The Law Society of Scotland (LSS) has asked members to vote on the proposal in September but the CML believes in the vast majority of cases, joint representation of lender and borrower is more efficient, more cost effective, and more clearly in the consumer interest.
The LSS proposals would make it mandatory for lenders and buyers in the same property transaction to be represented by separate solicitors.
The CML said that its response reiterates its member’s clear preference for joint representation to continue as the norm in residential conveyancing transactions. The CML argues a rule change is a disproportionate response, especially in advance of any conclusion to the separate review of conveyancing issues and practice which the LSS is currently undertaking.
Current LSS rules and the CML Lender's Handbook, the standard conveyancing instructions to solicitors, already provide for separate representation in the minority of cases where this is required, for example when a conflict of interest might exist. And the CML has repeatedly offered to take forward constructively any necessary discussion on aspects of the Handbook where refinement would resolve any concerns or issues.
The CML response states that there are clear time and cost efficiency benefits to lender and borrower sharing representation and says that compulsory separate representation has the potential to cause considerable and unnecessary duplication of work (and costs) and increase the risk of delays in transactions.
It also says that the consultation document has not been written in a balanced way, overtly favouring the arguments for separate representation with little evidence to support the assertion of routine problems with joint representation and that it misrepresents the CML's view on separate representation. It has never been the CML's position to support this rule change.
The CML also points out that the position of LSS is in direct contrast to the Law Society of England and Wales who have made it clear they favour the retention of joint representation as the norm.
If, despite these concerns, the LSS members vote through the rule change, the CML urges it to adopt a sensible implementation period of at least 12 months or more, to avoid the transition problems that hasty implementation would bring. A poorly considered rollout of the rule change could adversely impact the housing and mortgage markets in Scotland, and consequently many members of the LSS.
‘In the vast majority of conveyancing transactions, where the interests of the borrower and the lender are very closely aligned, we fail to see how mandatory separate representation can possibly be in the consumer interest,’ said CML director general Paul Smee.
‘Given that existing rules already provide for separate representation where conflict of interest does arise, we urge the Law Society of Scotland to think again. We continue to invite constructive engagement with the LSS to review and, if necessary, refine the Lender's Handbook to ensure that both lender and borrower clients' interests are properly protected,’ he added.