Cuts in lenders panels could lead to loss of high-street Conveyancing Solicitors
Mortgage lender panel cuts continue to unnerve conveyancing solicitors. The Law Society has now asked Business secretary Vince Cable to mediate talks between the Society, the Council of Mortgage Lenders, the banking regulator and lenders to reach an ‘amicable, long-term solution that is in the best interests of consumers, lenders and solicitors’.
Lenders will only instruct Conveyancing Solicitors who are on their panels to carry out legal work in connection with mortgages – this means that if a buyer’s own Solicitor is not on the lender’s panel, the lender will instruct another firm and the buyer will have to pay their costs as well. But in many cases the buyer will decide to get all the work done by a panel Solicitor.
Earlier this year HSBC drastically cut its panel, and Santander recently removed hundreds of solicitors from its panel, even after they had paid over £100 to have their membership reviewed. Other lenders have followed suit.
Closure of firms will lead to loss of choice for buyers
Banks such as HSBC and Santander occupy a dominant position in the mortgage market, and, as has been argued on numerous occasions, if Conveyancing Solicitors are not on their panels they will lose work. This leads to a loss of choice of Solicitor for many buyers, and the likelihood that they will not be able to find a local Conveyancing Solicitor.
It is questionable whether Vince Cable will be able to intervene in a meaningful sense. Banks and other mortgage lenders are being told by the Financial Services Authority to reduce the risk of mortgage fraud, and will argue that the cuts to their panels are part of their attempts to cut fraud.
In contrast, Conveyancing Solicitors claim that much of the fraud has arisen from lack of proper investigations by lenders themselves, or by intermediaries, and the proportion of cases where Solicitors have been directly involved is small.
Lenders obviously prefer to deal with a few firms of Conveyancing Solicitors rather than the hundreds of firms across the country, and are not going to be worried about some small firms going out of business.
Although the government argue that it is encouraging competition, it does not appear to be very committed to helping small firms involved in conflicts with major banks. But let us hope that Vince Cable will at least be prepared to get involved with discussions on this issue.