Solicitor warns of Lender Exchange suspension threat

Solicitors who have joined the Lender Exchange panel system in order to act for mortgage lenders, have been warned to beware of apparently being suspended from the panels of lenders covered by the system.

The issue has been highlighted in a blog by Brian Inkster of Glasgow and Highland firm Inksters, after he was sent an email by Lender Exchange advising that his firm had been suspended from the panels of Lloyds Banking Group and Santander, both of which require solicitors to join the system in order to act for them.

This was apparently due to failure to provide requested information, which Mr Inkster was eventually advised that he had in fact done but had failed to click the correct "submit" button to complete the process.

That was not an end of the saga, however, as after correcting the omission Mr Inkster was told that his firm remained suspended and he would have to contact the lenders direct to request that it be reinstated to their panels.

When he did so, however, he was, he says, "reassured by both panel administrators that my law firm had certainly not been suspended from their panels and I was to simply ignore such communications from Lender Exchange". He adds: "This was comforting indeed, but should Lender Exchange not have ascertained this before being so adamant with me that suspension had taken place? The Lender Exchange portal still shows my firm’s panel status as suspended today. No doubt I will have to spend a good part of the forthcoming week getting them to amend that status to reflect the actual fact that suspension never took place at all."

Mr Inkster was told that 50 emails similar to that received by his firm were sent out last Friday, and a further 250 are scheduled to be issued during this week.

Lender Exchange was set up with the aim "to make the process of applying for panel membership and updating lenders on changes in your businesses easier, quicker and more cost effective (for law firms and lenders alike)". Mr Inkster comments: "Well that was certainly not my experience". He has requested the Law Society of Scotland to take up the issue with Lender Exchange and the lenders "as a matter of priority".

Lorna Jack, the Society's chief executive, told the Journal: "We are sorry to hear some of our members have been experiencing problems with the Lender Exchange system. We will be contacting Decision First [the company which operates Lender Exchange] to see if this is a widespread problem and how it may be resolved.”

She continued: “We have continued to express our concerns regarding Lender Exchange following the first proposals for the system in September 2013, particularly the increased administrative burden and increased costs for our members. We carried out an online survey of our members and obtained legal advice on the draft terms and conditions which we received from Decision First. We also wrote a joint letter with the Law Society of Northern Ireland to all UK lenders as well as highlighting our concerns regarding jurisdictional and data security issues to Decision First.

“We still believe that the annual fee for use of the system is an unnecessary cost, as the Law Society already holds the information about solicitors that lenders look for and we have openly expressed our willingness to provide this information free of charge to lenders.”

Asked for comment, Justin Parkinson, managing director of Decision First, responded: "'Suspension' from the system does not instantly remove firms from lenders' panels as they are likely to have pipeline cases. Instead, the system highlights to lenders that we have had to 'suspend' the firm in Lender Exchange and lenders would then take their own actions. Perhaps making the firm inactive on Lender Exchange is a more appropriate phrase that we should use in the future.

"It's important that all firms (and lenders) are protected, so it's vital that any information, data and documents are provided at the earliest possible convenience. We impose the cutoffs for receiving annual compliance information and documents so as to give lenders a clear view of who has complied with their requirements and who has not.

"Any issues a law firm might face with the system can usually be dealt with in a brief call to the team.

"We have been discussing with the Law Society of Scotland ways in which we might be able to save their members more time and effort, and I hope in the fullness of time that we can work with the Society, its members and lenders on greater use of the smartcard to enhance the features of Lender Exchange, remove duplication and increase efficiency for all concerned."

Legal firms who are members of Lender Exchange should beware when updating their details, that it is necessary to conclude the process by pressing the button "Submit firm details", rather than "Update firm details".