Lloyds Banking Group is hardly flavour of the month with Scottish solicitors, following its decision to cut its panel of approved solicitors for residential conveyancing and mortgage lending transactions.

The Group should not be surprised. Having first of all declared that it recognised Scotland as a separate case from a similar exercise in England & Wales earlier this year, and then insisted that Scottish solicitors sign up to the ARTL system as a condition of remaining on the panel, it smacks of bad faith for it now to apply a cutoff based not on quality or service but on a crude count of transactions over the (recession-hit) past year.

In doing so it will have embarrassed the Law Society of Scotland, which promoted the assurance previously given and also incurred the wrath of some members for acquiescing in the ARTL decision – not only those who resent having to do things on a computer, but a perhaps considerable number who are yet to be convinced that the system is technically advanced enough at present to work efficiently for them. Letters published in the Journal provide some pointers here.

The Society took the view, among other reasons, that to adopt the system, which has no equivalent down south, would help protect banks against the risk of fraud and in turn protect solicitors from precisely the sort of outcome that has now materialised.

Small wonder then that the Society's President Jamie Millar felt moved to write to Lloyds' Director of Retail Market Operations reporting not only the Society's own disappointment, but members' shock, anger and frustration at the decision and its consequences for individual firms.

With its ARTL policy in place one does wonder what Lloyds actually stands to gain, even leaving out of account the damage to its reputation among a hitherto valued section of its customer base (or so it had us believe). The Group's decision is the more surprising when you think of the value of practice and client funds that must be held with its constituent banks, including not only LloydsTSB but Bank of Scotland, Halifax, Scottish Widows Bank, Cheltenham & Gloucester, Birmingham Midshires, Intelligent Finance, and St James’ Place Bank.

This is one instance where bargaining power is not all the one way. Perhaps the Group is assuming that only firms removed from the panel will be likely to look again at their banking arrangements. It may not be that simple.