At the AGM there was a report on the decision of the Law Society Council to carry out a review of the Conflict of Interest Rules. This followed a motion at the 2011 AGM that the exceptions to the general prohibition on acting for different parties in conveyancing transactions be reviewed.
It was noted that the Professional Practice Committee had received a remit to set up a Working Party to carry out a review. A number of solicitors attended a Focus Group meeting in Edinburgh in August 2011 and the Working Party concluded that the existing Rule should not be changed. It was also felt that any change would result in delay to conveyancing transactions and increased costs to consumers. This view was endorsed by the Professional Practice Committee at its meeting in September 2011.
Since that date, there have been a number of other developments in relation to lenders. These revolved around reductions in Panels. Examples include Lloyds Banking Group, Nationwide and, most recently, HSBC. Nevertheless, the view of the Professional Practice Committee remained the same. This view was put to the floor by the Convenor, Graham Mathews.
Members were informed that the Society’s Property Law Committee took a different view and a paper had been circulated. The paper was spoken to by the Convenor, Ross Mackay. There then followed discussion among members. It was pointed out that there was a groundswell of opinion in the profession that the time was right to consider making a change and that the issue was not solely concerned with mortgage fraud.
The Meeting was advised that the matter had been debated at Council and that it had been agreed that they were minded to propose amending the Rules to prohibit the same firm acting for lenders and borrowers in all transactions (residential and commercial). To that end, a Working Party is to be established to engage with members of the Society and with lenders and other interested parties so as to promulgate standardised practice and procedures for security work. The Working Party is to report to the Special General Meeting in September 2012 with recommendations.
Professor Stewart Brymer WS
31 May 2012