Lloyds Banking Group says fraud played a part in its decision to cut its solicitor panel across all of its brands.
Mortgage Strategy understands the bank is looking to cut from its panel all solicitors that do not submit at least one case a month.
A spokeswoman for Lloyds says solicitors that do not do large volumes of business with the lender can’t be up-to-date with its rules and guidelines.
She says: “This decision allows us to manage our panel better and ensure the firms on it are up-to-date with policies and procedures, and fraud comes into that.”
But the bank says its panel is still open to applicants as long as they can meet its volume demands.
Firms that are to be removed from its solicitor panel will still be entitled to carry out pipeline cases.
Although the volume criteria will be applied across the board Lloyds says it will look at each firm on a case-by-case basis to ensure, for example, that in rural areas there is still access to advice.
The Law Society says it will engage with the Council of Mortgage Lenders, the Building Societies Association and individual lenders to encourage them to see that cutting panels in this way is not the best way to address concerns.
Alan Cleary, managing director of Precise Mortgages, says: “I sympathise with smaller solicitors but no lender is going to continue using them. I think a lot of lenders would deal with smaller firms if the Law Society offered an indemnity against fraud.”
David Duckworth, partner at solicitors Optima Legal, says that Lloyd’s decision is not unexpected and other lenders will follow suit.
He says: “This decision will do much to improve protection for home movers as well as minimise risk to lenders.
“Mortgage fraud has reached huge proportions and reportedly exceeds £1bn per year. It is largely perpetrated through the processes conveyancers either control or facilitate.”
He adds that many conveyancers have failed to ensure their procedures are adequate to counter the threat of fraud.