Following extensive consultation and development, the Council of Mortgage Lenders has today issued a new set of instructions for conveyancers acting for lenders under separate representation conveyancing transactions in England and Wales.
These are designed to apply when a solicitor or licensed conveyancer is acting only for a lender, rather than for both lender and borrower, in house purchase transactions. The new instructions will form a new part of the CML Lenders’ Handbook for conveyancers, and will take effect in England and Wales from 2 July.
Normally, the same conveyancer acts for both lender and borrower, as generally speaking the interests of the lender and the borrower are closely aligned, and it can often be more efficient and cost-effective for the same conveyancer to act for both. This will still be the case in the vast majority of housing transactions.
However, in instances where the borrower specifically wishes to use a conveyancer not on a lender's panel of accepted conveyancers, or there is a conflict of interest, it is important that there is absolute clarity about exactly what is involved in acting for the lender. It is equally important for the borrower's conveyancer to know exactly which elements of work they are not required to do, and which they are, when acting for the borrower alone. The new instructions are designed to achieve that clarity.
In recent years, lenders have been moving towards more active management of their conveyancer panels, with the effect that there will now be a higher incidence of cases where a particular conveyancer may not be on a lender's panel. There are numerous reasons why a particular conveyancer may not be on a lender's panel, including:
small or new firms, or firms with very low volumes of conveyancing transactions;
commercial considerations relating to the lender's preferences in terms of its panel criteria;
the conveyancing firm's capacity to deliver particular services expected by the lender; or
The fact that a conveyancer is not on a lender's panel should not necessarily cause concern to a borrower who wishes that conveyancer to act for them, although borrowers will wish to take steps to satisfy themselves with their choice of conveyancer.
Paul Smee, CML director general, said:
"In most cases, the same conveyancer acts for both lender and borrower. However, where this is not the case, it is important that both conveyancers know exactly what is expected of them so that any confusion is eliminated and resulting problems minimised."
Jonathan Smithers, chair of the Law Society’s Conveyancing and Land Law Committee, commented:
"We are working with lenders to help ensure that our Conveyancing Quality Scheme supports lender confidence in operating broad panels. We hope that joint representation of lender and borrower will continue to be the norm. However, we recognise that a variety of factors may mean an increase in the number of cases where separate representation is used and we hope that the new instructions will provide some consistency in those cases. We will continue to work with the CML and other interested parties to improve the new instructions and, as a result, the experience for house buyers and conveyancing professionals."
June Mulroy, interim chief executive of the Council for Licensed Conveyancers, added:
"Licensed conveyancers are represented on lender panels, and also offer a high level of focus and expertise to individual borrowers who want to use their own conveyancer outside the lender's panel. Experience of fraud among licensed conveyancers is the lowest in the conveyancing market. The new instructions provide useful clarity for all conveyancers on separate representation cases."
NOTES TO EDITORS
1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 95% of all residential mortgage lending in the UK. There are 11.3 million mortgages in the UK, with loans worth over £1.2 trillion.
2. The new instructions, and an associated set of voluntary example letters designed to help ensure that there is complete clarity between the two conveyancers acting in transactions where the lender and the borrower are separately represented, can be accessed from the Lenders’ Handbook landing page of the CML website. The new instructions will take effect from 2 July.
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