Written evidence submitted by David Johnston
RE: LLOYDS
GROUP AND
SANTANDER CONVEYANCING
PANELS
I write to draw your attention to a concerted attempt
by the above two banks to use their dominant market position to
drive small conveyancing firms out of the mortgage market and
therefore to restrict consumer choice; presumably for their own
financial advantage. Given Lloyds in particular is 41% owned by
the taxpayer, is this Government Policy?
I am a solicitor with 30 years post qualification
experience. In 1984, I set up my own firm Clifford Johnson and
Co in south Manchester. I no longer own the firm but continue
to work fir it as a consultant. I believe that the firm has a
good reputation and has served its clients well over the past
26 years.
In particular, over this time, I have carried out
conveyancing mortgage work for the above two organisation. The
firm has been on panels for both organisations for 26 years. I
am not aware of any complaints or concerns from either organisation
over this period.
I was therefore surprised to receive letters from
both organisations recently removing the firm for which I work
from their conveyancing panels with immediate effect on the grounds
of "low volume" of work. The decision is being appealed
but, if confirmed, will have a serious effect on the firm's ability
to carryout conveyancing business in the future and if other lenders
follow a similar course may threaten the future viability of the
firm itself. Lloyds also threaten to carry out a further cull
in the not too distant future.
According to the Law Society, the rationale behind
the decision is to reduce both organisations exposure to fraud
and negligence. I would strongly questions this for two reasons.
Firstly, I believe that small, tightly controlled, well run firms
such as the form for which I work stand comparison with the large
"conveyancing factories" on grounds of customer satisfaction;
negligence; fraud prevention and complaints. Indeed, my personal
experience of such large organisations over the years is that
their services ranges from poor at best to appalling at worst.
Such organisations pay large referral fees to, for example, mortgage
brokers to get volume conveyancing business.
Secondly, I believe that the real reason for this
decisions is to reshape the conveyancing market by driving out
small providers to maximise the referral fee income which large
conveyancing providers are prepared to pay for volume conveyancing
business. This restricts consumer choice and, in my view, compromises
the ability to provide truly independent advice. I have always
been opposed to paying referral fees and I do not believe you
can give properly independent advice if you receive them.
Lloyds action is particularly troubling as when they
were created the then Government waived competition requirements
to allow their creation do to the parlous state of HBOS. They
now seek to use their dominant market position to reshape the
conveyancing market to their long term financial advantage.
They are also 41% owned by the taxpayer. Is there
decision in line with Government policy to promote small businesses?
I am also concerned that these letters have appeared
at roughly the same time. Is this coincidence? Or has there been
collusion between these organisations to attempt to shape the
conveyancing market to their advantage?
In short, I believe this development will be bad
for consumers as it will restrict consumer choice; compromise
consumers ability to receive truly independent advice, and coupled
with the other threats faced, hasten the closure of small, locally
based high street firms, thereby restricting access to legal services.
I would be most grateful if you would consider these
concerns and respond appropriately. If you need any more information
please do not hesitate to contact me.
August 2010
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