Mortgage lenders face OFT investigation into refusal to instruct sole practitioners

CONVEYANCING: 'Unfair and unlawful' practice restricts clients' freedom to choose own solicitor

Mortgage lenders who refuse to instruct sole practitioners could face investigation by the Office of Fair Trading (OFT) for anti-competitive and discriminatory behaviour, it emerged last week.

Michael King, chairman of the Law Society's conveyancing and land law committee, told the Society's council the matter had already been brought to the attention of the Council of Mortgage Lenders (CML).

Unless they come back with 'watertight reasons' for lenders not instructing sole practitioners, a complaint will be made to the OFT, Mr King warned.

Sole Practitioners Group chairman, Peter Williams, said the problem was becoming more serious as lenders were starting to insist that their nominated firms should also act for the borrower.

'This insidious policy is, no doubt, inhibiting client freedom of choice to select their own solicitors.

Any restriction of a client choice is both unfair and unlawful,' he said.Russell Wallman, the Society's director of policy, said the refusal to instruct sole practitioners might also indirectly discriminate against ethnic minority solicitors who were disproportionately represented in sole and small practices.

A CML spokeswoman said the matter had been raised and was being looked into.

'We have made some initial enquiries among lenders who said they were cautious about instructing sole practitioners because of difficulties with having proper indemnity cover.

Whether this is a valid concern is still being looked at and we will be looking deeper into it across the industry,' she added.

Meanwhile, the first licence to provide National Land Information Service channel services has been granted.

The service aims to pull together all the search information needed for a conveyancing transaction into a seamless electronic system.

The contract to run this was won by a consortium including the Law Society earlier this year.

The seven-year channel service licence - which will be the conduit for the information - was granted to the Teramedia consortium, made up of KPMG, Intergraph, Teranet, Compaq, Oracle and Cisco Systems.

The licence is the only one to have been awarded at present, although a spokesman for NLIS said that as the project developed, other licences would be awarded.

Ultimately, the plan is for channel providers to compete, keeping costs down.

Birmingham law firm Wragge & Co is a member of one of the other consortia seeking a licence.

Sue Allen and Victoria MacCallum