CML calls for solicitor fraud to be tackled
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The Council of Mortgage Lenders is calling for a comprehensive review of the way solicitors are regulated, to help combat fraudulent activity.
It opposes proposals for reform being put forward by the Solicitors Regulation Authority.
The SRA is campaigning for a principles-based approach to regulation but the CML does not believe that this will address lenders’ concerns and help restore confidence in the conveyancing services provided by solicitors.
Many lenders currently choose to appoint solicitors to a panel of firms that they will use to provide conveyancing services.
But the CML says if confidence in the regulation of solicitors is not restored, lenders are likely to scale down their existing panels and not accept new firms on to them until they have a proven track record.
It says there must be closer scrutiny of firms to reduce the risks to lenders.
In the latest issue of its News & Views it says it is concerned about the amount of fraud involving solicitors and the scale of professional negligence that has emerged in recent years.
It says: “We accept the most solicitors provide a competent, honest and reliable service, and many of the better firms are associate members of the CML.
“But the reputation of the industry as a whole has been tarnished by a minority of firms that do not uphold the same standards.
“A comprehensive review is needed to ensure that the industry is effectively regulated in the future and that unscrupulous individuals and firms are prevented from causing detriment to clients.”
Its says lenders must be confident that firms have adequate professional indemnity insurance, and that there is a reliable compensation fund for commercial clients who suffer loss as a result of fraudulent behaviour.
Readers' comments (2)
salil chaudhari | 16 Mar 2010 3:09 pm
There is always going to be a small minority of such firm of solicitors. Although I agree in principle that there should be 0% fraud, it is clearly not cost effective to eliminate it altogether.If that was to go ahead the SRA would increase their fees to pay for it similar to what the FSA are doing. I doubt if that will go down well with the majority of excellent firms of solicitors.As for lenders, they are in the business of assessing risk and therefore they should not have any problem filtering out unsuitable firms.
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Bob Bhalla | 17 Mar 2010 11:55 am
It is true a minority of firms are tarnishig the rest of us but that is surely the same in any industry, not sure this warrants a change to regulation. Additionally lenders have to decide how they want to move forward. We have had discussions with lenders about a 'preferred' solcitor panel arrangement or even acting for the lender whislt the purchaser is separately represented. However some lenders are reluctant because of increased costs and logistics etc. Thus they need to decide if they accept the current arrangment where the vendor/purchaser chooses his own solicitor or a different regime where the rules and pricing change. We can then work with them to acheive this to the better for all.
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