Lenders oppose reforms that could shrink conveyancing market
Published: 1 July 2014 | Author: Bernard Clarke
In this article, CML senior policy advisor Jennifer Bourne looks at the potential impact on the conveyancing market of proposals by Solicitors Regulation Authority that would restrict cover for lenders from professional indemnity insurance. She urges the solicitors’ body to widen its consultation and consider alternative proposals.
Lenders remain opposed to proposals from the solicitors’ regulatory body to restrict access to cover from professional indemnity insurance (PII).
The Solicitors Regulation Authority (SRA) is consulting on a range of proposals, including the removal of compulsory PII cover for claims from financial institutions. We believe that this would have damaging consequences for the conveyancing profession for a number of reasons:
- Lenders are unlikely to instruct firms that do not have in place adequate cover for financial institutions, and may require firms to source such cover and produce evidence that they have it in place. However, there is no clear indication from the insurance market as to whether this kind of "top-up" cover would be available, and on what terms.
- Any new requirements to review and verify PII cover may lead lenders to reduce the administrative burden by cutting the number of conveyancing firms they admit to their panels. Some lenders might choose to take this work in-house as an alternative.
- There could be a reduction in the number of conveyancing firms, with those that are unable – or choose not – to provide cover for lenders potentially facing a significant decline in business.
- Sole practitioners and small conveyancing firms are the most likely to be affected and could find themselves at a particular disadvantage.
We would urge the SRA to re-consider its consultation paper, which contains virtually no analysis of alternative options to its proposals. We believe this analysis needs to be carried out, and should be supported by robust evidence, before the SRA considers introducing such significant changes to arrangements for client protection.