MPowered Mortgages Conveyancing Panel Information

In operating open conveyancing panels, lenders such as MPowered Mortgages face a number of fraud and negligence risks. While there is no authoritative source of data on lender exposure to solicitor–led mortgage fraud, anecdotal evidence from lenders indicates exposure on individual cases are often in the millions of pounds. The National Fraud Authority estimates that £1bn per year is lost in mortgage -related frauds in total, which is seen as a conservative estimate.

These risks are exacerbated by the lack of a comprehensive set of data on all conveyancing firms (which, for the avoidance of doubt, would include solicitors and conveyancers across the UK) which is in a readily accessible format. Currently, lenders vet the suitability of their panel firms against a variety of disparate, incomplete and potentially inaccurate sets of information. One top 5 lender pointed out to us that it is almost impossible to track individual fraudsters who move from firm to firm, especially where they are no longer registered or no longer hold a valid practicing certificate.

MPowered Mortgages and other lenders are in varying stages of reviewing their approach to vetting firms on their conveyancing panels, to ensure their ongoing exposure to unsuitable firms is reduced. There is also regulatory impetus on lenders to ensure that they have satisfactory oversight of their third party panels, including a due-diligence process.

What you should do largely depends on the reason that your firm has been removed off the MPowered Mortgages conveyancing panel. The top 3 reasons are as follows:

1. lack of transactions
2. the lawyer is a sole practitioner
3. as part of the HSBC panel reduction.

In these three circumstances it is unlikely that you would expected to take any action. Disclosure and other compliance considerations are more likely to be relevant if the reason for removal is due to breaches of lender requirements or allegations of fraud or negligence. Whether the reasoning should trigger a disclosable 'material' breach will depend on the firm and the circumstances around possible failures to comply with the SRA Authorisation Rules, and the SRA will judge each case on its own merits. Factors such as the detriment or risk of detriment to clients, the scale of the issue and overall impact on the firm will need to be considered in deciding whether a failure is 'material'. As the compliance officer you will need systems to identify patterns of breaches. Even if you don't consider there to be regulatory implications the firms COFA should give some thought to whether she/he needs to take any action as result of being removed from the MPowered Mortgages conveyancing panel.

In the same way that there is a unique MPowered Mortgages conveyancing panel most building societies, operate a conveyancing panel for solicitors and other conveyancers that the lender will instruct. Terms and Conditions and criteria for inclusion on a building society conveyancing panel vary from lender-to-lender. Having CQS accreditation may be a requirement. Institutional lenders, such as a building society, is a client and is entitled to instruct the solicitor or conveyancer of its choosing (who, in turn, is free to accept or refuse instructions). Therefore, if lender and borrower cannot agree which solicitor or conveyancer should represent them jointly, they would usually proceed on a separate representation basis. The BSA have not published the equivalent of the UK Finance Lenders’ Handbook Part 3s.

Assuming that your practice in is on the MPowered Mortgages conveyancing panel and you are instructed by them in relation to a leasehold property, you must report to them if it becomes apparent that the landlord is either absent or insolvent. If MPowered Mortgages are to lend, they may require indemnity insurance. In any event,you will need to check MPowered Mortgages’s specific requirements. Notwithstanding whether MPowered Mortgages will lend in such circumstances you still need to advise the borrower (unless you are acting for MPowered Mortgages alone) as to the risks of buying a property with an insolvent or absentee freeholder.

In this situation please explain on the form what steps you have taken to discover the reasons behind cancellation of your MPowered Mortgages panel membership. In particular please provide details if you have received communications from the lender. E.G. before revocation of your panel membership did you receive any letters or calls from the lender putting you on notice?

You should contact MPowered Mortgages to obtain standard documents. The CML Handbook incorporates an explicit question for lenders to set out who to contact to obtain standard documents. MPowered Mortgages in their Part 2’s state: It helps to quote your MPowered Mortgages conveyancing panel number.