Potential changes ahead for conveyancing firms: Bank of England’s Synchronisation Project explored

Members of the CA will have received a discussion paper in May focused on the Bank of England’s Synchronisation Project which might well have implications for the way firms currently send money for completions.

The project, if successful, will mean the update to the Bank’s Real Time Gross Settlement (RTGS) system, due at the end of 2025, could include programming for synchronised operators.

Synchronised operation allows for the replacement of thousands of transactions going back and forth between multiple parties, with a third-party synchronised operator model to work out what the net movement of money is and move that money themselves from one account to another.

Very basically, in our world on completion day the operator could work out what the net payment, for example, should be between Nationwide and Halifax for transactions, and only move that money rather than each individual transaction amount. No money will be held by the conveyancing firm on the client’s, or lender’s, behalf.

Firstly, and this should certainly be known far and wide as I know many conveyancing firms may be concerned by such a project – this has yet to receive the go-ahead from the Bank of England.

At the moment, it is just a project that awaits the green light, and then if it does get that agreement, those working on it have suggested it is unlikely to come to fruition much before the end of 2026/start of 2027.

On top of that, you need synchronisation operators to have their platforms/systems in place to be able to deliver on this. Talking to two potential operators at our most recent CA meetings, one of them, PEXA UK, pointed to the fact a similar project took five to six years to come to fruition in Australia, so again we must stress to all conveyancing firms this will certainly not be happening anytime soon.

However, that being said, it would certainly be remiss of us as a professional body not to highlight this project, to outline some of the potential consequences of such action, and to be the voice of our members when this is being discussed, because clearly the Bank of England, and any synchronisation operators, need to be fully aware of the unique aspect of property sale and transactions that will need to be addressed.

At this very early stage, it’s clear that one of the key concerns for firms is around their client account bank accounts, and the interest they earn from them. As we know, many firms active in conveyancing earn a not insubstantial amount of their firm’s ‘income’ from this, and clearly a future in which payment synchronisation happens would impact greatly on this.

Now, it should also be stated that conveyancing regulators are not enamoured of firms being run in such a way – securing most of their profit from interest received on client’s monies.

At the same CA meeting, the CLC outlined what a significant risk holding client monies is for conveyancing firms suggesting it was “not a sustainable business practice” while the SRA has predicted the cost of regulation for firms would “drop like a stone” if firms were not allowed to hold client money. Plus, we also heard from Howden who outlined the lower cost of PI insurance which is very likely to be the case if this huge potential fraud risk is removed.

So, there are a number of things to understand here and the positive news is that clearly firms are going to have a significant amount of time to prepare for any such significant change, plus it may also come with both regulatory and insurance cost-benefits if introduced.

However, we also understand this is likely to mean a real change for the way many firms currently work, and a source of income that many rely upon. We certainly believe it is one of the biggest changes coming down the track for conveyancing firms, even if many might be sceptical about the ability to get over some sizeable hurdles in order to deliver it, not least who is going to take on the synchronisation operator mantle.

While, as a number of members suggested at our session, there are more pressing issues for our sector that should take precedence – not least speeding up the home buying and selling process – and this might feel like a solution to a problem that does not exist, we should remember this is not necessarily a project designed for property transactions but all other manner of payments for assets, etc, and secondly, if it is going ahead then we certainly need to be putting our views across in order to get a process that is going to work for our industry, our firms and our clients.

In essence, for conveyancing firms at the moment, there is certainly the need to keep a watching brief on this, and perhaps to set in train some initial steps and ideas about what the impact might ultimately be and what to do to mitigate any negatives and benefit from the positives.

For our part, the CA will be involved with the Bank of England, the Synchronisation Project Team, and other stakeholders, to take into account the potential impact, consider the relevant consequences and ensure the voice of the profession is heard in the ongoing discussions which will be taking place.

As more information comes to light, and progress is potentially made, we’ll be returning to this issue multiple times in order to make sure our members are completely in the loop and they can do everything to ensure they are not adversely impacted by any change.

Beth Rudolf is Director of Delivery at the Conveyancing Association (CA)