After an unsettling period for conveyancers when lenders began a process of culling their panels, we now have one bank announcing a membership fee for those who want to remain on the panel.
Santander is inviting new members to join its residential mortgages conveyancing panel for a fee of £199 and existing members are required to pay an annual fee of £99, which covers the cost of the compliance check.
This is an interesting development and it could be the shape of things to come.
The credit crunch and ensuing financial crisis brought fresh scrutiny to the conveyancing sector and lenders understandably took steps to cut costs and minimise the risk of mortgage fraud.
Since then, the industry has emotively debated this step.
The Conveyancing Association, which represents the majority of the UK’s leading conveyancing firms including solicitors and licensed conveyancers, believes that our industry needs to recognise that we do not have a divine right to be on lenders’ panels.
Therefore, we need to accept that lenders must manage their risks to reduce fraud.
There is no doubt that this trend will continue with ‘occasional’ conveyancers looking to withdraw from the market or at least from acting for lenders as well as their clients.
The Law Society has made a laudable effort, with the Conveyancing Quality Scheme (CQS), to address concerns about conveyancers and formalise the professionalisation of the sector.
However, for some in the mortgage industry, conveyancers need to look beyond this.
The FSA published its review of mortgage fraud earlier in the summer and identified several examples of good practice lenders should adopt.
Santander has carried out its own panel review and concluded that it can spare more conveyancers the pain of removal by introducing a charging scheme.
While some may be concerned over the impact that the proposed amendments will have on smaller firms, those that are serious about conveyancing will probably be prepared to take these measures.
To be fair to the bank, Santander is making no profit from the new arrangement and there is no scope for the fee to be passed on to the customer.
The fact is that panels are expensive to manage and most firms will not sincerely object to what is a relatively modest charge to defray the expense.
As long as Santander maintains the non-profit stance of the scheme, then I am sure that conveyancers will appreciate the opportunity to maintain and even regain a place on the panel of a major lender.
While many firms will balk at the expense out of principle, they should remember that the decline in open panels is unlikely to be reversed, so a constructive solution such as Santander’s proposal should be welcomed.
We will, of course, be keen to see details of what is involved in the compliance check and just how onerous it will be on firms compared to existing accreditation schemes.
Conveyancing Association members undertake to work to best practice, which entails much more than what CQS covers, including the use of IT, risk management and fraud prevention measures, as well as a commitment to customer service.
We understand that First Title is providing its web-based Lender Lawyer Connect platform for Santander and we are aware of at least one other company that is developing a similar system of compliance audits for another high street lender.
Is this the shape of things to come?
It certainly looks like lenders will be tightening up on their auditing and compliance processes, and this can be no bad thing for our industry.
Some voices have positioned this as a grand battle between lenders and conveyancers, but such simplifications can be an unproductive and inaccurate representation.
My view is that implementing auditing processes to restrict panels is a rational response by lenders to what they judge to be an increasing problem.
It is up to those firms that are serious about conveyancing to work with lenders to demonstrate they can readily meet their requirements.
The Law Society called for a “shared approach” that would “diminish the need for each lender to individually verify a common group of suppliers”.
This would be an ideal solution, but it is not one that currently exists, even with the CQS.
The Conveyancing Association is currently exploring avenues whereby a serious conveyancer could demonstrate to all their panels that they make the grade.
However, we support the trend for tighter scrutiny of firms on lenders’ panels and welcome the unilateral action being taken by Santander as part of the search for a satisfactory and equitable solution.
The next few months will be interesting to watch as any move by a lender can sometimes cause ripples across the sector with others following suit.
I think we would be naive to think we can prevent such changes occurring.
It is not so much a case of watch this space, but taking the first steps to working with lenders to improve the situation for all.
