It was actually a clever test. Van Halen stage shows were elaborate productions. To get ready, a promoter had follow a set of lengthy, complex instructions provided in the contract. The brown M&M provision was buried, at random, among these instructions. If the band members went backstage and found brown M&Ms, that meant that the promoter had not read the instructions and there were potential problems with the show. Any mistakes could be life-threatening. In Colorado, the band found the local promoters had failed to read the weight requirements and the staging would have fallen through the arena.
When you think about it, that's a nearly costless way to check for quality control.
As coneveyancers we live in a new environment of evidential compliance and risk management. It occurred to me that the CML handbook is analogous to the complex instructions that Van Halen issued. No one would argue against the assertion that lender requirements are becoming increasingly complex and difficult to follow. In 2013 over 1200 Part 2 sections were changed.
In recent years it is not uncommon for Lenders to shoehorn requirements into seemingly unrelated section of the Handbook. By way of example Part 2 for the CML Handbook Section 5.13.1 reads “If different from 1.11, contact point if borrower is not providing balance of price from funds/proposing to give second charge”
One would expect this to be a simple answer of either stating that the address is the same as Paragraph 1.11 or, alternatively specify the different address. It is a dangerous game to assume the content of a Part 2. For example Leeds Building Society’s response is as follows : ‘Mortgage Lending Department. If the balance of the purchase price is being paid wholly or in part by anyone other than the borrower, you must provide us with a declaration of this amount, that such amount is not repayable and that the party providing this amount will not acquire an interest in the property…..’
The significant benefit that Van Halen had about their quality control plan was that it was very apparent when the brown M&Ms were not in the bowl. With the example above (as is the case with many of the provisions buried within the Part 2’s) a Lender would have to look at the file – which could be years later- to see if the conveyance had complied with their requirements. Yet there are much easier tests at a lender’s disposal.
As pressure bears upon Lenders to justify their panel selection it is easy for them conduct a relatively low cost and simple tests to examine whether a firm complies with CML Part 2 requirements. Here are a number of examples of the equivalent of the brown M&M test:
- Lenders such as Santander who have specific requirements to submit a form CH2 at the Land Registry can easily request the Land Registry a report on specific firms to see if the appropriate entry on the title exists.
- Approximately 50% of Lenders now require the Land Registry to retain the original mortgage deed. It is likely that there are still lawyers who send certified copies of the mortgage deed with the original mortgage deed to the Land Registry. It is very easy for a lender to make a request and find out from the Land Registry if they are holding original mortgage deeds from specific law firms
It’s hard to counter the argument that a lender can raise when they state that as a law firm if you can't submit CH2s or send the correct documents to the Land Registry how confident can they be that you are complying with the rest of their requirement. Unless lenders put their faith in CQS as determination of law firm quality,lenders may take matters into to their own hands to start scoring law firms. It is possible that lenders can learn as lesson from Van Halen so do look out for that particular tune - even if you don't like heavy metal.
The LENDERmonitor Notification Service has sends-mail updates of lender requirements to thousands of lawyers across England and Wales. LENDERmonitor has been operating for three years and continues to be promoted on the CML website and by insurers. The cost of the service varies between £20 and £150 plus VAT per month depending on the size of firm. Inside Conveyancing are delighted to be able to offer it’s readers the service free of charge. There is absolutely no catch in signing up to the Notification Service, you can cancel at any time. You will not be charged at all for this service. To register click here