How can the industry make sure it remains sustainable, while providing an excellent, cost-effective service to consumers?
Giving their view in this week’s Market Watch are:
Paul Lockyer, head of Sesame Bankhall Legal Services, who argues the lack of action by the SRA and Law Society has made matters worse, but there are signs for optimism.
David Duckworth, partner at Optima Legal, who says firms’ survival relies on PII provider requirements and lenders’ panel decisions.
John Wotton, president of the Law Society, who believes its Conveyancing Quality Scheme has a key role to play in upping standards.
Paul Lockyer, head of Sesame Bankhall Legal Services
In April 2012, solicitors in the Assigned Risks Pool (ARP), the insurance body of last resort provided by the Solicitors Regulation Authority (SRA), will finally be forced out of the industry.
In my view, the SRA and Law Society have taken too little action, too late.
The lack of transparency shown by the SRA and Law Society over who is in the assigned risks pool has made the situation worse.
It has given the general public the impression that all solicitor practices are the same, which like many other professions is simply not the case.
This autumn, some good solicitor practices are once again likely to face huge hikes in their insurance premiums or may not be offered insurance at all.
If insurance costs are too high, they could go out of business and the chances of this will increase if they fall into the assigned risks pool.
The Law Society’s kite mark scheme, CQS, may help to raise conveyancing standards, but there is a question mark as to whether too many firms will attain it.
However, against this bleak picture, there are signs for optimism.
There are good, forward thinking conveyancing practices out there. These firms have invested in their technology and client care programmes.
They have dedicated case handlers available to deal with cases. They can process large volumes for lenders, whilst maintaining quality, and their risk mitigation programmes reduce the opportunity for fraud and negligence.
Once the chaff in the legal profession has been shed, I believe that good practices will gain more business from consumers, lenders, financial advisers and mortgage brokers.
The forward thinking firms have prepared themselves for the challenges ahead and are well placed to prosper.
David Duckworth, partner at Optima Legal
The conveyancing industry will survive – there is always going to be a need for skilled professionals to guide the public through the home moving process.
The question is more aptly put as: what will conveyancers have to do to survive?
Survival in this context goes beyond the obvious tasks of providing clients with an efficient, quality and value for money service.
Tomorrow’s successful conveyancer will have to ensure they present themselves as being an acceptable risk to professional indemnity insurers.
Otherwise, cover will not be available, either at a manageable cost or at all.
That will depend on a good claims record and a demonstration of systems and procedures that are up to dealing with cases safely. Not all of the many thousands still doing conveyancing will be able to meet these requirements.
If a firm can get past this hurdle, and for many they won’t, the other and growing hurdle for the survivors is “can we get or stay on lenders panels?” This is the key.
Lenders that wish for the status quo must be very thin on the ground.
They all see the need for significant reductions in their panels. The main reasons are worries over conveyancer’s negligence and susceptibility to fraud.
Add to that the clear direction from the FSA that lenders must “know” those whom they instruct and to whom they refer their customers.
Without an extensive and costly infrastructure how can lenders “know” their panel members?
It is questionable that they can meaningfully know 20 firms – 200 or even more is impossible.
However, the reality is that if the right firms are used (those that can safely handle volume, especially spikes and troughs) even the larger lenders will need no more than a manageable number.
If lenders see the need for panel reductions, what is holding them back as the PII and ARP debacle continues?
I suspect the answer will be “we don’t want to be the first to upset the high street practices, especially those in our locality or those who have accounts with us”.
I believe that some lenders will have their game plan ready even if it’s in the “confidential” file.
John Wotton, president of the Law Society
There may be parts of the conveyancing sector prepared to forgo high standards and a commitment to excellence in return for cost cutting and less robust services, but solicitors cannot.
There are many reasons why the Law Society introduced the Conveyancing Quality Scheme (CQS), but one of them was to guard against the dangers of negligence and fraud and to provide an efficient way for firms to provide a high quality service.
If CQS firms stop providing an excellent service as part of a cost-cutting exercise, they won’t remain a CQS-accredited firm.
That’s the point.
Consumers, lenders and insurers must be assured that a CQS firm will maintain high standards, which is why we have included an ongoing monitoring procedure and an annual renewal of accreditation.
These requirements, it must be remembered, are in addition to the already robust regulatory standards solicitors are governed by.
In the crowded conveyancing market, which is not limited to solicitors, there are varying degrees of quality. It is sometimes difficult for consumers to identify the difference in service levels from a bargain basement conveyancer to a regulated solicitor.
The difference can be vast and CQS plays an important role in educating consumers.
As well as playing its part in the collective effort to tackle fraud, core elements of the scheme include the CQS Client Care Charter and the new Law Society conveyancing protocol.
These specify time scales and make procedures easy for dealing with all of those involved in a transaction, including third parties such as estate agents.
It would be wrong to assume that ensuring high standards translates to services being more expensive.
What won’t be cut is a commitment to providing a quality service.
