Business secretary Vince Cable has been asked to intervene to resolve problems caused to law firms and consumers by banks restricting membership of their conveyancing panels.
Law Society chief executive Desmond Hudson has asked 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’.
In a letter to solicitors, Hudson said: ‘Such a dialogue is made necessary by the very serious implications of highly restrictive panels for the economic viability of many high street legal practices.’ The request is the latest move in a long-running row with lender Santander, which the Law Society said has cut hundreds of firms from its panel in a ‘crude and unfair’ review. The lender said it had carried out its regular quarterly review in line with its risk policy.
Banks have been tightening up their conveyancing panels following a call from the Financial Services Authority to manage them more closely because of the threat of mortgage fraud.
Hudson said: ‘While the Society recognises the imperatives driving lenders to introduce changes to the composition of their panels… we consider that many of the changes lack coherence, are based on questionable rationale and impact on both the profession and the public in a damaging way.’
The Society has prepared a briefing pack to help solicitors lobby MPs and encourage them to raise the issue with the secretary of state.
Meanwhile, the Solicitors Regulation Authority announced this week that it is looking again at a strategy to help firms cut the risk of mortgage fraud. The regulator said that it will revisit a draft strategy published last year and carry out a comprehensive review of current practices. The review will run until the end of 2013.
One area under consideration is whether it would be possible to amend parts of the conveyancing process to reduce the extent to which firms need to hold client money.
The review follows the SRA’s engagement with insurers. The regulator cited statistics which show that conveyancing accounts for an ‘unacceptable volume’ of complaints against the profession as the reason to target this practice area.
Conveyancing claims represent about 50% of the value of professional indemnity claims arising against firms.