David Gilman is partner in charge of Blacks Connect
In the wider financial services market the notion of firms ‘dabbling’ in certain areas of product advice has been (perhaps quite rightly) frowned upon by the regulator.
In fact in some areas, most notably in recent times equity release, there has been a concerted effort to remove any ‘dabblers’ from the marketplace with the perception being that such a specialist sector requires up to date technical knowledge.
The argument is that those firms/advisers who are only conducting a very small number of cases each year are not likely to be keeping up with all market developments and/or ensuring their knowledge of product options is completely up to speed.
The regulator would much prefer equity release advice to be dominated by a smaller community of top-quality specialists rather than ‘dabblers’ as there is less chance of consumer detriment if this is the case. You have to admit they have a point.
Which leads us neatly onto the conveyancing sector at present with the latest transaction data from the Land Registry for 2013 revealing we are still very much a ‘cottage industry’ with many firms conducting very low levels of conveyancing business.
Let’s take a look at the figures. In the whole of 2013 there were 796,061 transactions spread across a pretty substantial 6,220, conveyancing firms which gives an average of 128 transactions per firm in 2013. However, drill down further into the figures and we find that of those 6,220 firms, 4,594 conducted less than 10 transactions a month while only 1,626 managed to complete more than 10 transactions each month. Clearly, the UK conveyancing market has very large numbers of small operators only working on a very low number of cases each year.
We might question, as we did with the equity release market above, just how in tune with the marketplace these large numbers of firms are? I’m not for one moment suggesting that small operators can’t be specialist however I’m afraid that those who might be defined as ‘small’ are facing an upward battle in today’s conveyancing market.
The landscape of conveyancing increasingly suits the larger specialist operator – businesses like ourselves – who are able to push the envelope in terms of technology and commit significant investment and resource in order to ensure large numbers of cases get through the system.
I’m afraid that the smaller high-street operators are simply not able to compete in this area. It is for this reason that the bigger specialist firms are taking a greater share of the marketplace although admittedly this move has not progressed as quickly as many would have hoped – the Land Registry figures show that the top 20 conveyancing firms completed 12.1% of all transactions, the top 50 managed 19.1% and the top 100 hit over a quarter of all transactions, at 26.4%.
I have no doubt that the larger specialists will continue to build market share particularly if the mortgage/property market continues to grow as it has done over the past 12 months. Indeed, there are a number of reasons why, for example, advisers and estate agents should be increasingly looking at the larger operators and urging clients not to use family, high-street solicitors for their conveyancing.
Many smaller firms do not have the breadth of knowledge and skills that a larger firm has, and given the limited number of transactions they work on they are not used to some of the lenders’ requirements, particularly the smaller lenders.
The other big negative is they are unlikely to be on all the lenders’ panels – we all know that lenders tend to cull conveyancers from their panels if they haven’t submitted a transaction in a certain period (normally between three and 12 months) and I fully expect more smaller conveyancers to be unable to work on lenders’ cases in the future.
Brokers should be very aware of this – if they submit a case to a conveyancer who isn’t on panel then, at best, the process could be significantly delayed and, at worst, they may have to find another conveyancer later in the process and start again. Your client is not likely to be too enamoured with you on either outcome.
Therefore while I’m not here to say that big is always beautiful in conveyancing, recommending larger specialists rather than dabblers surely has to be the right approach.
Clients who have not used a conveyancer in a number of years might think the sector is as it was back then, but brokers should be the first to point out how it has changed, and the benefits for them using a larger operation.
At the end of the day we all want the case to complete quickly and with minimal fuss – the larger specialist conveyancers are without doubt in the best position to make this happen.