Law Society conveyancing scheme a “barrier to competition”

Bones: Illogical anomalies need to be addressed

The Law Society’s Conveyancing Quality Scheme (CQS) is a “market barrier”, blocking entry to non-solicitor law firms, the Competition and Markets Authority (CMA) has been told.

The Chartered Institute of Legal Executives (CILEx) said it was “at least questionable” whether the CQS, only available to firms regulated by the Solicitors Regulation Authority, was “a true reflection of quality or choice available in the sector”.

In its submission to the CMA’s review of progress since its 2016 report on competition in the legal market, CILEx noted the CMA’s original recommendation that quality indicators and feedback platforms should be independent of any single legal regulator or professional body.

“CILEx believes that this impartiality is vital, as if this is lacking then quality indicators can actually be detrimental to competition.

“Some of the current ‘quality hallmarks’ in the legal sector are administered by a single legal professional body for the benefit of their membership.

“These have then been adopted by other stakeholders as minimum thresholds, meaning these hallmarks have, inadvertently, become market barriers to those other legal professionals not covered by the hallmark.

“The net result is that it is at least questionable whether such a standard is a true reflection of quality or choice available in the sector.”

CILEx went on: “The CQS is recognised by the vast majority of lenders as a mark of quality and membership of the CQS is a requisite for acting on behalf of lenders in conveyancing matters.

“This means that non-solicitor legal firms are denied the opportunity to undertake the vast majority of conveyancing work even though they are as qualified and competent to undertake the work as any CQS holder.”

Elsewhere in its response CILEx called for “greater flexibility” in the regulation of legal services to accommodate the growth in digital solutions.

CILEx said the regulatory framework would have to “shift” to enable these digital solutions “which are created, coded and maintained by non-legal middlemen, and may even eliminate the role of legal practitioners within certain legal processes” to be “effectively regulated, or at the very least moderated, to ensure minimum standards”.

There was a call for two historic restrictions to be lifted, so that CILEx lawyers could certify copies of powers of attorney (they can certify originals) and have wider advocacy rights in the criminal courts.

Professor Chris Bones, chair of CILEx, described the CMA review as “important if the legal services sector is to become more competitive and offer better value to consumers.

“There are still areas that are outdated and where illogical anomalies need to be addressed.”

One common area of agreement among regulators and representative bodies is that the price and service transparency rules introduced in December 2018 following the CMA report need to be augmented by quality indicators, to ensure consumers do not simply choose on the basis of price.

In its submission, the Council for Licensed Conveyancers (CLC) said there was data available from HM Land Registry “about the location, value and types of property transacted” by any given firm.

“This could have value for consumers seeking to understand their conveyancer’s experience with properties like theirs.

“One tool on the market lays out just such data as well as information about the speed of submission of the AP1 form to the Land Registry, which it presents as a star rating as a proxy for quality.

“The CLC hopes that the use of such data might be piloted in a way that would enable assessment of its value to consumers.”

The CLC said the property market was “being supported by pent-up demand” and the stamp duty holiday which ends in March 2021.

“The economic conditions in spring 2021 will be key to the future development of the market.”

The CLC said that in its most recent survey on the impact of the pandemic, two-thirds of firms said the full impact had not yet been felt and “the vast majority of those believed that the impact would be felt fully between six to 12 months” from the date of the survey in August this year.

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