Search Code update for lenders and conveyancers

SearchCode logo

Introduction

1. At the end of September 2006, the Search Code was introduced prescribing quality standards for the property search industry. This paper will be of interest to staff responsible for lenders’ conveyancing instructions, Home Information Packs, in-house legal departments and conveyancing firms.

Development of the Search Code

2. Over the past 12 months, the Council of Property Search Organisations (CoPSO) has been developing the Search Code in consultation with the search industry and the major stakeholders. There is strong support for standard setting across the search sector, in recognition of the fact that the introduction of HIPs will bring a renewed focus on the need for robust consumer redress measures across the home buying and selling process.

3. While CoPSO has drafted the Search Code, meetings have been held with search organisations which are not CoPSO members and the major stakeholders including the CML, the Council of Licensed Conveyancers, the Law Society and Which? The stakeholders have been very supportive of the work being undertaken:

"The CML supports the concept of a code setting out minimum standards for the search industry. Provided the code contains adequate protection for lenders, lenders are likely to accept searches from all firms that subscribe to the code"

"The Council of Licensed Conveyancers supports the creation of a regulatory environment within which consumers, lenders and conveyancers can have confidence in the reports provided by private search companies"

"The Association of Home Information Pack Providers is very supportive of the work that CoPSO is undertaking in the development of a Search Code for the private sector. As part of the work AHIPP is undertaking on developing its own code, it is considering how it may embrace the Search Code as a constituent element.

AHIPP and its members view the development of meaningful standards as a cornerstone to the future operation of a successful residential property market."

"We also welcome the moves already made by the private search industry to adopt a code of practice, and will work with stakeholders to build on this." Communities and Local Government

A united approach

4. All private search organisations will be able to register under the Search Code, irrespective of size or trade association membership. It is clear from discussions with stakeholders, that there are clear benefits in having one formal set of standards via the Search Code as opposed to a plethora of separate schemes which will only serve to confuse. The Search Code provides the industry with an opportunity to work together to demonstrate that it is committed to operating to quality standards.

Working with AHIIPs

5. CoPSO has been working closely with the Association of Home Information Pack Providers (AHIPPs), as they have also introduced a Code of Practice. It has been agreed that both the Search Code and the HIP Code will be regulated via a single Property Codes Compliance Board and the PCCB was launched at the same time as the Codes on 29 September 2006. This approach reflects the common commitment held by both search and HIP providers, to introduce uniform redress provisions in a coordinated way which will benefit the consumer.

Timetable for implementation

6. The Search Code was launched on 29 September 2006, to tie-in with the Government’s HIPs dry run and the introduction of the HIP Code. Search firms are now able to subscribe to the Code.

7. In the run-up to the introduction of HIPs in 2007, it is clear that the home buying process will experience a period of rapid change and therefore it is important that the Search Code can be readily adapted to reflect this change. In turn, the Search Code will evolve over the next 12 months in consultation with stakeholders, consumer organisations and the Government. This means aspects of the Code and the Registration Rules could change in response to comments and feedback.

The Search Codes

8. The Search Code prescribes standards for the search industry and there are separate Codes for search compilers and retailers. Search organisations which both compile and retail searches must comply with both Codes. Two Codes have been developed in recognition of the fact that there are different types of organisations involved within the search sector and the high proportion of searches which are provided on a reseller basis. The majority of the requirements in each of the Codes are common and HIP providers and the NLIS channels will be able to subscribe to the Search Code for retailers.

9. The main areas covered in the Code are:

  • Content of search reports
  • Marketing
  • Training
  • Complaints handling
  • Insurance
  • Monitoring and compliance

10. The Search Code will be reviewed at regular intervals with key industry bodies to ensure best practice in search ordering, processing and delivery.

11. Organisations registering for the Search Code will be able to use the Search Code logo and there are guidelines prescribed for its use, which will be available from the PCCB.

