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As the Conveyancing Quality Scheme becomes compulsory for one major lending institution, how many others are likely to follow suit?
The Conveyancing Quality scheme was launched by the Law Society in October, 2011 as part of an initiative to encourage best practice amongst conveyancing firms, ease lender and insurer concerns and promote greater quality and a more ‘consumer’ focused approach. The former Law Society President, Linda Lee asserted that the scheme allowed purchasers an instantly recognisable quality mark highlighting the firms excellence and commitment to high standards. The first firm to gain membership to CQS said that it was for reasons of competition that they decided to pursue an application.
Despite the potential benefits to those firms actively undertaking to gain membership to the quality scheme, which includes more effective risk management, efficient practice and potentially favourable professional indemnity insurance renewal terms; the latest figures illustrate that of over 1100 applications from firms, only around 630 have been accredited so far.
There has been a lot of speculation about the compulsory requirement being placed upon firms to be a member of the quality scheme in order to access the panels of many of the institutional lenders. Today some of that speculation has been confirmed, with Santander being the first to require firms to become accredited if they wish to attain panel status. This is for new firms however, and those already on the panel are not obliged to apply; but instead pay a fee of £99 for annual compliance checks.
How many other lenders are likely to follow suit? Quite possibly many more to come. The CQS project is a Law Society initiative, though some no doubt feel that the Law Society has done little more than hand the lenders a large stick with which to hit small law firms. The application process is extremely bureaucratic and time consuming, adding to the many other pressures faced by conveyancing practices – low interest rates on client account, high professional indemnity premiums, depressed transaction levels, low fee rates, outcomes focussed regulation, changes in money laundering regulations, increasing risks of inadvertent involvement in mortgage fraud, changes in the conflict rules relating to acting for buyer and seller, increasing levels of lender claims and ‘fishing’ letters, new non-lawyer competitors entering the market and so on.
Whether or not the Law Society’s initiative was actually in the best interests of its members will no doubt continue to be debated, but one thing is clear. Firms who wish to survive in the conveyancing market have little choice but to get their CQS applications sorted out – and quickly.
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The Law Society has issued a practice note about the risks to solicitors posed by this new legislation, which came into force on 30 September.
The SRA has urged all practices to check HM Treasury’s consolidated list of asset freeze targets, which lists designated persons subject to financial sanction under EU or UK legislation.
The practising certificate renewal period opened on Monday 2 October.
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