Dear colleagues,
As you will know, Santander recently commenced what was planned to be an ongoing, probably quarterly review of their residential conveyancing panel. The bank was removing panel firms based on low activity and/or "dormancy - levels" of Santander transactions.
The Law Society views volume of activity as a criterion for panel management as a blunt instrument, particularly when a lender only looks at their own transactions rather than all the conveyancing work done by the firm. True dormancy and unexplained reactivation are potential indicators of fraud and our own risk criteria within the Conveyancing Quality Scheme (CQS) consider an applicant firm's total activity in the market.
The Society regards decisions to remove firms from panels based on incomplete activity information as ill-informed and unacceptable. This particular review was further worsened by the fact that the firms facing removal from Santander's panel had paid the annual compliance fee of £99, (and in some cases an initial £199 application processing fee.) only to be removed soon after.
The Law Society was not consulted or informed in advance of this exercise, but in an effort to bring it to a halt, I contacted Santander's CEO calling for an urgent meeting. The bank agreed and we have recently commenced discussions.
Whilst that dialogue continues, the bank has agreed an immediate pause in this review process and the next quarterly review has been postponed. The bank had already, to a degree, recognised the limitations of its review methodology since in its appeal process it actively sought out information about firms other market activity. In our discussions it recognised that unusual market conditions make it inappropriate to assume that low levels of activity with one particular lender equate to lower activity across the market.
I am sure you are all aware that the regulatory environment established by the Financial Services Authority require lenders to proactively manage their panels. If Santander recommence their review, firms appearing to be inactive or dormant will not be removed suddenly. Instead, Santander will take a more collaborative approach with firms in identifying their wider conveyancing activity beyond only Santander.
I am reassured that many firms who have been removed have in fact been reinstated on appeal, often with guidance from the Law Society's Practice Advice Service. Evidence of wider market activity has been a factor in many of these reinstatements, providing a strong indication that Santander would consider this factor during any future review. Any firm that has been removed should contact out PAS team immediately on 0870 606 2522 and consider an appeal.
Dialogue between Santander and the Law Society is continuing. We will look at other ways of working collaboratively with the bank, including how the lender can benefit from the CQS. Clearly, the Society will not compromise its key principles in terms of what is or is not acceptable practice for admission to panel membership.
Why did we choose to talk to Santander rather than defend our position aggressively through the media or the courts?
The recent HSBC saga showed that dialogue can work. It also illustrates that one approach is not always the best for tackling the issue of lender panels. To get HSBC around the table we needed the campaign. Santander were willing to talk from the outset and although we would have preferred those talks to have happened in advance, the bank responded quickly and effectively to our concerns.
Much as we might prefer it otherwise, banks are under no obligation to maintain solicitors on their conveyancing panels. However, the Law Society has and will continue to ensure bank mortgage customers can choose to be represented by solicitors – high quality legal advisers.
There is much work still to do between us and the bank. I will keep you all informed of further developments.
Desmond Hudson, Law Society chief executive