The session was an interactive roundtable/group discussion format, and delegates included mortgage lenders, tech firms, and conveyancing solicitors from a range of firms.
Setting the scene, Andrew Lloyd, Chief Customer Officer at PEXA, presented some stats about the market, stating that buying a home in the UK is the second most stressful experience after getting divorced, with remortgaging not far behind in sixth place.
Figures show that 81% of customers experience an issue on a sale and purchase transaction, with 43% facing a problem on a remortgage. Some additional stats explain this further, with 31% of purchase transactions falling through, 63% experiencing unexpected costs, and 40% experiencing a delay. Whilst the number for remortgage were lower, at 11%, 13%, and 33% respectively.
Andrew posed this provocative question to the room, which led to an interesting discussion:
“I don’t think it’s completely broken; I think it’s frayed. There are elements of it that are broken which are really difficult to fix and the industry isn’t working together to fix the broken parts.”
“People understand that there is legal work to be done, but they don’t understand what the lawyers actually do.”
“Everyone in the ecosystem is working in silo, we’re all doing our bit to streamline our processes but we’re not working together.”
“There’s a lack of transparency across the process which for people buying a house, can be extremely frustrating.”
Clearly there are many issues that need resolving, as the process is complicated and there are numerous opportunities for conflict. One lender described the process as ‘fragmented and difficult’, while a conveyancer highlighted the challenge of balancing a time consuming and unpredictable process with the need to offer a competitive price while also operating a commercially viable business. A tech firm challenged whether it was conveyancing that is broken, or the house buying market.
“The problem for the conveyancing association, it’s like herding sheep, you can get 3 or 4 on board but the rest aren’t willing to change. The land registry is a huge part of this process as well, but they don’t seem to be engaged in the discussion.”
The point was made that technology has played a significant role in the conveyancing market for a long time, which suggests that it is the underlying legal process that is the issue, rather than the application of technology. Overall, there was a clear consensus in the room that the conveyancing process has the potential to be significantly improved.
“In other parts of the legal sector, they’re using technology more widely, why has conveyancing been left behind?”
“It’s a lack of coordination, you need to look at your whole transaction. That’s what happens in other sectors, why doesn’t it happen in the legal sector?”
Suggestions included the increased use of indemnity insurance to remove delays and the seller providing the searches up front, was previously attempted with the failed introduction of Home Information Packs (HIPs). Another suggestion was that lenders could stipulate they would only have conveyancers on their panel who agreed to gather key documentation upfront, or to operate to defined service level agreements. The opportunity to streamline duplicative processes such as the verification of ID my multiple parties during the process (eg lender, broker, solicitor, estate agent..), although it was highlighted that this brings issues in terms of who holds the ultimate liability for this verification.
“There are 4 separate occasions where you have to get your ID verified, could we not get everyone together to work out how we share customers ID’s, so they only have to share it once?”
“There’s a significant risk with fraud in conveyancing and the risk increases all the time. Times have changed and you don’t see clients face-to-face now to check their original ID documents, a lot of it is digital and people use that in sinister ways.”
Examples were given that suggest the conveyancing market can expect to become increasingly automated:
· Identification verification is increasingly completed via trusted online services and apps.
· A significant proportion of property valuations are now done on an automated basis, or via a ‘drive by’ process.
· Open Banking has automated elements of the mortgage underwriting process in respect of the provision of bank transaction data.
It is reasonable to expect that the conveyancing process will follow a similar path.
“There is an opportunity for automation across conveyancing, particularly with re-mortgaging. Eventually, conveyancing will go the same way as financial services.”
“The risk appetite in the financial services sector has increased in line with tech adoption, why can’t this happen across the legal sector?”
Industry developments such as Consumer Duty will have an impact on the way mortgage lenders treat customers across the process of getting a mortgage, which could include elements of the conveyancing process.
“The customer has only been mentioned right at the end of this discussion but at the end of the day, it’s a market and the customers are important.”
To conclude the discussion, the room gave suggestions on what needs to improve across the industry, to give the special interest group a focus for future meetings:
· Fees – increasing fees as a market so that firms aren’t trying to drive down costs and increase case load.
· Transparency – improve transparency and communication along the journey for customers.
· Technology adoption.
· Regulation - to set a standard which outlines clearer expectations.
· AI – adopting AI and automation to drive down costs and improve the margin issue.
· Customer/Client Focus - bring the customer/client back to the centre of the discussion, reengineer the process so that it’s seamless for the client/customer.
· Lender role - lenders playing a bigger role in supporting the conveyancers.
Overall, it was a great session with lots of engagement and contribution from the room. Huge thank you to PEXA for facilitating the discussion and to the team at Addleshaw Goddard for going above and beyond with their hosting and making everyone feel so welcome.
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