Tuesday 16 November 2010
Law Society Conveyancing Quality Scheme
In our last posting on the blog we asked members to provide feedback on the proposed Scheme. Here it is:-
Concerns about the CML and the ABI
"In the November edition of its "News & Views" newsletter the CML commented upon the Law Society Conveyancing Quality Scheme. The following comments were made:-
"Lenders will continue to control membership of the individual panels of conveyancers that they are prepared to use. But if the new scheme is seen as robust by lenders, many are likely to require CQS accreditation as a minimum condition for panel membership"
It follows that membership of the Scheme cannot be seen as a universal panacea for conveyancers and, in particular, High Street practices. If the CML is implicitly looking at additional membership requirements over and above that of scheme membership then they should put their cards on the table and let the profession know what the Agenda is. Many fear that with the advent of ABS then we will simply see the financial services sector absorb conveyancing as an activity.
There are also concerns around arrangements for professional indemnity insurance with the ABI putting pressure on the SRA to relax the stringent terms of the master policy wording so as to allow claims declinature in cases of fraud, failure to pay premium and, potentially, failure to disclose material facts. There is also pressure to either restrict or limit cover for lenders. Quite clearly the CML is concerned about this and has stated:-
" … 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 they take out separate professional indemnity insurance covering potential losses by lenders. 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."
Taken together all this rather smacks of the tail wagging the dog. It is meant to be the SRA that is regulating the Solicitors profession rather than the Financial Services Sector dictating terms.
According to the CML the SRA is planning to publish a paper in December with a three month consultation exercise and "this has the potential to restructure fundamentally conveyancing arrangements in England and Wales.
More than ever it is important that all members of the Solicitors profession take an interest in the consultations that are on-going and make their voices heard
If we are not careful then I can envision a time when there are only half a dozen or so large "factory" units undertaking conveyancing in England and Wales."
(Senior Partner medium size Lexcel accredited firm)
"Lenders will continue to control membership of the individual panels of conveyancers that they are prepared to use. But if the new scheme is seen as robust by lenders, many are likely to require CQS accreditation as a minimum condition for panel membership"
It follows that membership of the Scheme cannot be seen as a universal panacea for conveyancers and, in particular, High Street practices. If the CML is implicitly looking at additional membership requirements over and above that of scheme membership then they should put their cards on the table and let the profession know what the Agenda is. Many fear that with the advent of ABS then we will simply see the financial services sector absorb conveyancing as an activity.
There are also concerns around arrangements for professional indemnity insurance with the ABI putting pressure on the SRA to relax the stringent terms of the master policy wording so as to allow claims declinature in cases of fraud, failure to pay premium and, potentially, failure to disclose material facts. There is also pressure to either restrict or limit cover for lenders. Quite clearly the CML is concerned about this and has stated:-
" … 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 they take out separate professional indemnity insurance covering potential losses by lenders. 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."
Taken together all this rather smacks of the tail wagging the dog. It is meant to be the SRA that is regulating the Solicitors profession rather than the Financial Services Sector dictating terms.
According to the CML the SRA is planning to publish a paper in December with a three month consultation exercise and "this has the potential to restructure fundamentally conveyancing arrangements in England and Wales.
More than ever it is important that all members of the Solicitors profession take an interest in the consultations that are on-going and make their voices heard
If we are not careful then I can envision a time when there are only half a dozen or so large "factory" units undertaking conveyancing in England and Wales."
(Senior Partner medium size Lexcel accredited firm)
“I'm all in favour of something being done to tighten up on fraudulent conveyancers and to promote best practice to consumers but in the current economic climate, a balance has to be struck between achieving this with a light, practical touch and making it effective. I suspect all but the biggest firms will find the proposed scheme unworkable and expensive and I am not sure what some of the proposals really do in terms of safeguards. The scheme appears rushed and to have come in with little or no consultation. I have certainly heard nothing about it either from other firms or the regulators, ILEX etc.
In particular, I do not see that employers have a right to carry out (nor necessarily the ability to interpret) credit checks on all employees who might conceivably be involved in conveyancing. I think an employee has the right to consider their personal finances just that, personal. I can see the value of CRB checks but am concerned about the length of time these are likely to take.
In my own firm, the SRO would be our senior partner, a litigator who has no direct involvement in the property department. I cannot see the value in obtaining such detailed information on him nor in making him complete the application form when the head of conveyancing's information is surely more important and relevant. If this is not a partner and one must be involved, one who works in property would surely be a more sensible choice.
Whilst I can see why a requirement to report on complaints whether dealt with internally or externally has been included, I cannot see the value in a separate complaints systems with all the cost and bureaucracy this entails when there are perfectly good existing processes for external complaints handling by regulators. I also think a dual system is going to be confusing for the consumer. Would it not be simpler to come to an arrangement with third parties such as lenders, the Land Registry, the regulators to report firms of concern, panel terminations etc and for those running the scheme then to visit and monitor those firms rather than relying on firms to "own up"?
When do we get to see and be consulted on proposed changes to the conveyancing protocol and the proposed client service charter. Is a new service charter really necessary given the existing raft of consumer led practice and regulation?
What happens when we are dealing with a firm which does not subscribe to the scheme?
