Sunday, 13 January 2013

The paradox of lender prejudice against sole practitioners

The most common reason given by lenders to remove sole practitioners or high street practices from their panel is that they are compelled to take a more restrictive approach to their selection process all in the name of their ongoing battle to combat mortgage fraud. 

The irony of the aforementioned rationale is that the exclusion of the high street solicitor obstructs the ideal of fraud prevention because the solicitor's personal knowledge of his client is the best defense against the identity deception which enables fraud money laundering to be perpetrated.  The commoditisation of conveyancing services around a small number of big conveyancing factories seems likely to impersonalise the operation and to promote the opportunity for mortgage fraud. In the vast majority of conveyancing transactions conducted by ‘national’ firms there no opportunity for face to face meetings between client and solicitor and a clever fraudster with resources can easily provide all the passports, driving licences and utility statements that his or her purposes require. The faceless dealing with clients is not only acceptable, it is also becoming the norm due to the immediate advantages of speed and economy.  Also, even when there are no villains involved, one has to consider how many problem files achieved that status in conjunction with and possibly because of there having been no or insufficient personal contact with the client for all necessary issues to be addressed.

Just in case a Lender reads this article here are a few points and questions for them to think about :

  1. Feedback and data from smaller firms indicates that they meet 98% of their conveyancing clients.
  2. Larger conveyancing practices (and I was previously involved with one) would see about 10% of their clients
  3. And here is the big one....How many of the mortgage frauds that took place in the last 5 years did the lawyer meet the client face-to face ?

If mortgage fraud was of such concern surely it’s time for the CML handbook to require every lawyer to meet their client face to face. Perhaps we need to revert back to the idea that mortgage deeds needed to be witnessed. Call me a skeptic but I fear that such a change is unlikely to happen as the large firms lobby would be up in arms. In time, due to increased regulation and technology, there will be data collected that overwhelmingly points to the need to meet all clients. The shame is that by the time lenders realise this there may be very few small firms around. 

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