Conveyancing: CQS needs teeth
Alternative business structures (ABS) and external capital will intensify competition but do nothing to stimulate demand in the conveyancing market, a leading Law Society representative has said.
Meanwhile, a senior adviser to the Council of Mortgage Lenders (CML) has warned that member firms of the society’s Conveyancing Quality Scheme (CQS) should be rigorously audited and the scheme’s governance should be altered if it is to be credible.
Speaking at the CML’s annual conveyancing conference in London this week, solicitor Jonathan Smithers, chairman of the society’s conveyancing and land law committee, said it is “hard to see what external capital can bring to the party” in a competitive and sophisticated market.
“[ABSs are] not going to stimulate any more demand. No people are going to move house because the Co-op is going to do their conveyancing, so they are competing for a larger piece of what is a set-sized cake.”
He observed: “I think it may drive polarisation between those who are competing on price and those who are competing on quality, which is really where the big difference lies between them… Whether it’s the Co-op or any large firm that’s owning it, the interface between what the client wants and how it is delivered is essentially the same.”
Michael Webber, head of legal services of the National Australia Group – which owns the Clydesdale and Yorkshire Banks – and chairman of the CML’s legal advisory panel, told the conference that the Clydesdale had endorsed the CQS only subject to improvements being made to the scheme, such as auditing of member firms and changes to its governance.
He insisted “there must be robust and a rigorous entry requirements” which go beyond “self-certification” forms that contain “self-serving statements”, and there needs to be “a transparent and a rigorous ongoing audit” of member firms.
He added: “Lenders need to be satisfied that… firms who don’t meet minimum requirements – and the bar should actually be set quite high – are removed from the scheme, not just invited to withdraw from it. It needs teeth.”
The CQS should have a “clear governance structure” and that body should include a lenders’ representative, such as the director-general of the CML. Also, there should be a “frank and confidential exchange of views” and where problems with poor-performing firms arise, “action should be taken as soon as possible”, said Mr Webber.
He continued: “There is not that two-way exchange of information that there used to be between lenders and the professional and regulatory bodies, that helps to nip in the bud those firms who should not be in practice and remove them entirely in the shortest possible time.”
Mr Webber said all lenders shared the “frustration at not being treated as a customer” by solicitors. Addressing practitioners, he said: “We are clients but all too often we are not treated as clients… Please remember that in the relationship we as lenders instruct you as solicitors in the capacity as a clients… please have the courtesy to treat us as such.”
Mr Smithers pointed out the CQS protocol requires lenders to be treated as valued clients. He defended CQS – which he said will have about 2,000 accredited member firms and a total of 3,500 outlets by the end of 2012 – saying it would ensure the creation of a “trusted community” of conveyancers.
It was designed to be a “carrot, not a stick”, he explained. However, the society is now “putting in place much stronger and stricter enforcement procedures”.
Asked by Eddie Goldsmith, senior partner of Liverpool firm Goldsmith Williams and chairman of the Conveyancing Association, whether the society was “giving up” on the remaining 2,000 to 3,000 firms that do conveyancing, Mr Smithers replied: “The entry level for CQS frankly is not a hugely high bar… I don’t think any well-run firm ought really to have a problem in getting in.”
He said firms can use the CQS protocol and conditions and so on without having to be part of it.
Steve Bennett 
Michael Webber made some valid points, as did Jonathan Smithers, at the CML conference. I agree fully with Michael’s assertion that there should be more lender involvement in CQS, he must have forgotten that two CML members are represented on our governance process and have been from the start.
They sit on the CQS assessment panel and will soon be joined by a lay member. There has been lender involvement early on in CQS design, as well as involvement with development of content of compulsory CQS training. We have also discussed with individual lenders their views of CQS and areas for improvement.