Professional practice updates 2012

Law Society of Scotland issues warning over HSBC mortgage documentation

The Society has issued a warning to solicitors acting for purchasers obtaining a mortgage from HSBC, where the Bank is separately represented by an HSBC panel firm. Documentation which has been issued by the panel firms is based on English conveyancing law and practice and requires both the purchaser's solicitor and the seller's solicitor to grant undertakings, some of which may be difficult to honour. It also requires the purchaser's solicitor to undertake a considerable amount of additional work which would not be required if that solicitor was acting directly for a mortgage lender under the CML Lenders Handbook. The Society's advice is that solicitors should decline to engage with the panel firm on the basis of this documentation, as it exposes them to unacceptable risk.

The Society's warning follows the launch last month by HSBC of a new panel system comprising only four firms in Scotland which are allowed to carry out security work on its behalf and the imposition of a charge of almost £200  on borrowers who choose a non-panel solicitor to act in a purchase.

Ross MacKay, convener of the Law Society of Scotland's Property Law Committee, said: "Now that we have had sight of the documentation being issued on behalf of HSBC we have serious concerns that buyers' solicitors are being placed in an invidious position by being asked to deal with paperwork which is patently not fit for purpose. This further penalises customers of the Bank who choose their own solicitor. Regrettably it seems that a system patently designed for England is being imposed on Scottish practice, to the detriment of both public and practitioners. We would urge the Bank to review their panel system immediately so that customers currently buying properties with an HSBC loan are not prejudiced."

Nationwide Building Society

Nationwide Building Society have confirmed their decision to reduce the size of their conveyancing panel throughout the UK by removing firms which have not carried out any new security work for them in the past year. They are writing to affected firms to inform them of this decision and to explain that there is a right of appeal. However the relevant letter indicates that a prerequisite of making an appeal is membership of the Conveyancing Quality Scheme (CQS) operated by the Law Society of England and Wales. Nationwide have assured us that this condition does not in fact apply to Scottish firms.

Assessment of fees by Auditors of Court

From 30 April 2012 those Sheriff Court auditors who are employed by Scottish Court Service will be barred from undertaking private work either in relation to assessing fees at the request of solicitors or extra-judicial taxations on a joint remit from solicitor and client. Auditors who are not employed by Scottish Court Service, including those in Edinburgh and Glasgow, will continue to be able to offer such services.

All Sheriff Court auditors will continue to tax judicial accounts.

Firms whose terms of engagement state that fees will be assessed by the auditor of court should review those now, particularly in relation to executry work. Files could be sent to external law accountants for feeing.