tmgroup: The new transparency rules come into effect
Ahead of the new price transparency rules coming into effect on 6th December 2018, tmgroup asked the industry “Will the new rules change conveyancing for the better?”.
They received an overwhelming response, with many saying they were confident that the new rules “make good business sense”, and should create competitive advantages for firms that promote the quality of their services alongside their prices. Yet there was a note of caution, that those who focus too heavily on price alone, risk a race to the bottom – and losing out.
Want to find out what the regulators, media professionals, industry consultants and partners, and legal professionals have to say?
Take a look…
What do the regulators think?
“Better information is good for clients and, if done well, can help firms too.”
“Potential clients might rely on word-of-mouth, referrals, or online searches to choose their conveyancer. However a buyer or seller starts their search, our new requirements will help them make an informed choice.
We want CLC firms to succeed and we believe that providing clear information to customers makes good business sense. The changes provide CLC Practices with new opportunities to create a competitive advantage as they focus on service and quality and not just price.
While our requirements set out what firms must do, we know that all CLC Practices are different, so we are giving them flexibility to comply with the rules in the way that best suits their business and their clients.
Better information is good for clients and, if done well, can help firms too. We are urging the firms we regulate to take a good hard look at how they position themselves in the market and to potential clients. Identifying, developing, and communicating their differences and the value they add will help potential clients know what their business offers – and why they should choose them over the competition. The changes can be a catalyst for this, but it will be up to firms to make the best advantage of them.”
With thanks to Stephen Ward, Director of Strategy and External Relations, Council for Licensed Conveyancers (CLC)
“Being more transparent may give conveyancing providers a real competitive advantage.”
"Buying a house is the biggest and most complex financial transaction most people will make during their lives, but for many, finding the information they need to help them choose a legal professional to work with can be a hugely frustrating challenge. Time and again, users of legal services highlight price and quality as the two most important factors they consider and look for information on when choosing a provider.
That there is an appetite to shop around is clear, an SRA survey of 1,000 recent homebuyers found that two-thirds spent more than an hour researching providers. Yet only 15% were able to track down easy-to-understand information on what firms may charge them. Our new transparency rules seek to address this by asking firms to publish both prices and accessible information on the services and people that sit behind these.
Not only is this approach good for consumers, but in a highly competitive market being more transparent may give conveyancing providers a real competitive advantage in winning new business. At the very least, publishing prices should help debunk public misconceptions that professional legal services are more expensive than they really are. Our research suggests that people think legal costs are as much as 22% higher than is actually the case.”
With thanks to Chris Handford, Director of Regulatory Policy, Solicitors Regulation Authority (SRA)
“The new rules will allow consumers to compare ‘apples with apples’, and increase accessibility to conveyancing providers.”
“We, at the CA, certainly believe the new transparency rules will deliver a number of benefits providing far greater certainty for consumers that the charges they pay will match the transaction as it has been described to them.
The benefits, as we see them, include the fact the consumer will now be made aware of any referral fee that is applicable in the case, they’ll effectively be able to compare ‘apples with apples’ when it comes to the service on offer, and that as a result this will encourage them to buy on service rather than on a perception of what is the cheapest.
In a general sense, we believe it will improve the process for consumers wishing to find out about the costs of conveyancing, and it will also increase the accessibility of conveyancing providers, given that consumers have found it frustratingly difficult to ascertain the true costs involved because these have not been accessible from, for example, the firm’s website. Following the introduction of these new rules next month, it will be up to the regulators to take a robust view in enforcing failures to comply and providing full cost transparency, so that consumers are not lulled into £99 ‘deals’ only to find that their final bill is closer to £1,500.”
With thanks to Beth Rudolf, Director of Delivery, Conveyancing Association (CA)
What do legal professionals think?
"Comparison websites will not help, because a client will only be able to search against firms who pay to be on the site."
Compli advises lawyers on regulation, risk and compliance
"I remain to be convinced. In most cases a meaningful fee quote is the result of a two-way process formulated on the basis of information received from clients regarding the work required, the timescales involved and consideration of the personnel required to complete the work.
The provision of the required information on a firm’s website is unlikely to be meaningful in the absence of this process. If done properly, it could provide more of an opportunity for firms to showcase their expertise and reputation (not just focus on price). It could also raise clients’ awareness of what is involved in a property transaction and thus help to better manage clients’ expectations, but there is a risk that too much information or a long list of caveats/exclusions either becomes meaningless or more confusing for consumers.
The danger is that there could be a race to the bottom which in turn could lead to falling standards and increased complaints. Comparison websites will not help here either because a client will only be able to search against firms who pay to be on the site."
