Julie West, a solicitor based in Surrey, told Mortgage Solutions that she had been removed from a number of lenders’ panels in recent months and that her business was now at risk.
“This has dramatically affected my business. In September I was taken off the panel for Nationwide, just after Christmas it was Lloyds and ING have followed suit.”
West has worked in the industry for 12 years without a single claim against her and said the removal from the ING panel hurt the most. She says she received no notification from the lender and that the removal only became apparent midway through a case.
“We were some way down the line and they just removed us from the panel. I was active on a transaction quite happily and then they said that not only would they not instruct me, they would not allow me to work for the buyer either.
“This is turning me from a profitable small firm into one that is loss making.”
ING confirmed to Mortgage Solutions that firms must meet the following criteria to remain on its panel:
• be registered with the Solicitors Regulation Authority or the Council of Licensed Conveyancers
• have achieved the Law Society of England & Wales CQS accreditation if they are a sole practitioner
• evidence at least £2m Professional Indemnity Insurance cover
• be able to evidence they have been consistently completing 12 or more purchase transactions per month in the last 12 months which will be verified by using Land Registry data
ING added: “If firms don’t meet those requirements they will fall off the panel.”
It is the final rule which has caught out West and appears to be discriminating against smaller firms in general. Rob Hailstone of the Bold Legal Group is leading a campaign against mass legal firm culls by lenders.
Following changes to HSBC’s panel at the start of last year, he collected over 2,000 signatures against the decision and forced the lender to relax its rules.
Lenders may be using different sets of criteria, but most will also be driving down costs and protecting commercial relationships, often at the expense of consumer choice and service. In many cases, the battle against fraud is simply a useful cover.
Hailstone said this is still leaving law firms themselves in an impossible situation.
“The ING move simply confirmed that we don’t know what a lender is going to do. At least once a week I’ll have an email from a conveyancer which has been removed from a panel but we don’t know why. It’s like a secret society. There’s no thought or logic behind these decisions.”
Hailstone said that completing more than a dozen purchases each month was too much for small firms and that they were being unfairly impacted.
“For a lot of smaller firms a dozen cases a month is a good figure and will result in a good income. Yet these are the firms that are being thrown off panels, often with no notice at all.
“The lenders need to come clean and come together to work this out. I don’t think they talk to each other enough and they certainly don’t share data enough. We need to find a common ground.”
Mortgage Solutions has spoken to a number of firms which did not wish to be named and has seen documentation from lenders such as Nationwide, ING Direct, Lloyds Banking Group, Santander and Coventry Building Society about firms with small caseloads being removed from panels.
Both West and Hailstone say that panel removals can create the impression that a firm is at risk or offers poor quality service.
“This behaviour can even make a client think that your firm is dodgy or more vulnerable to fraud. Lawyer firms who occasionally dabble in this sector are being ruled out for being high risk,” said Hailstone.
“But the service at some of the bigger firms has always been a complete nightmare and is not the type of service you want to see in our industry.”
West adds: “They say the restricted panels will help fight fraud but fraud is still rising. It is unfair on small law firms and unfair on the consumer who has a restricted choice. Banks seem to be prompting people to choose firms based on price but this just drives everything down to the bottom.
“Day after day we take on business then the client provider won’t instruct us. It makes us sound like we’re not good enough when in fact I think we offer a better service.
“I have an unblemished record and have never had an incidence of fraud.
“I deal with customers who have popped in to see the solicitor up the road and I have to look these people in the eye. Some of the volume firms don’t even meet clients, how are they to judge the risk?”