The Nationwide Building Society, one of the UKs largest mortgage lenders, is in the process of cutting back its Conveyancing Panel on the basis of Solicitors panel inactivity. But does this pose the same threat to consumer choice that the recent HSBC conveyancing panel cull does?
It is vehemently argued by many in the property/legal world (not to mention consumer groups and the Law Society) that lender panel cuts can be bad news for consumers.
The Nationwide Conveyancing panel is one of the first lenders to announce such cuts in 2012. As a result the lender is removing Solicitors Practices from its panel if they have not handled any transactions for it in the last year.
What does this mean if I am borrowing from the Nationwide?
In short not a lot - for now.
The key thing, for home buyers taking out a mortgage with the Nationwide, is to make sure their preferred solicitor is on the Nationwide Conveyancng Panel before instructing.
Failing to do this could result in delays as the part of the conveyancing process that your solicitor undertakes on the part of the lender will need to be handled by another firm.
Once a conveyancing transaction becomes effectively 'split' between 2 firms things can get complicated. Furthermore you may find yourself having to pay additional Conveyancing Costs to the second Solicitor.
As long as you confirm your Solicitors membership of the Nationwide Conveyancing panel you have nothing to worry about.
Dormancy policy criticised
This criterion for panel contraction is known as 'dormancy' and it has been criticised by the Law Society calling it a 'blunt instrument'.
The Law Society Gazette article argues that this process can effectively result in firms with high standards (i.e. good claims records) being (unfairly) removed.
The Law Society did however credit the Nationwide for at least consulting with the Law Society before taking action (unlike the recent HSBC Conveyancing Panel cull) saying “Dormancy based on zero transactions for Nationwide in 12 months is a blunt instrument for panel reviews. There are more sophisticated and accurate ways of assessing dormancy”.
Is there any redress for Law firms removed from the Nationwide Conveyancing Panel?
The Nationwide has stated that firms that can prove they have been active in the last 12 months or have been accredited with CQS are welcome to appeal for reinstatement.
On the face of it this seems very fair, especially when compared with other Conveyancing Panel cuts, as it offers a clearly defined reinstatement policy.
Solicitors not in possession of a time machine still should speed up their well advised application for CQS!
The Law Society is in regular dialogue with the Nationwide Building Society, so relegated Solicitors may find themselves reinstated as a result.
Law Society fawns but stands its ground.
The Law Society has been more than happy to accept the show of confidence in its CQS initiative. However it has also been emphatic about its disappointment in being unable to convince the Nationwide to plot a different course.
Is the Nationwide Conveyancing Panel cull on-going?
At this stage it is not clear whether this is a 1 off cutback, a periodic one or whether firms that have been inactive for 12 months automatically lose their panel status on the 12 month anniversary of 'dormancy'.
We will be tracking developments closely so watch this space.
Fridaysmove's recommended Solicitors all enjoy full Nationwide Conveyancing Panel status.