Scottish solicitors split over separate representation

Print This Post

20 August 2013


Survey suggests small majority opposes conflict rule change

Whichever way a decision goes on the future of separate representation for property buyers and lenders in Scotland next month, it is likely to prove unpopular with a large number of solicitors, a survey has revealed.

Law Society of Scotland members will be polled on a rule change at a special general meeting on 23 September after deciding in March to put it to a vote. If the change is approved, the current exception to the conflict of interest rules allowing joint representation will be removed.

A pre-vote survey found opinions for and against altering the rules which allow the same solicitor to act for both the buyer and the lender were evenly divided, with 49% in favour and 51% against the proposed rule as drafted in a consultation document.

The survey received 279 responses. It found institutions – which included the Council of Mortgage Lenders (CML), Which? and banks and building societies – tended to favour the rule change more than individual solicitors. Among individuals the breakdown was that 47.5% were in favour and 52.5% against, whereas 59.1% of organisations supported the change and 40.9% were against.

Error, group does not exist! Check your syntax! (ID: 14)

The society’s vice president, Alistair Morris, observed that support for a change to the status quo had grown in recent years and said it was an “essential debate”. It was important that home buyers were protected “and that solicitors are not compromised in representing their clients”.

He said the CML had responded to a consultation saying that it was opposed to the change, “although some of their members are already practising separate representation”. In March the CML accused Scottish solicitors of being ‘protectionist’ in seeking to require separate representation.

Mr Morris said Which? responded that it believed consumers should be better informed on the issue and there should be further discussion over whether solicitors should only be able to act for banks on an ‘execution only’ basis, in which they do not provide legal advice to the bank.

He continued: “We are well aware of the fears that have been raised around potential for delay or possible increased costs for the borrower. While these issues have to be considered, we have calculated that any potential cost increase would be a small percentage at around 0.1% of the overall price of buying a new home – if indeed the lenders do decide to pass on costs to their customers.”

He noted that in the Republic of Ireland separate representation was mandatory and banks were legally prohibited from passing on their legal fees to purchasers.

 



Leave a comment

* Denotes required field

All comments will be moderated before posting. Please see our Terms and Conditions

Legal Futures Blog

Know your client checks – A lesson from BHS

Paul-Bennett for Legal Futures

As you will be aware, it is a legal requirement for advisory firms to carry out ‘know your client’ checks. The purpose of doing so is to confirm your client’s identity and to seek to provide protection in respect of anti-money laundering (AML) and terrorist financing laws. The BHS experience before the House of Commons’ work and pensions committee and business, innovation and skills committee shows that firms need to think beyond AML obligations.

September 29th, 2016