Compliance · 8 min read · Updated 25 October 2026

Lender Instructions in Conveyancing: Handbook Compliance and Where AI Fits

What the Handbook asks of a panel firm, what the SRA has said, and where software can help with lender requirements.

By Appan Pathmanathan, Chief Operating Officer, Lex Sentinel

A firm acting for a buyer and their mortgage lender must follow the lender's instructions in the UK Finance Mortgage Lenders' Handbook as well as the rules of its regulator. Work for a lender cannot be sub-contracted to another firm, and facts the lender has said it wants reported must be reported. Software, including artificial intelligence (AI) tools, can track requirements and flag gaps, but a person decides what to report.

Lex Sentinel, where I work, builds AI tools for conveyancers, so I have an interest in this topic. This is general information for firms regulated by the Solicitors Regulation Authority (SRA) in England and Wales, and it is not legal advice. The Handbook is maintained by UK Finance and by each lender, and I could not read the current Part 1 text, which sits behind a login. I have therefore cited Handbook paragraph numbers only where I could confirm them, and I say where a point is my own view. Check the current text for your lenders before you rely on any of it.

What is the Mortgage Lenders' Handbook and who must follow it?

The Mortgage Lenders' Handbook is the set of instructions a lender gives the firm it appoints to act on a mortgage, and it applies to the firms on that lender's panel. Part 1 holds the general requirements and each lender publishes a Part 2 with its own variations, so the requirements can differ between two mortgages on the same purchase. UK Finance announced on 29 June 2026 that its new Handbook website was live, used by over 120 lenders.

UK Finance's summary of amendments to the England and Wales Handbook, which is dated 2017, says a paragraph 1.12.1 was inserted in 2012 to make clear that sub-contracting work from firms acting for the lender is not acceptable. I could not confirm that the numbering is unchanged in the current text.

What standard of care does a firm owe the lender?

That of a reasonably competent conveyancer, in my view, because the lender is the firm's client in the same retainer. The Handbook is the lender's instruction, and the firm's duties to the borrower and to the lender sit side by side. I could not confirm the Handbook's own wording on the standard of care, so check Part 1.

The conflict rules in the SRA's Code of Conduct for Solicitors apply to a joint retainer. Paragraph 6.2 covers conflicts of interest and its exceptions, 6.3 confidentiality, 6.4 disclosure of material information and 6.5 not acting where clients' interests are adverse. I found no reference to lenders or mortgages in those paragraphs, so applying them to a lender and borrower is the firm's own judgement, drawing on the SRA's conflicts guidance, which I understand dates from 2020 and have not rechecked.

What must a conveyancer tell the lender?

A conveyancer must report to the lender the matters the Handbook requires to be reported, and refer to the lender a matter the Handbook does not cover. UK Finance's 2017 amendments summary describes paragraph 2.3 as the provision on referring a matter to the lender. The text I could read does not say what the firm must do about completion in the meantime, so read the current paragraph before you rely on any summary of it.

The SRA's analysis of professional indemnity claims gives the best evidence that reporting is where firms go wrong. Its indemnity insurance claims data says failure to comply with an agreed requirement to report four facts about the transaction accounts for nearly 20% of claim payments. The four facts it lists are back-to-back transactions, a seller who has owned the property for under six months, part of the purchase price paid directly, and a variation in the purchase price. The data covers 2004 to 2014 and all areas of law, the document itself is undated, and I could not find a current equivalent, so read it as evidence that this duty has long produced claims and not as a current rate.

What does the SRA say about technology and lender duties?

The SRA has published nothing specific on that subject that I could find. Its anti-money laundering report for 2025/26 lists the introduction of new systems and processes, such as client verification tools, as a change that should prompt a review of the firm-wide risk assessment. The same report describes failure to carry out appropriate customer due diligence in conveyancing as an area it considers high-risk for money laundering.

The SRA's warning notice on the misuse of AI, published on 17 August 2026, says the use of AI does not diminish or transfer professional responsibilities. I found no statement from the SRA, UK Finance or the Law Society that links AI to a firm's duties to its lender. For the wider rules, see our guide to what the SRA expects of firms that use AI.

Where can software help with lender requirements, and where can't it?