Michelle Garlick, Partner and head of the Compli team at Weightmans LLP.
“Price transparency only risks making the industry even more price competitive, driving down fees and consequently service.”
“Whilst I understand the intention, I do feel the requirement for price transparency has caused confusion and created a further distraction in an industry which has far more pressing issues around modernisation and digitalisation of the conveyancing process.
Conveyancers generally already provide clients with a comprehensive illustration of fees and anticipated expenses but, as every transaction and clients’ needs are unique and unknown at the point of instruction, additional fees can never be quantified by either client or lawyer at the point of instruction.
Other professions do not seem to have this need for ‘standard’ disclosure of fees if, for example, we compare ourselves to accountants. Price transparency only risks making the industry even more price competitive, driving down fees and consequently service for under-valued and complex work in an ever more demanding consumer market – something which many conveyancers are not yet geared to offer. Low margins have already driven expert people out of residential conveyancing, which has resulted in a skills shortage, inevitably contributing to slower transactions.
Price transparency will not fix the current challenges with the conveyancing industry. As conveyancers, we need to be more consumer aware in our dealings with clients, and be more inward looking. We need to review our processes and procedures and invest in technology to offer consumers better, digital access to information, to enhance the home buying process – something price transparency will not change. Price is also only one metric to enable consumers to make an informed choice. Fee transparency in isolation does not enable clients to make informed choices based upon the capability of the firm being considered, its service or claims record.”
With thanks to Suman Dally, Partner, Shoosmiths LLP
“It’s a fine line between providing enough helpful information and overwhelming the reader.”
“Information is power and helping the public and small businesses to understand the legal services that protect their own interests is unquestionably a good idea. Many people only use lawyers a few times in their lives and so are not familiar with the issues and options. We are all busy, so moving the initial explanation of services onto lawyers’ websites should help more lawyer-client relationships start well.
Understanding what is involved in a service before buying helps potential clients to judge what is offered. There are many kinds of legal providers, and different approaches will suit different people. The problem for lawyers is the complexity of a legal process is hard to explain clearly, especially before we know much about a client’s circumstances.
It’s a fine line between providing enough helpful information and overwhelming the reader. Big differences between matters may not be obvious to someone outside the legal sector. All the same, this is a positive step and I hope that these changes will inform consumers so they can choose a suitable level of service and the right professionals to help them.”
With thanks to Megan Jenkins, Professional Support Lawyer, Shakespeare Martineau
“The new rules should help with enquiry conversions from clients.”
“I am fully in favour of providing clients with full costs transparency at the outset of a transaction and we have been doing so for as long as I can remember. The new rules require us to publish pricing details on our website; however there are a host of variables that will affect a transaction, which makes it almost impossible to provide an accurate fixed price without discussing the transaction with our clients first.
It is important that clients consider what is covered in the base fee quote provided. Some law firms will include items as part of their standard retainer (for example acting for a lender on a purchase, processing SDLT returns etc…) whilst others will list separate charges for handling these. This needs to be made very clear to enable the potential client to make their choice on a full like-for-like basis.
Decisions should also not be based on price alone. It is important to establish the level of service to be offered and the qualification and experience of the person(s) handling the transaction. Both can have a significant impact on the transaction and how it progresses.
The new rules will enable clients to view general details of the charging structure of a firm, which in return should help with enquiry conversions. However, I am still a firm believer in picking up the telephone to discuss a new transaction. Only then can you be guaranteed an accurate initial quote and an indication of service.”
With thanks to Rebecca Swain, Partner and Head of Residential Conveyancing, Thomson Snell & Passmore LLP
What do media professionals and industry consultants & partners think?
“The younger generation (your clients one day) are looking for 24/7 access and immediate responses.”
“The new Pricing and Transparency rules, very few want them and most will think they will drive legal fees down. I go to a lot of conferences and seminars and watch a lot of webinars (part of the job) and I don’t believe that has to be the case. I have even read (and have available) a Counsel’s Opinion on the rules. The question is, do you want to do the bare minimum to comply or use your website and the rules as an opportunity to try to win more, well paid work?
As much as the next person, I sometimes question change for changes sake, but when it is inevitable I try to embrace it and, to be honest, use it (as a businessman) to my advantage. My advice is, look at all the possible solutions and then make your decision. However, don’t forget, that the younger generation (your clients one day) are looking for 24/7 access and immediate responses. Maybe you should provide them with what they want?”
With thanks to Rob Hailstone, CEO, Bold Legal Group (BLG)
“We mustn’t lose sight of the fact that this isn’t just about price – otherwise we risk a race to the bottom which benefits no one.”
