CML urges Scottish solicitors to reject separation

The director general of the Council for Mortgage Lenders said proposals laid out by the Law Society of Scotland were not in the public interest and had the potential to cause “considerable and unnecessary duplication of work and costs, increasing the risk of delays in transactions”.

A 14-page consultation document published by the society stated that “every solicitor’s client is entitled to, and must receive, independent advice focused on their best interests”.

Currently lenders and borrowers can share legal representation if required, a situation which is also the case in England and Wales.

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The consultation cites changes in the requirements of lenders as a reason for imposing mandatory separate representation, including an increased risk in conflicts of interest between lender and borrower.

It added: “Many solicitors now believe the only way to ensure clients receive the best advice is to act for only one client in a transaction.”

However Mr Smee said there were clear time and cost-efficiency benefits to the lender and borrower sharing representation, and refuted the society’s claim in its consultation that the CML had supported the rule change.

He said: “Given that existing rules already provide for separate representation where conflict of interest does arise, we urge the society to think again to ensure that both lender and borrower interests are properly protected.”

Examples of conflict of interest risk from the consultation:

• If a client became ill and the solicitor acts on behalf of the two parties, he would be expected to disclose otherwise confidential information to the lender – his other client

• If a solicitor did not disclose something to the lender, which may be minor at the time of the home purchase, and they then become insolvent

• Lender requirements being ‘out of step’ with conveyancing practice with unachievable requirements placed on the solicitor

Adviser Comment

David Pye, principal of Scottish Borders-based Meldon Independent, said: “I’m actually in favour of separate representation. While I can understand the CML’s objections, I believe many lenders are only dealing with larger practices and restricting the market.”