The recent furore in the conveyancing market has set many solicitors on a collision course with lenders.
Times have been hard for conveyancers and, subsequently, introducers over the last five years and there is growing anger at the banks for reducing panels and putting further pressure on businesses that are perhaps already in danger of going under.
The reality that we all have to face up to, however, is that open panels are dead – a bold statement perhaps, but a realistic one nevertheless.
Put simply, the truth is that becoming a member of a lender’s panel is a bit of a black art these days.
The application process is pretty exhaustive and then there is all the red tape and bureaucracy of third-party validation that goes with it. Yet, this is the way of the world we live in now.
All the fraud and dodgy dealings that have gone on in the past, and still are to a degree, has cultivated a world where lenders are wary of whom they are dealing with and this caution has had a domino effect right the way down the food chain to the customer.
As property purchases get underway, quite often introducers only find out who the client’s solicitor is at the point of application, but if they are not mindful of whether that solicitor is on a lender’s panel at the outset, it has the potential to cause unnecessary expense and delay.
All well and good if the solicitor is on the lender’s panel, but if they aren’t, the client may have to dis-instruct and reappoint a firm that is or carry on regardless. Either way, it will almost certainly mean they have to pay out more.
Clearly, therefore, it is important for introducers to established this at the beginning or incur the wrath of their clients further down the line for not advising them properly.
In an ideal world, there would be a central database that introducers can access to ascertain if a solicitor is on a lender’s panel. This would provide a really useful service for the industry by offering time and money saving benefits for introducers and clients alike.
That said, being on a lender’s panel does not guarantee that a solicitor will do a good job.
Conveyancing is a specialist area and introducers who want a job done well should engage the services of a specialist. A good conveyancer will not only have the right knowledge and experience, but also the relevant due diligence and processes in place to ensure the transaction runs smoothly.
With every up there is a down and, in the case of restricted panels, it is the fact that certain areas may not have a local practice to represent purchasers. Fortunately, however, there are practices that are set up to deal with clients countrywide.
There is a belief that restricted panels will limit freedom of choice for customers, but customers deserve a good service and need protecting.
HSBC is trying to do this by ensuring that the legal firms that it deals with have been vetted and are trusted to do a good job. It is fair to say that its panel announcement could have been handled more sensitively and, in retrospect, I dare say HSBC would agree.
But in terms of the number of firms on its panel, it would be naive to think this figure has been plucked out of thin air. Someone, somewhere, will have done the research. Clients will not pay more to use HSBC’s panel either; competition will see to that.
Having fewer solicitors on lender panels will not sound the death knell for conveyancing. HSBC was not the first to restrict its panel and it won’t be the last.
Instead, over the longer term, there will be new ways of doing business.
Alternative Business Structures will open up the market by competing with conventional mortgage providers. New entrants will drive the sector in a new direction and technology will play a bigger role in the processing of mortgage services. As those processes become slicker, the customer will pay less administration costs.
Of course, these new contenders will require introducers to pass business their way and being able to speak with clients in their own home will provide the ideal platform for intermediaries to do just that. Naturally, what follows will be a need for legal services to handle the case.
Legal services are changing. There will be general practitioners and specialists. If it is specialist advice you are after, you will need to go to specialist solicitor and not one with a dilettantish approach to house purchasing, or any other discipline for that matter
Introducers need to be aware of this and only deal with solicitors that are on lenders’ panels, have due diligence in place and are firms that lenders – in whatever guise they come in – are happy to deal with.
