Decisions made by banks that do not understand our business models continue to impact adversely on sole practitioner firms, writes Sukhjit Ahluwalia.
We all know that the approach of mortgage lenders to managing their residential conveyancing panels has led to challenges for the profession as a whole. However, for sole practitioner conveyancers, this has meant facing an onslaught of discrimination, with corporate decisions being taken by bank after bank to exclude sole practitioner firms from their lending panels.
Many firms were removed from panels they had been members of for years and have had to fight hard to be returned, losing valuable work in the process. In addition to the other significant challenges of running a conveyancing practice, such as the cost of professional indemnity insurance, it can be easy for sole practitioners to become disheartened and feel a sense of marginalisation within the profession.
Small businesses, like sole practitioner firms, are the backbone of the economy, providing a vital and specialist service to the local communities they serve. They are at the forefront of client care at grassroots level. Not only are decisions to refuse to accept these firms onto lender panels made without regard to the undue hardship that will be caused, given the sizeable proportion of work that firms will lose as a result, but they are also made without consideration for the interests of members of the public, whose fundamental right to freely choose their own legal representation has been severely impeded.
A strong belief in access to justice, principles of fairness, and the rule of law underpins everything that sole practitioners do. So it has been with vigour that the Sole Practitioners Group (SPG) has taken up this issue, which has adversely impacted upon so many of our members.
The SPG responded to the challenge by launching a conveyancing lobbying group, which has engaged with both the Council of Mortgage Lenders and the major banks, such as Santander, Lloyds, Barclays, and Nationwide, to name but a few. We are working hard to increase their understanding of how sole practitioners work.
The advent of the conveyancing quality scheme (CQS), the quality benchmark set by the Law Society as a means to counteract these problems, has helped sole practitioners somewhat, with the CQS accreditation enabling them to maintain their positions, as has the lender exchange scheme, but there is still much to be done. On the whole, sole practitioners have felt that this is a battle they have had to fight for themselves, without tangible support on a day-to-day basis, against corporate decision-making which seems to be hidden behind a wall of misconceptions and skewed statistics.
Some banks are of the view that they are less protected in the event of dishonesty or failure to account for money when instructing a sole practitioner than they would be if instructing a multi-partner firm. This is emphatically not the case.
First, there is no evidence to suggest that sole practitioners are more likely to be dishonest than a multi-partner firm.
Second, the compensation fund does not distinguish between sole practitioners and multi-partner practices when considering applications. The only difference may arise when the fund, which is a last resort, considers whether an applicant has a viable alternative means of recovery. Each case is assessed on the prevailing facts at the time.
Third, since 1 April 2015 and the introduction of eligibility criteria into the Compensation Fund Rules 2011, businesses with a turnover of £2m or more are no longer eligible to receive a grant from the fund. Given that few, if any, sole practitioners achieve this level of turnover, this surely puts the banks in a more difficult position when recovering losses from larger firms, than would be the case with sole practitioner firms.
However, the situation has improved for sole practitioners. Following our engagement with Lloyds, it has in excess of 530 sole practitioner firms on its panel. While most banks still require panel firms to undertake a minimum number of transactions per annum in order to qualify, we continue to work hard to ensure that those numbers are realistic and reflective of the quality of the transaction and the service given by the member, not merely the quantity. So often, our changing legal landscape makes the assumption that ‘more’ or ‘bigger’ is equivalent to ‘better’, despite the fact that, time and time again, this has been proved wrong -bucket shop conveyancers are a prime example.
Kem Masinbo-Amobi, a specialist conveyancer who heads up the SPG lobbying group, says: ‘We must ensure that the primary concern of banks is good practice and sole practitioner firms are a clear example of how personal client service and not “volume” or the “bottom line” is at the heart of what they do. Only by active engagement can we change the flawed mind-set of banks who do not understand the sole practitioner business model and look to the continent and the US, where a substantial number of law firms are sole practitioners, as examples.’ SJ
Sukhjit Ahluwalia