Having read the ‘Solution to the insurance crisis’ letter (1 October) it occurs to me that, if those solicitors who actually meet their conveyancing clients (and there are still many of us), forwarded the copy passport and driving licence or other ID documentation to the lender - either at the outset or with the certificate of title - they could be checked against the ID taken by the lender or its broker. This would pass the responsibility for identity back to the lender. If the lender accepts the ID presented by the solicitor and releases funds, they would be accepting the risk and would be forced to tighten up their own procedures.
Teresa Waters, managing partner, Waters & Co, Coleshill, Birmingham
The Law Society needs to act fast to avoid a repeat of headlines such as ‘500 firms fall into assigned risk pool’ (see  Gazette, 1 October, 1) in twelve months’ time. I do not blame the insurance companies for the increased level of premiums experienced this year. As a profession we do not need to be lobbying the ABI to get their members to reduce their premiums. Instead we should working with them with a view to reducing our exposure to litigation, a mutually beneficial goal.
From speaking to brokers and underwriters over the last six to eight weeks it is clear that conveyancing is the new ‘high risk’ service our profession provides. It was not so long ago that personal injury was ‘high risk’. I understand from those brokers I have spoken to that personal injury firms have changed the way they work and, in consequence, are having fewer claims and one would assume lower premiums.
I was pleased to read in the Gazette a letter from Alan Tunkel (1 October) who, as a practising barrister specialising in mortgage fraud, recognises that our profession needs to ‘limit or exclude our liability to mortgage lenders’. As Mr Tunkel acknowledges individual solicitors are not in a position to do this without the fear of removal from lenders’ panels. Is not the alternative for the Law Society to seek a review of Rule 3. Surely, there is now a conflict of interest for us in acting for both lender and borrower. We are already prohibited for acting for both parties for non-standard mortgages. The conflict, in part, is the financial pressure this joint role is putting on firms when PII renewal comes around. More importantly, the conflict is present in every transaction. In addition to checking title documents and providing security for the lender, we are required to make checks of our borrower clients, in accordance with the CML handbook and under rule 3.19 of the Solicitors Practice Rules, on behalf of the mortgage company. We are leaving ourselves open to high-risk, high-value litigation for very little financial reward.
How to rectify? If the exception at Rule 3.17 is removed, the mortgage companies would have to have separate representation. Surely this is best for all concerned. The lenders will be able to implement their own procedures for checks, either in house or with their own firm of solicitors/conveyancers, thereby reducing mortgage fraud and other potential claims. High street practices will not lose clients as the borrowers/purchasers will still need separate representation. Larger practices will be able to compete for work on behalf of the mortgage companies. And, in theory, there will be fewer claims and therefore lower PII premiums. The downside is that it may lengthen transactions. But I’m sure both lender and borrower clients would rather their transaction completed properly as opposed to quickly.
The only alternative is for us to start charging considerably more when acting for both lender and borrower. Unfortunately, a cost borne by our borrower client not the lender.
It is time to address this issue before more firms fall by the wayside. Fewer high street practices affects the image of our entire profession. I suggest the Law Society addresses this jointly with the Council of Licensed Conveyancers, whose members’ PII renewals are due next June.
Partner, small multi-disciplinary west country firm (full details provided)
As a high-street practitioner for 37 years I have never known such a ridiculous situation as the one that faces the profession over PII renewal.
The Law Society has got us all into this mess and we are losing faith in it looking after our interests.
1. The deadline 30.9.09 gives such power to the insurance companies. Claims made which never progress and become dormant have a potential figure put against the claim which can hang around for years and which insurers use to jack up premiums.
2. There is no real competition among insurers.
3. Referral fees (bribes) have facilitated mortgage fraud and loss of independence. Estate agents, mortgage brokers, developers and others have such a grasp over the conveyancing business that solicitors have taken risks to please their 'masters'. If a solicitor does not please his 'master' he loses the business.
4. Conveyancing by large firms at a distance with unqualified staff never meeting the client has also led to the problems we face.
5. How can firms in a recession face such gigantic increases in premium? Turnover goes down, premiums increase.
6. Which firms have made the mistakes that are costing us dearly? Firms I know in Leicester run a mile from any transaction smelling of fraud. On a sale of a house there is little chance of a mistake being made and similarly on a registered purchase little should go wrong. Lack of documents is covered by conveyancing indemnity policies.
The solution is for each transaction to be covered individually on a case-by-case basis. The big boys would pay more and the small boys would pay less. We could live with a fee of £40 for each transaction.
Andrew Bingham, Bingham & Co, Leicester