“Providing the consumer with all the information to make informed choices around which service proposition best meets their needs is clearly something that all professionals within the property transaction marketplace should be aiming for. It is something that we at tmgroup have been championing for some time through our technology platforms.
It is important however that we don’t lose sight of the fact that this isn’t just about price, but that it more crucially is around the holistic service proposition, otherwise we risk a race to the bottom which doesn’t benefit either the consumer or the industry. A cheap service that makes mistakes, incurs unnecessary disbursements, and delays the transaction to the point where it risks falling through is not a good outcome for anybody.
We have been working closely with our conveyancing partners to develop ways of delivering transparency around the actual service, which I believe will ultimately represent the step forward in consumer experience that the regulators and the industry are both seeking to deliver.”
With thanks to Joe Pepper, CEO, tmgroup
“The best will use it as a chance to explain what they do and flesh out the value a good law firm adds.”
“Is the market only working if people are shopping around for the best deal? Competition authorities and modern professional regulators certainly think so, and law firms and clients are therefore invited to ignore the fact that economists have known since the 1930s… that markets actually never work so straightforwardly.
I’ve spoken to firms as they prepare to publish price information. They range from firms that already have a conveyancing fees ‘calculator’ on their website, to those whose high-end part of the market is not especially price-sensitive. All those firms have to find ways to include caveats to the quotes given – there is a tension between the regulator view that this is a ‘commoditised’ service, and the reality that no two transactions are the same.
The worst examples give a quote that’s hard to ‘read’ the component parts of if you’re not a legal or property professional, and attach caveats that sound more like a warning. The best examples use it as a chance to explain what they do – to flesh out the value a good law firm adds, and the fact this is an individual service.
If all firms met the standard of those who have done it best, would clients shop around more? Probably not, but it’s still a good thing to do.
With thanks to Eduardo Reyes, Commissioning and Features Editor, The Law Society Gazette
“Firms will open up an online channel that could increase contact and improve market share”
“Firms should see publishing prices as a real business development opportunity to engage with consumers and help them to understand the value of the firm’s proposition, and not purely a compliance issue. Instead of the traditional methods of phone calls or face-to-face visits, home movers are now seeking digital channels to find quotes online in the evenings and on the weekends, when they are not at work.
By publishing price information online, firms will open up an online channel that could help them benefit from increased contact and improved market share in an increasingly competitive market.
When clients feel looked after and have a good experience, they are more likely to go back to the firm for other work, from generating a quote all the way through to the completion of the work, being able to improve efficiency in the firm and communicate via multiple channels.”
With thanks to Craig Campbell, Product Director – tmconnect, tmgroup
“The benefits will stand or fall based on the up-front case made by introducers and conveyancers for the value they represent”
“I think the new price transparency rules will change conveyancing for the better, and I think in time firms will come to welcome their introduction for three principal reasons:
- They are being nudged into line with how the market increasingly wants to engage with mainstream private client services. Those that embrace it most fully will see the best results. Firms that adopt a "what can we get away with?" approach either already serve niche markets, or will simply widen the competitive gap between them and their professional peers who do embrace these changes.
- The benefits to clients of paying referral fees will stand or fall based on the up-front case made by introducers and conveyancers for the value they represent. I don't think it'll be enough to say "we're passing on a marketing cost that we incur" if there isn't a discernible client benefit to go with it.
- Price transparency is encouraging firms to look for more service and performance data that contextualises price. This has hitherto largely been ignored, but this new catalyst is already bringing forward innovative datasets from bodies such as HMLR and Trustpilot, which is improving the range of comparable data. Firms that argue strongly that price isn't an accurate measure of the value they supply can now make the wider case using solutions like ours“
With thanks to Richard Hinton, Director, Pitsford Consulting Ltd
“Managing online reputations and reviews will be a crucial part of a firm’s marketing considerations moving forward.”
“Although many within the legal sector are reticent about the upcoming changes to price and service transparency, it should make it easier for consumers to make informed decisions on their buying choices.
It will become imperative for conveyancers to consider how they will demonstrate their added value and expertise to the client. Those that fail to consider the services they offer and why their price is justified because of their experience will result in an inevitable race to the bottom by focusing their attention on the competitive price they can offer. Managing online reputations and reviews will be a crucial part of a firm’s marketing considerations moving forward.
Businesses that implement the relevant changes effectively, and carefully consider the unique selling point they offer their potential clients, should create: a competitive market, offer better value and service for money and decrease consumer complaints.”
With thanks to Chris Harris, Managing Director of Lawyer Checker and the Practical Vision Network
What do you think about the new transparency rules? Got an opinion you’d like to share? Tweet us @TM_Property