News In Focus
SGM papers reveal regulation doubts on sep rep
Law Society of Scotland members have been asked to make a clear reaffirmation at this month’s special general meeting if they want to see the principle of separate representation of borrowers and lenders when a mortgage is taken out, enshrined in the solicitors’ practice rules.
Papers now sent out to solicitors for the meeting on 23 September reveal that the Society’s Regulatory Committee, which now exercises the Society’s rule making functions on behalf of its Council, “specifically wished a clear view from members at the SGM” before it would formally approve the rule change.
The committee, which met on 3 September to consider the wording of the draft practice rule referred to it from the meeting of Council the previous week, had in mind the split of views among solicitors revealed by the Society’s recent public consultation on the proposed change, when a narrow majority of the 250 or so solicitor respondents came out against the proposal.
This contrasted with the balance of opinion at the Society’s annual general meeting in March, which supported by 58 votes to 27 a motion approving the recommendations of the Society’s working party in favour of separate representation and calling on the Society to bring forward draft practice rules to the SGM. It is thought that had a poll been called to enable voting by proxy, the majority in favour would have been much greater.
Solicitors are divided over whether the risks of additional costs to clients and delays in completing transactions, outweigh the benefits of ensuring the avoidance of conflict of interest situations that are claimed to arise from the duties to lenders imposed by the Council of Mortgage Lenders’ Handbook.
The CML, which is opposed to separate representation, has offered to enter negotiations over the terms of the handbook. Some solicitors argue that these should be given a chance, while others believe that it is only the move to change the rules that has produced this offer.
In addition to members’ views at the SGM, the Regulatory Committee will also want to consider any alternatives to a rule change which would address the issues identified as consequences of separate representation.
Carole Ford, convener of the Regulatory Committee, said: “We want to consider the advantages and the disadvantages that the rule change would bring before we make any final decision. It’s clear that the current situation has generated concern, and we are keen to find workable solutions to the issues identified by the earlier working party and those raised during the consultation.”
The special general meeting will be held in the Crowne Plaza Hotel, Glasgow, from 4-6pm on Monday 23 September. Click here to access the papers for the meeting.