SLC welcomes the CMA market study

8^th February 2016

Society calls for exercise to embrace a wider remit

The Society of Licensed Conveyancers (SLC) has broadly welcomed the launch by the Competition and Markets Authority (CMA) of a market study into legal services in England and Wales, but is calling for the study to take on a wider remit with reference to conveyancing to include instructions from mortgage lenders and interaction with third parties.

In particular, the Society wishes to draw the CMA’s attention to:

• The fact that conveyancers routinely act on behalf of home buyers and mortgage lenders on the same transaction, which is unique in UK law and arguably results in conflict of interest
• Mortgage lenders expect conveyancers to act on their behalf without any consideration. In fact conveyancers are now required to pay fees to be included on lenders conveyancing panels, so are in effect paying for the privilege of acting on behalf of lenders. This appears not to be in accord with UK contract law which requires a consideration be paid for goods or services procured.
• On the basis mortgage lenders expect conveyancers to cover the cost of acting for them from fees paid by the home buyer there is no transparency as to the legal costs associated with procuring a mortgage
• Mortgage lenders pass on unreasonable risk and responsibility to conveyancers which can cause tensions with third party relationships (the duty to recommend that home buyers procure an independent survey being an example. Conveyancers routinely receive business introductions from estate agents who have a vested interest in home buyers not procuring a survey)

The SLC has met with the Legal Services Board on this matter and has been disappointed that their reaction was to direct the Society to the FCA call for inputs on the competitive operation of the mortgage market. The Society believes that the interaction between lawyer and lenders falls squarely within the LSB’s statutory remit.

The SLC will be expressing its views on this matter to the CMA as invited in their recent press release announcing the market study into legal services.