Lender panel restrictions hit smaller law firms

Topics: Law Society activity,Conveyancing

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New criteria adopted by mortgage lenders to control the membership of their conveyancing panels have piled further pressure on smaller firms struggling to stay in the market.

The Gazette has learned that Metro Bank and Newcastle Building Society are among the institutions that have introduced new restrictions. They now require firms to have at least 120 purchase completions registered with Land Registry over the past 12 months.

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The change follows a linkup between several lenders and the conveyancing outsourcer Legal Marketing Services (LMS), which claims to promote a ‘more responsible’ approach to panel selections. Some solicitors fear that the requirement for a defined number of transactions will prevent many smaller conveyancing firms from joining or remaining on panels.

Jonathan Smithers, president of the Law Society, said: ‘The number of transactions a firm has completed, particularly for smaller firms, does not necessarily indicate the quality of that firm’s work. We would urge lenders to look at qualitative indicators such as membership of the Conveyancing Quality Scheme when selecting firms.’

A partner at a conveyancing firm told the Gazette that her firm was recently ejected from a number of lender panels, including Metro Bank, and Melton Mowbray and Monmouthshire building societies, because it did not have the required 120 purchase completions.

Metro is a particular concern because, as a so-called ‘challenger bank’, it is aggressively seeking to compete with the established big lenders.

‘This seems to be a major shift and a worrying trend,’ she said. ‘I can see they might want to cut out firms that “dabbled”, but this is well beyond that.’

She added that her firm has a healthy conveyancing section and that the 120 purchase requirement sets the bar too high.

Andrew Knee, chief executive of LMS, told the Gazette that although his firm advises lenders selecting panels to take into account factors such as the number of cases a conveyancer undertakes each year, it is ultimately the lenders who make the final decision.

He said: ‘It is difficult, because if a firm falls below the cut-off point they think it should be lowered. But if lenders don’t have some sort of method, then they will go back towards having 5,000 firms on their panels.

‘A number of the lenders we work for, although by no means all, have decided that an average of 10 cases per month for a firm will give [the lender] the optimum result in terms of having a sufficient number of experienced firms within a manageable panel.’

Charles Morley, head of mortgage distribution at Metro Bank, confirmed that the bank uses LMS-recommended criteria to determine which firms to include on its panel.

‘The criteria are designed to ensure we work with experienced conveyancing specialists. As a bank, we pride ourselves on offering excellent levels of customer service so it is important that this experience is continued with our suppliers and partners,’ he said.

The bank said that 120 completions is only a guide. Other criteria it uses include requiring firms to have two partners or more, an A-rated insurer and membership of CQS.

Readers' comments (31)

  • The rope is getting tighter by the day.Bye, bye, Mr High Street Solicitor. But sadly bigger is not always better.

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  • But Mr High Street Solicitor cannot do as good a job as a 19 year old clerk at one of the factory firms who are permitted to act, surely??

    With their red tape, lack of organisation, lack of clarity and lack of knowledge, the lenders' interests are in safe hands.

    But let's not forget the impact on Mr Client.

    a) Stick with your trusted representative and pay someone to act for your lender or
    b) Go with your lender's representative

    Either way, it's rarely a nice positive experience.

    My most recent dealing was with one of these factories who require a list of undertakings from me at the outset. (undertakings which are actually impossible to give at that stage)

    I sent a letter in the form that they required, not undertaking a single thing. It is clear to see that they'd saw the letter from me, not read it, ticked it off their list and merrily proceeded to delay other trivial matters.

    Good luck Metro et al

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  • Surely this is the signal (for anyone with half a brain) to revisit Sep Rep.

    Let those firms the Lenders want on their panel have the work, the remaining firms, perhaps the majority, can then start charging properly and...in particular...will actually thrive as they ought to see massive reductions in their PII cover.

    Grasp the nettle for Christ's sake instead of doom gloom and whinging !

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  • LMS...I had forgotten about these parasites who add no value.

    Do you really want to be enslaven this this type of third party anymore ?

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  • It's amazing how blind promises from clever marketers with the bucket shops have created a story with the lenders they believe. One day, I hope sooner rather than later, doing no real work and throwing numerous meaningless indemnity policies at every minor query, will give rise to large numbers of claims against the bucket shops so that property law is treated properly again.

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  • Hardly surprising news......usual kid gloves response from TLS ! Big firms bucket shop factory firms can do no wrong and of course are paragons of competence and trustworthiness Ha !!

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  • Please Law Society protect your members. I am looking forward to bringing up this issue at the National Property law Conference on Friday. Lets pull the rug from under the lenders feet.

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  • Why did the Law Society stop after persuading HSBC to accept CQS?
    Time to push for separate representation for all lending matters so we can all be on a level playing field.

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  • Anonymous at 12.32 is spot on. Seperate representation assures everyone of the best quality. Whats the problem? We only need to get it going. Who's game?

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  • I am regularly completing renewal panel application forms. Trying to meet all their requirements is hard for a small firm. It is very upsetting when you have to explain that a particular lender requires a minimum of 4 partners and we cannot act for a client who wants us to do so.

    Further matters are not helped by referral fees being paid by firms. We do not pay them but recently had a request for £100 plus vat from an Estate Agent for what they said was a referral. It turned out they meant to send it to the sellers solicitors and not ourselves. Referral fees should be banned from conveyancing as it is the client who pays in the end higher fees and leads to estate agents saying 'you are better if you use our solicitors'.

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