Small law firm fights back
In the world we now live some institutions seem too big and mighty as to be unchallengeable when they dictate how they will be conducting their business in the future. However, on this one occasion one small firm has said, “This is not right”. This is their story.
To act for a client with a mortgage, a conveyancing firm is required to be on the mortgage lender’s conveyancing panel. However in 2010 The Lloyds Banking Group, the largest lender, told hundreds of small law firms that as of immediate effect they were removed from their panels. The reason given by Lloyds was risk of mortgage fraud due to low numbers of transactions.
Since then, as if by stealth, the banks have been working collaboratively to exclude small firms from the property market, by removing them from their panels, asserting small law firms to be most risk of either perpetrating mortgage fraud or not recognising it.
For firms whose work was predominantly conveyancing, the effect was devastating. Hundreds have already closed from loss of business because the local clientele have been prevented from using their local solicitor.
A P Bassett Solicitors of Lostwithiel saw this as a move by the banks to get themselves into position for when the Legal Services Act legislation introducing Alternative Business Structures (ABS) came into being in 2011. This allowed non solicitors to sell legal services. By then Lloyds TSB were already offering their new mortgage customers free conveyancing.
The Law Society wrote to Vince Cable that substantial reductions in conveyancing panel membership had implications for access to justice, for the principle of consumer choice and the wider consumer interest. The Law Society accepts that the lender, as a client, can choose who they like to represent them. Paul Bassett, however, says this should not mean giving the lenders the power to call the shots by dictating which conveyancer the borrower can use to represent them. “One of the great things about being a local, when it comes to conveyancing, is that we have local knowledge and we are able to deal with any last minutes hitches that come up that could cause a potential delay if dealt with remotely.”
A P Bassetts are a small family run High Street firm providing help and advice on all sorts of legal matters. Most of the town’s shops and businesses in Lostwithiel are independent traders, which helps give the town its appeal. With a population of approximately 3000, a solicitor’s office where they have quick and easy access to legal services on their door step is a community need.
Office Manager Joy Bassett says “Our quality mark is awarded to us by our clients. What our clients have to say to others about our business in a small community is of great importance to our reputation. Therefore we work hard to deliver the best service we can.”
According to the Department for Business Innovation and Skills, small businesses are vital to the growth of the economy. One of the department’s main aims is to remove the barriers that prevent small businesses from growing. Paul Bassett claims the banks’ action is a major barrier to the growth of his business. He says, “It’s one thing to shut up shop because there is no custom, but when you have the customers who want to use you, but are prevented from doing so, that is an abuse of the dominant position. If local people are prevented from supporting local businesses, it’s their community and local economy that suffers.”
Paul suggests that if mortgage fraud is the real reason for reducing the number of conveyancing solicitors from the lender’s panels, then the answer would be for both parties, the lender and the borrower to each have separate legal representation, instead of the current situation where the one conveyancer acts for both the lender and the borrower. Separate representation would eliminate mortgage fraud, but the lenders are against it because, they say, it adds extra cost to the borrower who will have two lots of conveyancing fees to pay. Paul would like the lenders to explain to the consumer why they think the borrower should be expected to pay for the lender’s costs?
Paul Bassett felt the actions of the lenders were not at all in the interest of the consumer, the High Street or indeed his own business. He decided it was time to fight back and started a petition against the banks called ‘Big Banks Bad for Local Business’ You can follow the campaign on twitter and banksbad4biz.wordpress.com.
The local business group were concerned about the knock on effect of the banks’ decision would have on the town’s economy. Kat Smith, Treasurer for the Lostwithiel Business Group said, “Lostwithiel has a thriving community of independent shops and businesses and we were shocked to hear the actions of the banks could be a threat to the future of A P Bassett Solicitors, who make a valuable contribution to our High Street. The success of small businesses is vital to the town’s economy.”
Paul and Joy involved the local press and the campaign gathered momentum. It caught the eye of Christian Lister from SME Ambassador who agreed it was going to take new legislation to bring about the changes that are needed to create a level the playing field between the small firms and the big banks. Christian supports the campaign and says, “We are more than a nation of shop keepers, we are a nation of small businesses and we are the backbone of the nation’s economy. Innovation and change are part and parcel of business life, but taking away the ability to serve the local community with everyday legal services, such as conveyancing, benefits no one but the lenders. The quality of service and the human interaction of face to face dealings allow the consumer reassurance when buying or selling a property. Generational and cultural changes are all around us, people like to buy things online and it’s when things go wrong people find a strong urge to deal with people not machines, far away call centres or lender picked panels. Buying or selling a house isn’t the same as buying a pair of new shoes – there is no simple returns policy.”
Paul’s local MPs agreed the banks’ action was an attack on the High Street. MP for North Cornwall Dan Rogerson brought the matter to the Prime Minister’s attention at PMQ by asking about the restrictive practices of the Mortgages lenders. Dan Rogerson says; “It cannot be right that banks and large corporations dictate to customers who they should engage as legal representatives. Smaller local firms play a vital role in the success of high streets and the small business economy, and the Government should ensure a fair and open market is operating. I support those who are campaigning for a level playing field in conveyancing work.”
Paul and Joy are delighted with the Prime Minister’s response that he wants to investigate. Paul said, “We still have a way to go, but at least we have made it to Parliament!”
Is the high street worth fighting for? Are our local communities worth fighting for? Is the future of small businesses worth fighting for? A P Bassett Solicitors believe that they are!