Mortgage lenders lose faith in regulation of solicitors
The Council of Mortgage Lenders (CML) has called for closer scrutiny of law firms to crack down on mortgage fraud committed by solicitors, and a comprehensive review of the way solicitors are regulated.
The CML said the principles-based approach of the Solicitors Regulation Authority is not adequate to help restore lender confidence, and out of touch with the more intrusive style of regulation being championed by the Financial Services Authority.
CML director general Michael Coogan said: ‘Lenders and homebuyers rely on solicitors to provide conveyancing services as an essential part of the process of buying a property. But we are concerned about the amount of fraud involving solicitors and the scale of professional negligence that has emerged in recent years.’
Coogan conceded that most solicitors provide a ‘competent, honest and reliable service’, but the reputation of the industry as a whole has been ‘tarnished by a minority of firms that do not uphold the same standards’, he alleged.
Coogan said ‘more intrusive regulation’ and ‘closer scrutiny’ is particularly important given the way the legal profession is changing in light of the Legal Services Act and the increased competition that new entrants to the market will bring.
‘Lenders must be confident that firms have adequate professional indemnity insurance and that there is a reliable compensation fund for commercial clients who suffer loss as a result of fraudulent behaviour,’ he said.
He warned that if lender confidence in the regulation of solicitors is not restored, lenders are likely to scale down their existing panel arrangements and not accept new firms on panels until they have a proven track record.
An SRA spokeswoman said the regulator’s approach was not about ‘light-touch’ regulation, but modern and proportionate regulation that focused on getting the best for consumers.
‘We want to encourage law firms to assess and tackle the risks themselves wherever possible, but those who can't, or won't, put things right will face tough action,’ she said.
She said the SRA has already made significant progress in tackling mortgage fraud and that its investigations have saved lenders between £15m-£20m in the last year.
She added: ‘We have put extra resources in place and are working closely with other agencies, including major lenders, the police and other regulators.’
In a separate development, the National Fraud Authority (NFA) has published its second report into measures taken to combat mortgage fraud. It says there has been ‘significant progress’ in tackling the problem over the past 12 months, with corrupt mortgage intermediaries, solicitors, licensed conveyancers and surveyors all targeted. The NFA estimates the annual value of mortgage fraud to be £1bn.
Comments
Surely this is a joke? The
Surely this is a joke?
The Mortgage Lenders, who were falling over themselves to throw money at people, suggesting tighter regulation of solicitors? Where has Michael Coogan been for the past few years? Does he really expect to be taken seriously, by anyone who can string two thoughts together?
The Lenders put their own staff under extreme pressure to hit lending targets, gave the nod to dubious valuations (including sacking surveyors firms who were "too conservative" in their valuations) and now it is the legal profession which needs more regulation!
The correct response is for conveyancers to be prohibited from acting for both the Lender and the Borrower. There are huge conflicts of interest between them, (especially in the modern era of sales driven lending, rather than professional responsible lending) and it is the Borrower who needs protection. This can only be provided by independent conveyancers.
Naturally the SRA will not recommend this -it may benefit the legal profession.
I think it's time the
I think it's time the conveyancing industry is unionised.
I wonder how much longer conveyancers are going to accept being at the bottom of the food chain, with all the responsibility, always at risk of redundancy and drawing the lowest fees.
I just don't understand why people continue in the job?
What's the attraction of the job? It's not like conveyancers are well paid for there efforts and, anyway, it's a boring and undemanding job.
Maybe conveyancers like doing conveyancing so that they can go home and have something to moan about.
Comrade Stalin sends his greetings
Surely, the greatest bit of hypocrisy since the Soviet prosecutor at Nuremberg started to attack those on trial.
Brings to mind Heinrich Himmler writing to Ante Pavlevic, the Croatian Ustashe leader, telling him to stop being so extremely violent.
Yes, this would be very very funny indeed but for one thing. It shows the utter weakness of the SRA. Coogan is surely safe in his assumption that he can attack the SRA when they seemingly now take their orders from “Which?” and attempt to bring solicitors to the SDT for lawful actions.
He can see that all that seems to matter to the SRA is politics. How viciously ungrateful, after the SRA helped out the CML, by intervening a firm whose actions were questioning CML member's mortgages. Of course, I am sure that this was a mere by product of suspected dishonesty, on the part of that firm.
Lets make the real position clear to the CML.
For years and years your members accepted self certification, seemingly on the basis that it didn’t matter what borrowers said about their income. This was irresponsible at best, criminal at worst.
Your members clients paid solicitors peanuts in exchange for a complete insurance indemnity for all mistakes and you turned a blind eye to woeful conflicts of interest, because you didn’t want to pay the bill for the work done on your behalf.
Now it has all gone wrong you want us to pay for your mistakes and you want us to pay for strict regulation as well.
No deal, my friend. No deal
You think that you can browbeat the SRA into heaping yet more burdens on solicitors. Burdens, which is history is anything to go by, you will complain about as soon as the market picks up.
You may well be able to do this but you will shortly be facing conveyancing by Tesco. They are not going to give you a full indemnity and you start playing these sorts of games with them then you’ll be toast.
As for the Law Society, we are clearly well into phase two of the effects of the abandonment of democracy and kow towing to oligarchy, which was the surrender of all powers to the SRA. Having had the deaf SRA, we now have huge outside political interference, regardless of the law and uncle tom cobleigh and all thinking they can beat us up.
I think the Law Society needs to get some test cases in front of the High Court fast, with a view to telling these busy bodies where to “get off“. They could start with “Which?”, in a case to ascertain whether or not condemnation of a lawful action should be taken into account by a regulatory body.