Chancery Lane says strict panel membership criteria stifle consumer choice and warrant further investigation.
Restrictive policies on which solicitor firms can join lenders' conveyancing panels and a lack of transparency over why some practices are rejected suggest the mortgages market is not working well, the Law Society has told City watchdogs. Chancery Lane has called on the Financial Conduct Authority, which has been consulting on remedies to improve the market, to conduct a fresh investigation into lender attitudes.
Responding to the FCA's Mortgages Market Study interim report, the Society notes that buying a house and taking out a mortgage represents one of the largest financial transactions consumers will undertake. However, restrictions on which firms can join a lender's panel limits consumer choice.
The Society says a lack of transparency surrounding the reasons why firms are rejected from a panel is unhelpful. Without feedback, firms are unable to implement the changes necessary for them to qualify.
Some lenders only accept firms that complete a certain volume of transactions, freezing out sole practitioners and smaller firms. The Society says lenders should be focusing on quality instead.
Homebuyers can instruct a solicitor who is not on the firm's panel. However, this incurs additional costs as the homebuyer has to pay for their own representation and the lender's representation. The Society adds that many first-time buyers will be unaware of the additional cost: 'Many consumers instruct solicitors who have served them previously or have been recommended by a friend or family. When consumers learn of the additional costs of separate representation they are often under pressure to decide whether to continue with their chosen solicitor or one from the panel.'
The FCA is expected to publish its final report this year.