Mortgage lenders should create a single body to vet law firm applications for conveyancing panel membership, the head of mortgage fraud at Lloyds Banking Group has said.

Paul Collins, who is also manager of the group’s conveyancing panel, said that lenders should develop a unified approach to approving members and recruit a third-party organisation to manage the process and carry out the due diligence on firms.

Collins told an event organised by the Conveyancing Association that a single fee could be charged for the process. Individual lenders could then decide which firms they want on their panels, applying their own risk criteria.

Eddie Goldsmith, Conveyancing Association chair, said he supported the idea: ‘The last thing that any firm wants to do is repeatedly provide the same information over and over again. Therefore one body that can coordinate the standard information, even if there has to be some additional information given, has to be a real plus.’

Goldsmith said he hoped stakeholders, including the Council of Mortgage Lenders and the Law Society, would work together to make it happen.

While Collins said it was ‘inevitable’ that panel sizes would fall, he said Lloyds, which deals with about 30% of the mortgage and re-mortgage market, would continue to have a ‘pretty large’ panel of several thousand firms.

He also denied that sole practitioners were being removed from panels: ‘sole practitioners have a place on our panel - we’re not eliminating them’, he said. Lloyds had found that sole practitioners posed no higher risk than firms with two to three partners.

Collins said Lloyds had begun to take ‘aggressive action’ putting in place greater controls of its panel management over the last couple of years, following the spike in mortgage fraud in 2009. That year, he said, saw the peak in mortgage fraud by solicitors, who were absconding with funds, failing to register charges, and failing to comply with money laundering obligations.

The incidence of mortgage fraud has come down ‘considerably’ since 2009, but he said the number of attempts to perpetrate fraud had remained consistent. He also noted a shift in the trend for mortgage fraud to be committed by the vendor rather than purchaser solicitors, as well an increase in valuation fraud relating to properties being repossessed.

Goldsmith said: ‘The issue of mortgage fraud isn’t going to disappear overnight and no-one is naive enough to believe it can be fully eradicated.’

Law Society chief executive Desmond Hudson said: 'For some time now the Society has publicly called for a common industry wide solution to the panel management issue. The Society has committed to doing all it can to help lenders find an effective common solution. Maintaining panels that are as open as possible will be in the best interests of all lender and the public.

'The Law Society recognises the pressure lenders face from the Financial Services Authority in relation to their panels, for solicitors, who make up the majority on those panels, lenders can use the Conveyancing Quality Scheme data that the Society has collated for this purpose and is prepared to provide for free. 'CQS is a scheme both solicitors and lenders can benefit from, with the necessary data made available to lenders thereby avoiding the need for firms to supply the data many times to different lenders. This is why we are piloting CQS data collection. We will be discussing with lenders the outcomes of the pilot and looking to work with them to provide a system that works for all concerned.

'The number of CQS firms continues to grow. Lenders could help drive up numbers quickly if they are more vocal in their support for the scheme.'