David Gilman is a partner at Blacks Connect LLP
Tremors have been running through the world of conveyancers in the last couple of weeks ever since HSBC announced that in future it would be using a panel of only 43 firms.
Previously homebuyers could choose their own legal representation and the firm would act for the lender as well.
However with concerns over mortgage fraud and an instruction from the Financial Services Authority telling lenders that they need to know the firms they work with better HSBC has announced that this will no longer be an option.
HSBC’s decision should not be seen as opposing consumers’ best interests as lenders have every right to safeguard their interests.
One way of doing this is to use specialist solicitors who have been quality checked. Borrowers can still opt to use their own solicitor instead of one of the 43 on the panel but this will cost an extra £192.
HSBC is not the only lender to reduce its panel of conveyancing firms. Within days Nationwide Building Society said they would remove firms from their panel who had been dormant for 12 months or were not part of the Law Society’s Conveyancing Quality Scheme.
Whilst these two announcements come hot on the heels of one another lenders have in reality been reducing their panels for some time.
This is backed up by data from the Land Registry which shows that between November 2010 and November 2011 the number of conveyancing firms reduced from 5600 to 4600, a decline of 18% in just 12 months.
Moreover the top 10 conveyancing firms increased their market share from 6% to 8% during the same period.
Many mortgage brokers recommend a conveyancer to their client but these latest moves mean that is now even more important that the broker is recommending a specialist quality accredited firm that the lender will accept.
Most lenders may not go as far in the cull of their panel as HSBC but there is no doubt the number of conveyancing firms will reduce and the large volume specialist conveyancer will win as the industry consolidates.
Just hanging a sign outside the door saying “solicitor” does not imply that a firm is a specialist in every aspect of the law and this is no more evident