Lloyds Banking Group to cut solicitor panel
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Lloyds Banking Group intends to remove conveyancing firms from its panel which have conducted a low volume of transactions.
Lloyds Banking Group, which includes Lloyds TSB, Halifax, Bank of Scotland, BM Solutions and Cheltenham & Gloucester has told the Law Society that it also intends to change its residential mortgage panel membership criteria.
Lloyds will send letters to firms who are affected by this over the course of the next month.
The bank has also confirmed:
- Regardless of this review its panels will remain open to new applicants.
- New applicants will have to meet the volume threshold within twelve months of membership.
- Firms which are to be removed from panels will still be entitled to carry out pipeline cases.
Following this action, Lloyds will look to further rationalise during the remainder of 2010 using a risk based model which would assess firms individually.
Although the low volume criteria will be applied across the board, it will look at each firm on a case by case basis to ensure that, for example in rural areas there is still access to solicitors’ advice and representation is maintained.
Firms who receive a letter from Lloyds will be provided with a contact telephone number to use to raise any issues.
The Law Society says it is disappointed with the decision and will continue to engage with the Council of Mortgage Lenders, Building Societies Association and individual lenders, encouraging them to recognise that across the board cuts to panels based on a ‘one size fits all’ model is not the best way to address lenders’ concerns in the current economic climate.
David Duckworth, partner at solicitors, Optima Legal, says: “Lloyd’s announcement that they are to take steps to significantly reduce their panel of solicitors is not unexpected and inevitably other lenders to the residential conveyancing market will follow suit. This decision is to be applauded as it will no doubt do much to improve the protection of home-movers, as well as minimise the risk to lenders.
“Mortgage fraud has reached enormous proportions and, reportedly, currently exceeds £1bn per year. It is largely perpetrated through the legal and related processes which conveyancers either control or facilitate.
“Many conveyancers have failed to ensure training and procedures within their practices are adequate to counter this threat, with increasingly alarming and costly consequences. The effects are not only felt by lenders, but often by the home-mover.
“Home-movers are now far more likely to take the time to research firms and increasingly look for reliability and efficiency above all else. The appointment of their conveyancer to a lender’s panel is a good starting point for making an assessment on who to use.”
Readers' comments (9)
Danny Lovey | 28 Jul 2010 3:57 pm
What a lot of tosh....
If Lloyds have a problem with a particular solicitor or conveyancer then by all means remove them.This Lloyds plan will lead to a restriction on choice of a solicitor by the public by stealth. Lloyds should know that it is not the solicitors choice of who the borrower has a mortgage with - a solictor is presented with a fait accompli, and the volume of business a solicitor has done with a member of LLoyds group has nothing to do with a solicitors abilty to be good at doing the conveyancing.
It seems LLoyds are only interested in volume not quality which can come just as good, if not better from a smaller solicitor, but at a lower volume.
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Anonymous | 28 Jul 2010 4:44 pm
Will the FSA step in here, as Danny Lovey's comment suggests, this is a restriction of choice and therefore must contravene the TCF guidelines issued by the FSA.
It does not surprise me that a large conveyancing firm like Optima will back it as they will see increased volumes for their conveyancing "factory" environment. At least Optima are one of the better versions of this, what happens when the others start taking this market share? The servicee delivered by these large units is often poor to say the least!
Just as a client has the right to choose who gives them advice regarding their finance they should have the right to choose who gives them legal advice, especially when dealing with the largest debt they are likley to take on in their life!
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Stephen Foden | 28 Jul 2010 4:45 pm
Dear Sirs,
I am one of two directors in a rural based legal practice.
The directors have between us some 40 years of conveyancing experience.
We do not undertake volume conveyancing work instead we concentrate on providing a high qulaity cost effective service to a discerning customer base who demand and receive a personal service.
We have risk management systems in place are working towards the Lexel Quality Standard and our IT systems are better than most.
There are a substantial number of volume providers who offer a poor quality of service often undertaken by unqualified staff.
It is often music to our ears to know of such a firm acting when we have a particularly difficult property with title defects because invariably they are never highlighted by the volume providers.
Such defcts are accepted with out enquiry both to the cost of the homeowner and ultimately the lender
Fraud is a problem for all of us not just the low volume providers but also the high volume providers.
if as we do, you know your clients and take active steps to know our clients and their backgrounds the likelihood of fraud is much reduced. The volume providers simply do not have the time or luxury of undertaking such protective steps.