Property Codes Compliance Board (PCCB)

12. The Search Code will be monitored and enforced by the Property Codes Compliance Board, which is an independent body funded by registered firms. The PCCB has an independent Chairman Sue Scott. Sue has a wealth of experience in managing self-regulatory regimes and has worked for both the Mortgage Code Compliance Board and is currently Head of Legal at the Banking Codes Standards Board.

13. The Board of the PCCB will include representatives of search companies, conveyancers, lenders and have a majority of public interest members. The PCCB will also maintain a central register Registered Firms and promote the benefits of registration to firms which have not subscribed. The PCCB website can be found at www.propertycodes.org.uk.

Registration Rules

14. Registration Rules set out the rights and obligations of Registered Firms who have agreed to subscribe to the Search Code. The same set of Rules will also govern firms which subscribe to the HIP Code.

15. The Registration Rules cover the following matters:

  • Applications for registration
  • Obligations of Registered Firms
  • The provision of information to PCCB
  • Disciplinary procedures
  • Sanctions for non-compliance with the Code
  • Appeals
  • Cessation of Registration
  • Professional indemnity insurance requirements
  • Competence testing
  • Consumer information which must be provided with each search report

16. Organisations wanting to subscribe to the Search Code will need to complete an application form and provide copies of required documents, for example, a professional indemnity insurance schedule and submit these to the PCCB, together with the registration fee. The PCCB will normally expect to complete its new application processing within one month of receipt. If the PCCB decides not to register a firm, there will be a right of review via the Property Codes Independent Review Process. This Review Process will also be available should a Registered Firm want to question any disciplinary action taken by the PCCB. Once an organisation has successfully completed the application process, its name will be added to the central Register and a Certificate of Registration will be issued.

Consumer Information

17. The Registration Rules provide that a summary of the Search Code and the protection provided to the consumer must be included with each search report. Registered Firms can decide where the prescribed text will be included in each search report. The only requirement is that it should be clearly set out for the consumer.

Complaints handling

18. All Registered Firms must have a formal written complaints procedure. Both the Search Code and Registration Rules set prescribed time limits for responding to complaints speedily and fairly. If a complainant is unhappy with the outcome of the complaint, the complaint can be referred to the Independent Property Codes Adjudication Scheme which will be operated by the Chartered Institute of Arbitrators on behalf of the PCCB. The maximum claim for compensation will be £5,000 and the complainant will not have to pay to refer the complaint.

19. A copy of the Codes, Registration Rules, Guidance Notes and Application Form for the Independent Property Codes Adjudication Scheme can be found on the PCCB website.

Insurance

20. On launch of the Search Code at the end of September 2006, the main insurance requirement will be for Registered Firms to have £2m PI. The HIPs 2007 Regulations also require search firms to have run-off cover. Together, these insurance requirements provide comprehensive protection for consumers.

Inspection and compliance monitoring

21. The PCCB will be piloting the inspection regime in advance of this being introduced from Autumn 2007.

22. PCCB will independently monitor compliance with the Search Code and assess the extent of compliance of each subscriber. Any adverse reports will be followed-up to ensure matters have been corrected. In some cases, disciplinary action will be taken. Compliance will be checked via:

  • A self-certification questionnaire, the Annual Statement of Compliance, signed by senior executives.
  • Detailed compliance visits.

23. The compliance visits will:

  • review high level compliance controls
  • check details of search reports
  • include visits to administration departments
  • include market research activities, including ‘spot checks’ through mystery shopping
  • monitor the media and complaints to both Registered Firms and the Independent Property Codes Adjudication Scheme.

24. The PCCB will refer any allegations of breaches of the Code to the search provider so they can take appropriate action. Each Code subscriber must have procedures in place to deal with complaints speedily and fairly. If there is a serious failure to comply with the Codes, the PCCB can use its disciplinary measures.

Kate Nicholls (Head of Communications)
info@copso.org.uk
020 7927 6836

www.propertycodes.org.uk

March 2007