Software can check a file against a lender's requirements and flag the gaps, but a person has to decide what a gap means for the lender. The table shows where I would draw the line. It is my reading of the Handbook and the Code, and no source I found says in terms that software cannot take these decisions.

Task	What software can do	What a person must do
Finding the lender's requirements	Pull the lender's Part 2 and map its variations against Part 1	Confirm the version is current and read the variations that matter on this file
Tracking requirements on the file	List what the lender requires and flag what is missing	Decide whether the evidence on the file meets the requirement
Spotting reportable matters	Highlight discrepancies, such as a price that differs from the contract or a source of funds that does not match the ledger	Decide whether the lender would want to know, and report
Drafting the report to the lender	Produce a first draft from the facts on the file	Check it is accurate and complete, and send it
Identity and fraud checks	Read documents and compare them	Decide whether the evidence is sufficient, and act on warning signs

Can a firm let software read the Handbook?

Possibly, but the Handbook's terms of use restrict it, so a firm should read them before software processes the content. The terms of use for conveyancers prohibit automated extraction, scraping or crawling without UK Finance's prior written consent (6.2.1) and use of the Handbook in the firm's products or services (4.3). They permit AI tools used ancillary to advising the firm's own clients (4.1.1.2), and exclude UK Finance's liability for use of the Handbook with AI technologies (7.11). Paragraph 6.3.5 is reported to require compliance with the law and with responsible AI policies, but I have only seen a paraphrase of it.

The terms do not expressly address a supplier that processes Handbook content for a firm, and I have not checked whether other clauses affect that, including those on non-transferable permission and sub-contracting. Ask your supplier how it obtains the content.

What does an AI tool change about the firm's risk assessment?

Adopting an AI tool is a trigger for the firm to review its firm-wide risk assessment. Regulation 19(4)(c) of the Money Laundering Regulations 2017 requires policies that ensure appropriate measures are taken, in preparation for and during the adoption of new technology, to assess and if necessary mitigate money laundering risk. In my view, a tool that reads identity documents or source of funds evidence for a mortgage-funded purchase is new technology within that provision.

If a firm changes how it checks lender requirements, it should record who reviews the tool's output. The firm cannot sub-contract the lender's instructions, and by the same logic I would not expect it to hand responsibility for the output to a supplier.

What should a firm do?

A firm can take six steps, which are my own synthesis of the sources and are not prescribed by any regulator in these words.

Keep a list of the lenders on your panel and the current Part 2 for each, with the date you last checked it.
Record on each file which lender's Part 2 applies and which variations from Part 1 matter on that file.
Record the reasons for any decision about whether to report something to the lender.
If you use software to extract or track requirements, record who reviews its output and what they check.
Check the Handbook's terms of use before software processes its content.
Review your firm-wide risk assessment when you adopt a tool that touches identity checks or source of funds.

About the author

Appan Pathmanathan is a solicitor and Chief Operating Officer of Lex Sentinel, which builds AI tools for UK conveyancers. He has worked in UK legal practice since 2001, including litigation involving money laundering and fraud, and conveyancing, and has been managing partner of a law firm. He delivers anti-money laundering and compliance training. Connect on LinkedIn.

Sources

Checked on 25 October 2026.

Frequently Asked Questions

Who has to follow the Mortgage Lenders' Handbook?

Firms on a lender's panel that accept its instructions must follow it. Each lender also publishes its own Part 2 with variations from the general Part 1.

What must a conveyancer report to the lender?

The matters the Handbook requires to be reported, and any matter it does not cover should be referred to the lender. Read paragraph 2.3 of the current Part 1, as UK Finance's 2017 amendments summary describes it as the referral provision.

Can AI decide whether to report something to a lender?

In my view, no: the duty rests on the firm, so a person should decide. No source I found addresses AI and lender reporting directly. Software can flag discrepancies for review.

Can a firm use software to read the Handbook?

Possibly. The Handbook's terms of use restrict scraping and use in a firm's own products, and permit AI tools used ancillary to advising the firm's own clients. Read the current terms and ask your supplier how it obtains the content.

What does the SRA say about AI and lender duties?

I found no SRA guidance linking the two. The SRA's warning notice of 17 August 2026 says the use of AI does not diminish or transfer professional responsibilities.