The Law Society claim that conveyancing panel memberships, and the increasingly demanding standards needed to remain a panel member, reduce consumer choice, push-up consumer fees and should be investigated further.
The Law Society has stated: “Where consumers wish to instruct a solicitor of their choice they may do so. However, if that solicitor’s firm is not a member of the lender’s panel the consumer will incur additional costs; the cost of their own representation and that of the lenders. This additional cost means that consumers usually choose a solicitor on the lender’s panel. Firms who are not on the panel lose business and consumers lose their right to instruct a solicitor of their choice.
“The strict panel criteria and lenders’ policy on separate representation has the effect of ultimately reducing the number of solicitor’s firms on lender panels. This has repercussions for the wider mortgages market and contribute to it working poorly for consumers as they have a reduced choice in the solicitor they can instruct. In our view, the detriment to consumers, and by extension the same caused to law firms excluded from panels, and the impact on the mortgages market caused by lenders’ approach to panel management merits further investigation by the FCA. We are happy to meet with the FCA to discuss these matters further.”
In recent years lenders have dramatically reduced the size of their conveyancing panels, whilst also increasing the requirements that would enable a company to retain their position on the panel. To become a member of The Quality Conveyancing Scheme, a legal services company must have four partners to be considered members. Is this an adequate standard of quality?
Additionally, some lenders may require a law firm to use lender accredited insurers to provide a firm with their professional indemnity cover. These stipulations are deemed as unfairly excluding perfectly professional conveyancing services and reducing the choice for consumers.
Opting to use a solicitor that is not on a lender conveyancing panel can also increase the fees a consumer would need to pay as the home buyer has to pay for their own representation and the lender’s representation.
The Law Society concludes that many first-time buyers will be confused and completely oblivious to any additional charges: “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 Law Society are calling for a review into lender conveyancing panels, urging them to become a lot more transparent as to reasons why some firms are deemed unacceptable. Without this clarity, firms are unable to meet the necessary criteria and these limited choices will continue to increase fees and delay the home buying process.
Has your conveyancing business been adversely affected by lender conveyancing panels? Should there be more clarity into panel restrictions and obligations?