Kumar: Right that we are active in the market
The Council for Licensed Conveyancers (CLC) has begun its review of referral fees in the profession but suggested the regulation of estate agents would help deal with concerns about them.
Chief executive Sheila Kumar also questioned whether CILEX had the evidence to back up criticism it made recently of volume conveyancing firms.
Last July, the CLC announced it would review referral fees in 2026 in light of a BBC Panorama programme on ‘conditional selling’ by estate agents. This is where agents are incentivised to encourage buyers to use in-house services, such as conveyancing.
In an interview with Legal Futures about the regulator’s work, Ms Kumar said the project had now begun with an analysis of the information it held on firms’ referral arrangements, which they were required to disclose as part of their annual returns.
“The important thing to remember here is that our firms are already required to be transparent about referral fees, where they’re paying or receiving them. But, of course, that really comes too late in the process. It’s the estate agent or other referrer who’s benefiting from the payment, who should be telling their client about that.”
She conceded “the next steps that we might take aren’t immediately obvious, but they’ll be driven by the data”. Rather, regulation of estate agents – which the CLC strongly supports – “would certainly help”.
It might also be the answer to the long-running debate over whether the provision of upfront material information about properties for sale should be mandated by the government to ensure it happens consistently across the market.
“Usually, if people come to the table and do it voluntarily, there’s no need,” said Ms Kumar. “But we do know that it’s going to be tricky without the regulation of estate agents.” In which case, she suggested, mandation might be the only option.
Some might question the extent to which a regulator should be involved in reform of the home-buying and selling process – the CLC is much more vocal than the Solicitors Regulation Authority, for example – but, in a market where 30% of home sales fall through, Ms Kumar was unapologetic.
“As a specialist regulator of conveyancing, I think it’s right that we are active in the market because this is all about whether or not the whole legal process around provision of conveyancing works as well as it can. We’ve got a public interest objective [under the Legal Services Act 2007].”
In any case, she added, any new system needs to work with existing regulatory frameworks.
Last month, in its response to the government consultation on home-buying reform, CILEX urged regulatory action over high-volume, low-fee conveyancing practices. It said: “CILEX has been made aware that this environment frequently results in inefficiencies and process bottlenecks that negatively affect conveyancing lawyers, and ultimately, poses risks to consumers buying and/or selling property.
“CILEX believes that a collaborative regulatory action is necessary to ensure that service quality and consumer protection is not compromised.”
A review of conveyancing fees should prevent firms from committing to “extremely high caseloads”, it added.
This certainly caught the attention of the CLC, which regulates many of the major so-called volume practices.
“I would be really interested to have a conversation with CILEX to find out what evidence drove their statement,” said Ms Kumar.
“We are very clear that there are different risks in different firms for different reasons, and our regulatory approach addresses those risks. It is absolutely wrong to take a blanket approach and say it’s large conveyancing firms [that are the problem].
“In fact, very certainly in our cohort, the large conveyancing firms have the systems, processes and personnel in place on the whole not to be high risk for us. There’s nothing to indicate they need enhanced monitoring.”
The low level of fees is a never-ending topic of conversation in the sector. “We have said, probably much more over the course of the last 12 to 18 months, that firms need to price conveyancing appropriately,” Ms Kumar said.
But the regulator’s focus is on whether they have sustainable business models, depending on type and complexity of work, for example, rather than the individual prices they are charging.
“Increasingly, we are seeing that firms are taking a sensibly calibrated approach to more complicated transactions.” Indeed, firms have informally told the CLC that they have been able to increase fees without significant resistance.
A new issue around financial sustainability could arise from government plans for an Interest on Lawyers’ Client Accounts scheme – given the amount of money conveyancing firms hold, this could have a significant effect on some practices.
But Ms Kumar said the CLC already looked at this when considering firms’ financial stability. “We would be extremely concerned already if any firm had a sort of undue reliance on client account interest for prop themselves up.
“We also find that many of our firms actually make a lot of effort to return client account interest and we encourage that.
“There’s also the separate point about whether the legal aid system be dependent on client account interest. Is that a sustainable model?”
The second part of this interview will be published tomorrow
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