CQS accreditation is 'no longer enough

Acting for mortgage lenders in conveyancing transactions has long been a welcome source of income for most general practice solicitors. However, the criteria for membership on mortgage lenders’ panels have been getting more and more difficult for many smaller firms to achieve.

Many mortgage lenders require firms to be accredited under the Law Society’s Conveyancing Quality Scheme (CQS) in order to be on their panel of solicitors. The CQS provides a recognised standard for residential conveyancing practices, and membership establishes a level of credibility for firms. This in itself is no ?bad thing: generally the required standards for CQS accreditation are not prohibitive for most firms undertaking residential conveyancing work and indeed reflect good ?practice.

To apply for CQS accreditation, practices must be able to evidence:

• The integrity of the senior responsible officer and other key conveyancing staff;

• The firm’s adherence to good practice management standards; and

• Adherence to prudent and efficient conveyancing provided through the CQS protocol.

Not only does CQS accreditation allow access to many mortgage lenders’ panels, it is also intended to reassure clients that such practices ?have the necessary skills and ?expertise to provide residential conveyancing advice. The core management practices and protocol requirements help reduce the risk of claims in such transactions, and so could have ?a knock-on impact in reducing professional indemnity insurance costs.

So, it makes sense for the CQS to be a badge of experience and credibility that mortgage lenders would want to see evidenced by the solicitors on their panels.

However, some lenders are also now introducing further restrictions on the firms that ?can become members of their conveyancing panels. This is being done by reference to ?the number of purchase completions such firms have registered with the Land Registry in a 12-month period. Most recently, Metro Bank and Newcastle Building Society announced that they now require at least 120 such purchase completions per firm?in order to join or remain on ?their panels.

Quantity over quality?

The concern for many is that this minimum annual transaction number will prohibit many smaller practices from sitting on lender panels and it is not clear what, if any, evidence such lenders have for assuming that quantity equates to quality. Perhaps it is to provide some criteria that reduce the number of firms on their panels to a more manageable size and to badge such solicitors as ‘conveyancing specialists’.

Arguably, accreditation under the CQS should provide such a badge already, but clearly the tide is turning to include additional criteria for such lending panels. Other criteria mortgage lenders are starting ?to require include minimum partner numbers per practice and rated insurer status.

What is disappointing is the limitation of choice that this places on the consumer. ?While a number of property purchasers will view the legal costs associated with buying a property as a commodity and want to look at the lowest ?cost option, many purchasers will recognise that this is the single biggest financial commitment they will ever make and will be willing to pay for legal services from a firm they know, like, and trust. 

Unsuitable choices

What happens if such a firm is not on their mortgage lenders’ panel? It seems most likely that the mortgage lender will simply refuse the application unless one of their panel firms is instructed. This leaves the consumer with the unenviable choice of either switching mortgage lender and potentially not taking out the best or most suitable mortgage in their circumstances, or instructing panel solicitors ?that they are not familiar with.

Could public opinion and such limitations on clients ultimately persuade mortgage lenders to move away from the ever-increasing restrictions they are placing on firms wishing to be on their panels? Or will it make alternative lenders on the market without such stringent criteria more attractive to borrowers? Time will tell.

Jennifer Williamson is a business services partner at accountancy firm Kreston Reeves @KrestonReeves www.krestonreeves.com