other firm charged me £150 and I charged my client £600. 

Up to 2012 this worked fine. After Lloyds took us off their panel the others jumped in after them in 2012. At the beginning of 2012 they reduced panels. First HSBC reduced their panel down to 43 firms. At that point the Law Society got involved. The Law Society in 2011 introduced its CQS scheme and did a deal with HSBC to say if a firm had CQS they could be on their panel. 

I thought that’s just disgraceful as that’s just cut out all the small firms as well. Very few were interested in CQS accreditation before then, but it then became the Law Society’s means of expanding the scheme. Santander then took us off their panel in the summer. They gave the same reason as Lloyds: because we were not doing enough volume of work we were a mortgage risk. 

I had appealed in the case of Lloyds by pointing out that we were the only firm in this town of 3,000 people and we’d grown and developed and that we served the community well, we didn’t have public transport in the same way that other towns had, all the rural stuff, messages of support from people etc. but to no effect. When I appealed to Santander they replied with a generic email message saying no. 

So I then went to the press to say what was happening. What Santander also did was tell the firms who had been doing work for us that they couldn’t continue to do so. This meant the firms we were doing seprep with said “sorry Paul, we can’t help you anymore because we’ll lose our panel accreditation.”

When I went to the press, Santander claimed I hadn’t appealed and they were still concerned about the rural communities and all the rest of it. I think they intended to make sure our campaign didn’t get off the ground as far as I’m concerned. That’s where the anger came from. I thought either I lie down and let them do this or I do something about it.

My clients and I have used seprep without any problems. The Law Society approach is solicitors cannot promote seprep that we’ll find the SRA won’t sanction it. The Law Society says it’s not in the interests of the consumer. They claim licensed conveyancers will just take a march on us all. 

I believe seprep is the future. Mandatory separate representation will come about. The Law Society is saying that seeking seprep should only be a last resort, but that isn’t an argument that’s going to work. That just looks like self-interest.  I don’t think it costs more nor causes delay. I’ve done it on the basis of no more cost to the client to do so and no delay. It can work. If I am not doing the mortgage work, why should I charge my client the same sum as if I was doing it? The fact that the lenders want their costs paid for by the borrower is an issue that should be challenged.

When seprep is in the lender’s interest they insist upon it. Equity Release schemes, where people take out a mortgage and do not pay monthly to borrow on their homes, can only be done with the borrower being given legal advice from their own solicitor. The lenders don’t want any challenge from family members, who have lost their inheritance saying their parent wasn’t properly advised.

In the long term it will be mandatory separate representation, because the lenders cannot change their culture. They will have set up their conveyancing sheds to sell their products  and  will become embroiled in mis-selling of insurance and there will be a public outcry.

Where is the campaign now and what’s next?

We initially got the local community behind us and have got great support from within the town for what we’ve been doing. We tried to get to the local Law Society interested and they initially had a fairly neutral stance. Then the Law Society nationally became quite aggressive in saying – no we don’t want separate representation, it is going to be against the interests of conveyancing solicitors to do so. I’ve not got a lot of support from within the profession. But I do know lots of lawyers who are angry about what’s happened. But they’re not necessarily up for separate representation. 

What we have done is go to local MP’s. We were lucky to get Dan Rogerson, the North Cornwall MP to raise a question at PMQ’s. The PM said he would investigate the matter. We’ve got an online petition and postcards that we’ve given out to people to petition Vince Cable to look at this from protection of the High Street point of view. 

There’s a risk of losing the local touch. If we went, there is no firm for my clients between Fowey and Bodmin.  We’re in an area with hardly any public transport. That leaves many stranded without a solicitor to go to. That’s not just for conveyancing, it’s all the other work. Local communities will fight for it once they are aware of what’s happening. 

What do you see the situation being in a years’ time? 

Until the Scottish Law Society decision last Friday, I was not expecting quick change. Their decision has given a boost to change south of the border. Our campaign has sought to get the issue out there. It’s time will come. It will become an issue when lots of law firms have been removed from panels. With CQS you’re now down to maybe a couple of thousand law firms who are dealing with conveyancing in the country. When the lenders control of the market becomes clear, at that stage there will be calls for change. The CML reaction to the Scottish decision has been extreme and watching the Twitter conversation between the CML and the Law Society shows that there is now a chance for separate representation here.

Firms are suffering and hoping the market will pick up and they get back to some volume business. I’d like it to be that lenders didn’t veto seprep. There’s no reason why they have effectively done so and they clearly do not want it. It’s not a free market. That’s what we’re up against. Look at the way the lenders are working. They are offering free conveyancing if you buy their product, or saying that you won’t have their loan unless you use their conveyancer.

What I would like to see in a year’s time would be for clients to be able to use firms they choose, if they want to use their local firm to buy, but not do mortgage side, that they can. That at least will be a level playing field. 

Have you assessed what impact this has had on business?

Yes. Until now we’ve grown each year. It’s too early to tell, but I’ve had to allow for a 20% reduction in fee-earning income for this year. We’re fortunate that we still get the downsizing work and people who are buying properties without mortgages. We are still doing conveyancing, but we have lost out significantly since the removal from the panels happened.

Do you feel supported by the Law Society?

No. They say that ‘small firms being removed from panels is going to destroy firms’. ’This is a blunt instrument.’ They also know that it’s nonsense to say that small firms are a mortgage fraud risk. It’s not true. They don’t and won’t say that this is part and parcel of the lenders wanting to increase their market share.  I don’t believe for a second it’s to do with mortgage fraud. I don’t believe it’s because they’ve been told by the FSA that they had to do something about their panels and this was the only way they could do it. 

But that’s because I don’t come across solicitors who do mortgage fraud. My experience of my fellow solicitors is that we’re honest and get things done right for our clients. I think the banks wanted to get rid of competition from law firms and exploited the conveyancing panel issue to make some money out of it. I’ve got no evidence of this, but when you look at those lenders who are selling legal services, they need to have customers for their product.  
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