Lender Exchange: what's it about?

In late autumn 2013 the Society was advised by the Council of Mortgage Lenders about a new residential conveyancing panel management solution, facilitated by a company called Decision First. Decision First will provide a “gateway” between solicitors and banks for the purpose of panel management. The aim is to help lenders streamline the panel management application process for the benefit of both solicitors and lenders.

Decision First has now developed a single interface called “Lender Exchange”. The Lender Exchange scheme was launched on 4 August 2014. Lloyds Banking Group (which includes retail mortgages for Bank of Scotland, Birmingham Midshires, Halifax, Lloyds Bank and Scottish Widows Bank) and Santander are the first lenders to use the system. Law firms on each of these lenders’ residential conveyancing panels have been asked to register on the Lender Exchange. We have been advised by Decision First that they are in final discussions with TSB, Nationwide, RBS and Virgin Money.

The Professional Practice team has received enquiries from members who have been contacted by Lloyds Banking Group and/or Santander, who have advised that they each intend to participate in the Lender Exchange scheme.

The Lender Exchange system will allow panel firms to keep lenders up to date with any changes to their practice. The scheme means that conveyancing panel members only need to provide their details and supporting documentation once to those lenders involved in the scheme. Lenders will then use information from this database to make their own decisions about membership of their conveyancing panels.

Decision First will charge panel firms a single annual fee for use of the Lender Exchange system, which will be based on the size of the firm. The Society has expressed its concern in relation to the charge, which it views as an unnecessary cost to process information as the Society already holds this type of information about solicitors and has offered to provide it free of charge to lenders.

In the event of a removal or rejection of an application, firms can appeal through the system, but the appeal will be dealt with individually by the lender.

Society concerns

Over the last 12 months the Society has published regular updates in relation to the Lender Exchange scheme in the professional practice updates section of its website. The Society has openly voiced its concerns and stated its opposition to this new system of panel management. We also carried out an online survey of our members in November 2013. The main issues of concern raised were the clear increased administrative burden, increased costs, and no guarantee that by participating in the scheme solicitors will get onto lenders’ panels.

We obtained legal advice on the draft terms and conditions we received from Decision First, which we published in the professional practice updates section of the Society’s website on 21 May 2014. The terms and conditions are a commercial contract between Decision First and the relevant law firm. The Society has not approved or endorsed the terms and conditions on behalf of its members, but we have highlighted a number of concerns in relation to Decision First. The final terms and conditions were published in the professional practice updates at the end of July. We would also remind members that by accepting the terms and conditions, firms are bound by them and any applicable lender-specific terms and conditions.

The Society’s brokers Marsh Ltd reviewed the indemnity provisions in the terms and conditions in relation to the potential implications for cover under the Master Policy for professional indemnity insurance. We published a summary of the advice provided by Marsh in the September bulletin and in the professional practice updates section of the website.