A tale of two professions: who will help conveyancers resist pressure from lenders?

Once upon a time, mortgage lenders decided to pare down their lists of solicitors who they considered acceptable to act on their behalf when lending monies to borrowers who were buying properties. The apparent concern was fraud; the idea was that by reducing the number on the panels they would reduce the number of fraudulent - or perhaps, negligent - solicitors at the same time. No point was made of the behaviour and negligence of any lender, nor, I believe the rumour has it, was it even mentioned.

In these days of transparency, the lenders did not see fit to explain how they were proposing to effect this filtering process, nor were they pressed to do so.

Shrinking panels

HSBC started it off, reducing the membership ranks to a tiny percentage of what they were before. With every indication the other lenders would follow suit, property solicitors were getting worried and turned to their representative body for help. The Law Society instigated negotiations with the lenders, and HSBC particularly in the first instance, to rectify the situation. Solicitors breathed a sigh of relief as the Law Society, as always, was about to come to the aid of all those it represented.

I don't want to spoil the end of the fairy story but you already know it. Our representative body used the opportunity to negotiate preference for its own Conveyancing Quality Scheme when lenders considered any of us for their shrunken panels. No assurances were obtained that qualifying as a member of the scheme would mean acceptance on any panel although it should help. Certainly, it had the desired effect for the Law Society that, over a period of a year or three, some two to three thousand firms joined or applied to join the scheme.

In the meantime, lenders were beginning to charge solicitors a fee for being on their panel - apparently deciding that making firms pay for the privilege of being allowed to do work they had done for a hundred years without paying would not impinge on their integrity or charges to their, and the lenders', customers.

To our total disbelief our guardian had failed to look after the larger proportion of its flock whose income reduced and whose client base shook, to the extent that many either retired, shut-down, amalgamated reluctantly or have been forced to contemplate such a course.

So we reached a point where the majority of solicitor-members of the parent society remained defenceless to the relentless pressures of the lenders and, at the end of our fairy story, it is fair to say we were not living happily ever after.

Commercial entity

At this point, we reach part two of the story. A commercial entity has entered the arena and come up with an alternative plot whereby the Law Society's CQS is by-passed and shown to be of ever-reducing value even to those who made the mountainous efforts to join the club. Yes, Lender Exchange, which is due to go live shortly, will mean another fee. It does not guarantee membership of ANY lender's panel and, some lenders will still not countenance even an application unless the solicitor is currently engaged in dealing with a mortgage in progress (although this itself is a conundrum because why should a firm acting for a mortgagee at any time have any need to make an application). But it looks as if it may be endorsed by lenders en masse.

What our society should have done was to stand up to the lenders from the outset and use its influence on its own members to stand firm against the pretensions of the lenders and force them to keep their panels open. Not use the half-baked idea of a CQS to their personal aggrandizement at our expense. If the lenders thought that the CQS had value why would they countenance an alternative through an independent company? Would they have given in if we had remained firm and refused to accept the arbitrary mayhem they have put in place? We don't know for sure but many believe so, but we never tried - and could only have done so with the right leadership of the Law Society who suggest they represent us.

Now we are hoisted further, albeit with someone else's petard. How can the Law Society complain at this turn of events? No one in their leadership had any vision to consider further eventualities and they turned over the majority of their members themselves so why shouldn't an outside commercial company do the same? They, at least, have no vested interest in us, no responsibility, no vaunting of being our protector or having our interest at heart.

 

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Howard Salter is a partner at Statham Gill Davies Solicitors

www.sgdlaw.com

 

 

 

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