The comment that a practice such as ours is a greater risk than any others is misguided. We have a minimum professional indemnity cover of £3,000,000.00 and the compensation fund behind us.
We provide a good quality of work at sensible prices.
The risk to the home owner is that there will only be big practices in the future restricting the quality of servioce on offer and access to legal services.
We are very privileged to be in the position in a rural practice where our client's like the personal attention and regretably the decision made by lenders to make decisions on a volume basis will affect not only legal service providers but also their customers in the long term.
It is misguided to suggest that a practice such as mine can offer a lesser service to a lender or lesser protection than a volume business - indeed I would suggest the contrary to be the case.
Stephen Foden
Fodens Solicitors
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Anonymous | 29 Jul 2010 10:30 am
Come on see the wood for trees. The banks have successfully cut out brokers from the process and solcititors will be next. It won't be long before getting that cheap direct deal consumers will have to take the bank account, buildings insurance and the banks approved solicitors to qualify for the deal. The solicitors will be the large panel type firms who will pay a kick back.
These lenders are now looking at the supermarket business model of the one stop shop for everything in the housebuying process. Small conveyancing firms will go the way of the mortgage broker.
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Solicitor Liverpool | 29 Jul 2010 4:14 pm
A step in the wrong direction for conveyancing. High volume equals low fees, high risk and poor service; Low volume equals higher fees, lower risk and better service.
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Anonymous | 30 Jul 2010 3:54 pm
As a recent customer who decided to take the banks preferred solicitor - against the advice of the banks own mortgage adviser - I have to say that the service and advice I received was pathetic.
After 3 conversations with a cooped up Hen in an office in Glasgow I changed to a local Solicitor that understood the market place and saved me hours of time and potentially money.
How can this be treating customers fairly? What will the Government do - nothing as we the broker and the end consumer go back to RIP OFF BRITAIN!
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Anonymous | 5 Aug 2010 5:11 pm
A spokesperson for Lloyds Banking Group has stated (as reported by Law Society Gazette) that a condition requiring all firms on its conveyancing panel to act on a regular basis ensures that all firms on the panel are fully familiar with the group's policies and processes. Do you agree that the conclusion to be drawn by implication from this published statement is that firms which fall below the specific numerical measure are not familiar with the bank's processes?
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Anonymous | 6 Aug 2010 4:00 pm
The rather odd thing is that LLoyds Bank Group are refusing to tell the Law Society or any of the firms removed from their panel what the new threshold is or how many firms they have removed from their conveyancing panel. Why on earth do they feel the need to keep this secret?
Is Lloyds Banking Group applying the same threshold to all firms no matter what the size of the firm and no matter how many conveyancers they employ? It is to be hoped that they are not doing so particularly if the concern is whether the individual dealing with a matter has much experience of Lloyds Bank Group Mortgages. Clearly smaller firms will deal with a lower overall volume of LLoyds Bank Group mortgages than larger firms - but the individuals within the small firms are none-the-less likely to be experienced property lawyers. Property lawyers in smaller firms tend to have a more personal knowledge of each transaction they handle than would be the case with many of the large factory conveyancing style organisations.
Smaller firms are well placed to offer clients a more personal service, and much more likely to see their clients to face - a factor which lenders troubled by the spectre of mortgage fraud should value.
Firms dealing with high volumes of transactions often do so at a distance - they never meet their clients - they can not see whether the photograph on a copy passport is really the photograph of the person who has instructed them in a particular purchase and mortgage transaction. If a mortgage deed is not signed in the presence of the lawyer dealing with the mortgage transaction they can not really know who has signed the mortgage deed. The problem with mortgage fraud is that we all pay for it in the end.
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Grey Haired Underwriter | 9 Aug 2010 2:05 pm
Can we please stop having all this tosh about TCF. It does not mean treating everybody the same.
And Danny the customer can always and has always been able to choose who they want to represent them in conveying the mortgage. The lender has the same right about who they use to convey the mortgage. The fact that the lender tries to use the same lawyer as the customer is a matter of goodwill and to prevent undue cost for the customer. There was a trend in the 1980's for people to try doing their own conveyancing but do you think that the lnder was going to use an amateur to convey the mortgage. There was a whole trend of fraud perpetuated by sole practitioners before the 1990s crash and that's why they are not so popular with lenders these days. The fact of the matter is that the lender has more experience of the legal profession than the borrower and is choosing to use that experience. Simples
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