CML news & views

We are pressing for a comprehensive review of the regulation of solicitors, and oppose proposals for reform being put forward by the Solicitors Regulation Authority (SRA).

The SRA is campaigning for a principles-based approach to regulation but we do not believe that this will address lenders’ concerns and help restore confidence in the conveyancing services provided by solicitors. There must be closer scrutiny of firms to reduce the risks to lenders.

Instead of pressing ahead with proposals for this kind of reform, the SRA should agree to undertake a comprehensive review of the existing arrangements with the government and the Legal Services Board. That should determine how the industry is regulated in the future.

Lenders, and home-buyers, rely on solicitors to provide conveyancing services as an essential part of the process of buying a property. But we are concerned about the amount of fraud involving solicitors and the scale of professional negligence that has emerged in recent years.

We accept the most solicitors provide a competent, honest and reliable service, and many of the better firms are associate members of the CML. But the reputation of the industry as a whole has been tarnished by a minority of firms that do not uphold the same standards.

A comprehensive review is needed to ensure that the industry is effectively regulated in the future and that unscrupulous individuals and firms are prevented from causing detriment to clients.

More intrusive regulation is particularly important, given the way in which the legal profession is changing. The launch of new business models in the profession will make the market for legal services more competitive, but closer scrutiny is needed as the industry goes through a process of change.

Lenders must be confident that firms have adequate professional indemnity insurance, and that there is a reliable compensation fund for commercial clients who suffer loss as a result of fraudulent behaviour.

Many lenders currently choose to appoint solicitors to a panel of firms that they will use to provide conveyancing services. But if confidence in the regulation of solicitors is not restored, lenders are likely to scale down their existing panels and not accept new firms on to them until they have a proven track record.