Last month, the Law Society of England and Wales announced that it would launch a conveyancing quality scheme that will accredit individual firms in January.
The aim is to demonstrate high-quality standards among conveyancers and improve lender and consumer confidence in the integrity of services provided by the profession.
Firms qualifying for the scheme will need to comply with higher standards covering the competence and probity of staff, the financial standing of the firm, supervision of staff and administrative processes.
Lenders will continue to control membership of the individual panels.
In its latest issue of News & Views, the CML says if the new scheme is seen as robust by lenders, many are likely to require CQS accreditation as a minimum condition for panel membership.
But it says: “We are continuing to emphasise that The Law Society needs to ensure that the scheme has sufficient resources and rigour to ensure it is credible to lenders.
“It is not simply a matter of ensuring records are up-to-date, but also of acting to prevent entry to the CQS to uphold standards and to ensure removal of accreditation when problems are identified in future.”
Also underway is a review by the Solicitors Regulation Authority on professional indemnity insurance.
The SRA is reviewing arrangements for professional indemnity insurance and compensation should a solicitor stop practising as a result of negligence or fraud.
Although the review is still in its early stages, there have been indications that the regulatory minimum standards may be changed and potentially will not include cover for lenders as commercial clients.
That would leave solicitors free to choose whether or not to take out separate PII covering potential losses by lenders.
The CML says: “In reality, we would expect lenders to require effective professional indemnity insurance if they are to keep a conveyancing firm on their panel.
“Lenders will therefore demand greater transparency about firms’ insurance arrangements and will be more active in supervising and monitoring their activity to ensure professional indemnity insurance will be sufficient to cover lenders’ risks.”
The SRA is planning to publish a paper in December, with a three-month consultation exercise. This has the potential to restructure conveyancing arrangements in England and Wales.
The trade body says the responsibilities of solicitors for holding, releasing and transferring funds leaves lenders exposed to the risk of fraud by unscrupulous practitioners who collect the mortgage monies but do not pass them on.
In says: “Introducing an alternative method of transferring funds between banks could reduce exposure to this risk and safeguard firms from losses. But it would require fundamental changes to the conveyancing process. We are investigating the possibility for greater use of electronic transfers between financial institutions.”