I suspect many firms will find it difficult to easily provide the level of transactional information being requested. I doubt they separately record which matters go abortive and which do not, which are buy to let and which are not, whether they have ever dealt with a lender who does not subscribe to the CML/BSA (most high street firms will have dealt with the odd private charge but I doubt they will have separately recorded this). Although firms could go through individual files, this would be a huge task and I doubt the data would then be much more than a best guess. If firms are to go to these lengths to provide the information, there ought to a clear understanding of the use to which this information will be put and why it is required. I personally cannot see that knowing how many transactions a firm has carried out and its value will provide any indication of the risk that firm poses and am concerned as to what use (and whether the information provided will be shared with any other organisation or body) it will be put. Small firms carrying out low volumes may be doing a fantastic, compliant job for clients including lenders, large volume firms may be doing high numbers with inexperienced staff. Given the threat posed by corporates such as Tesco or lenders coming into the market in future poses, this is a real and legitimate worry, particularly for small high street practices. I definitely cannot see what relevance Legal Aid work has to a conveyancing scheme and cannot understand why this is being requested.
Surely the bigger problem here is that a conveyancer's only real safeguard is checking the details of whatever firm they are dealing with on the SRA/CLC websites. I have contacted the fraud section of the SRA on numerous occasions in relation to firms whose branches or details are incorrectly shown or have not been updated quickly only to be told that no information with regard to any applications being processed can be given and effectively, they cannot help me identify whether I am dealing with a bogus firm, a real firm with a bogus branch or one under investigation. This leaves decent conveyancers trying to do the right thing horribly exposed. Do you tell your clients that you cannot proceed unless the other side change solicitors effectively putting the transaction at risk when in fact the SRA may just not have updated their details yet, do you ask the other firm and have a good fraudster spin a compelling tale or do you go ahead and hope for the best or that by the time you get to exchange, the website might be up to date? I don't see that the proposed scheme will help with this dilemma. What is needed is some sort of confidential advice line where you can find out if another firm is under investigation, subject to possible intervention, has recently opened or closed a branch office etc.”
Head of Conveyancing – regional firm
In particular, I do not see that employers have a right to carry out (nor necessarily the ability to interpret) credit checks on all employees who might conceivably be involved in conveyancing. I think an employee has the right to consider their personal finances just that, personal. I can see the value of CRB checks but am concerned about the length of time these are likely to take.
In my own firm, the SRO would be our senior partner, a litigator who has no direct involvement in the property department. I cannot see the value in obtaining such detailed information on him nor in making him complete the application form when the head of conveyancing's information is surely more important and relevant. If this is not a partner and one must be involved, one who works in property would surely be a more sensible choice.
Whilst I can see why a requirement to report on complaints whether dealt with internally or externally has been included, I cannot see the value in a separate complaints systems with all the cost and bureaucracy this entails when there are perfectly good existing processes for external complaints handling by regulators. I also think a dual system is going to be confusing for the consumer. Would it not be simpler to come to an arrangement with third parties such as lenders, the Land Registry, the regulators to report firms of concern, panel terminations etc and for those running the scheme then to visit and monitor those firms rather than relying on firms to "own up"?
When do we get to see and be consulted on proposed changes to the conveyancing protocol and the proposed client service charter. Is a new service charter really necessary given the existing raft of consumer led practice and regulation?
What happens when we are dealing with a firm which does not subscribe to the scheme?
I suspect many firms will find it difficult to easily provide the level of transactional information being requested. I doubt they separately record which matters go abortive and which do not, which are buy to let and which are not, whether they have ever dealt with a lender who does not subscribe to the CML/BSA (most high street firms will have dealt with the odd private charge but I doubt they will have separately recorded this). Although firms could go through individual files, this would be a huge task and I doubt the data would then be much more than a best guess. If firms are to go to these lengths to provide the information, there ought to a clear understanding of the use to which this information will be put and why it is required. I personally cannot see that knowing how many transactions a firm has carried out and its value will provide any indication of the risk that firm poses and am concerned as to what use (and whether the information provided will be shared with any other organisation or body) it will be put. Small firms carrying out low volumes may be doing a fantastic, compliant job for clients including lenders, large volume firms may be doing high numbers with inexperienced staff. Given the threat posed by corporates such as Tesco or lenders coming into the market in future poses, this is a real and legitimate worry, particularly for small high street practices. I definitely cannot see what relevance Legal Aid work has to a conveyancing scheme and cannot understand why this is being requested.
Surely the bigger problem here is that a conveyancer's only real safeguard is checking the details of whatever firm they are dealing with on the SRA/CLC websites. I have contacted the fraud section of the SRA on numerous occasions in relation to firms whose branches or details are incorrectly shown or have not been updated quickly only to be told that no information with regard to any applications being processed can be given and effectively, they cannot help me identify whether I am dealing with a bogus firm, a real firm with a bogus branch or one under investigation. This leaves decent conveyancers trying to do the right thing horribly exposed. Do you tell your clients that you cannot proceed unless the other side change solicitors effectively putting the transaction at risk when in fact the SRA may just not have updated their details yet, do you ask the other firm and have a good fraudster spin a compelling tale or do you go ahead and hope for the best or that by the time you get to exchange, the website might be up to date? I don't see that the proposed scheme will help with this dilemma. What is needed is some sort of confidential advice line where you can find out if another firm is under investigation, subject to possible intervention, has recently opened or closed a branch office etc.”
Head of Conveyancing – regional firm
I am open to correction on this but as far as I can see from the CRB website those who are exempted from the Rehabilitation of Offenders Act and can therefore be the subject of CRB checks would be (inter alia) Solicitors and Legal Executives. I cannot see that there is any general provision applicable to people who work in Solicitors' firms and would therefore query the basis upon which there can be a requirement for CRB checks for all employees working in conveyancing.
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