Conveyancing solicitors divided over impact of regulator 'shopping list'

Conveyancing solicitors are divided over the impact of being able to choose a regulator, after the Legal Services Board approved an application by the Council for Licensed Conveyancers (CLC) to regulate ABSs.

The move makes the CLC the first body to be approved as an ABS licensing authority and will allow it to compete with the SRA in regulating firms specialising in conveyancing and probate services.

According to the LSB, the CLC currently regulates ten to 15 per cent of the residential conveyancing market, made up of 1,103 licensed conveyancers, 301 managers and 215 practices.

The LSB said that 30 per cent of firms already regulated by the CLC, accounting for more than half the turnover of licensed conveyancers, would need to be licensed as ABSs before the end of the transitional period in October 2012.

The next step is for the Lord Chancellor, Ken Clarke, to approve the CLC's application as a licensing authority.

According to the CLC, the order is due to be made in August by the Lord Chancellor, well ahead of 'ABS day' on 6 October 2011.

Jonathan Smithers, head of property at CooperBurnett, said the SRA's application to become a licensing authority was 'vastly more detailed and exhaustive' than the CLC's and had to be approved by the society's council, so it was no surprise it took longer to approve.

Smithers said ABSs could be created as volume conveyancers were purchased by large chains of estate agents, particularly agents that were already receiving referral fees from them.

If this happened, he said some might think being regulated by the CLC was easier than the SRA.

'At the moment the solicitor brand is very important to a firm in selling conveyancing services. The public does not know what licensed conveyancing means in the same way.

'In the future well-known firms like Tesco coming in as an ABS will use that brand and, if the CLC offers a less stringent regulatory environment, it may be easier for them to be regulated by the SRA.'

However, Paul Marsh, former president of the Law Society, said any firm that opened a conveyancing ABS would have to 'force its way into a static market'.

He said an oversupply of conveyancers was putting downward pressure on prices and making the launch of any new business model even riskier than it would normally be.

'This is a very complex market,' Marsh said. 'Licensed conveyancers have just got through their own process of introducing outcomes-focused regulation. No one knows how this will work.

'If a lot of high-risk solicitors become licensed conveyancers to reduce their insurance premiums, it could blow their system of regulation apart.'

Richard Barnett, chairman of the Law Society's land law and conveyancing committee, said approval of the CLC's licensing application emphasised that solicitors would end up with a 'shopping list' of regulators, which could include ILEX.

'ABS has been with us for 20 years through the CLC,' Barnett said. 'If a big firm wanted to converge, it would have done so already. Countrywide, the largest conveyancing firm in the country, is regulated by the CLC.

'If a firm of estate agents buys a firm of solicitors it will be to do other kinds of work, just as the Co-operative is doing.'

Eddie Goldsmith, chairman of the Conveyancing Association, which represents both solicitors and licensed conveyancers, said he was encouraged to see the CLC's application go through.

'Obviously it's limited at this stage, but I'm sure I speak for many solicitors when I say we welcome the prospect of a choice of regulators. Competition is good, even among those who regulate us!'

Victor Olowe, chief executive of the CLC, said the LSB's decision would enable 'some of our existing regulated entities (that must be regulated as ABS) to retain the CLC as its regulator and continue to deliver positive outcomes for consumers.

'We are also pleased that our experience of regulating ABS-type structures for the past ten years has been recognised by the LSB.'

Olowe said the LSB welcomed the chance to regulate a 'wider diversity of ABS entities' in the future.