Professional practice updates 2013

Professional practice updates December 2013

New Certificate of Title for Bank Of Scotland

Consultation on Cameras and live text-based communications in the Scottish Courts

New Certificate of Title for Bank Of Scotland

Following representations from the Society after matters were brought to the attention of the Property Law Committee, Lloyds Banking Group have agreed to amend the Certificate of Title to be granted in relation to Commercial Banking so that reference to "current best conveyancing practice" is removed and the new wording will be:-

"We have examined and considered all relevant documents of title and other documents and papers relating to the Property and considered the results of the Searches (including where relevant Coal Authority enquiries, searches in the Register of Community Interests in Land and Form P16 Reports), local authority property and planning enquiries and made all appropriate enquiries of the Owner as required in terms of your instructions to us.

The information given in this Certificate arises solely from such examination and consideration and the results of such Searches, enquiries and information.

In giving this Certificate and investigating the title to the Property, we have exercised the standard of care of a reasonably competent solicitor experienced in acting on behalf of heritable creditors taking security over non-residential property or where applicable residential property in Scotland."


Consultation on Cameras and live text-based communications in the Scottish Courts

The Society is responding to a consultation issued by the Judicial Office for Scotland on behalf of the Lord President. Comment will come from the Civil Justice Committee, the Criminal Law Committee and the Access to Justice Committee. Any members who wish to express views, which may be relevant to the Society's response, can email Fiona J Robb - Secretary to the Civil Justice Commitee.

Professional practice updates November 2013

New conveyancing panel management solution

Changes to Combined Standard Clauses

Land Registration Act consultation

New conveyancing panel management solution

We have recently been advised by the Council of Mortgage Lenders (CML) about a new conveyancing panel management solution facilitated by a company called Decision First. Decision First will provide a "gateway" between solicitors and banks for the purpose of panel management. The objective is to help lenders to streamline the panel management application process for the benefit of both solicitors and lenders. The Decision First scheme could also operate in England and Wales although it is opposed by the Law Society of England and Wales. According to the CML, Decision First plans to roll out the scheme in Scotland in early 2014. For full details of the scheme, please read this letter from the CML Director General Paul Smee to the Society's Chief Executive Lorna Jack dated 18 October 2013.

We are concerned that Decision First wants to charge solicitors to process information about themselves and their firms so that they can remain on lender panels. This is despite the Society already holding that information about solicitors and being prepared to provide this information to the CML which would save our members having to process this material again and prevent them from having to pay the fee to Decision First.

Please tell us what you think of the Decision First conveyancing panel management solution by completing the brief online survey by 5pm on Friday 13 December 2013. Your response will ensure we can raise concerns with the CML when we meet with them about this issue in the near future.


Changes to Combined Standard Clauses

The Glasgow and Edinburgh Conveyancers' Forum have agreed the third edition of the Combined Standard Clauses for residential conveyancing transactions. The new Combined Standard Clauses are effective from 1 November 2013.

A copy of the new Combined Standard Clauses can be found here.

The changes represented by the update are relatively minor in their effect.  The Combined Standard Clauses no longer refer to automated registration of title to land (ARTL) or to what was the Edinburgh windows policy, and reference is now made to the new Green Deal initiative.


Land Registration Act consultation

Call to practitioners to respond to the Keeper's Consultation on the Implementation of the Land Registration etc. (Scotland) Act 2012

As the first substantial legislative revisal since the introduction of land registration by the Land Registration (Scotland) Act 1979, the Land Registration etc. (Scotland) Act 2012 ("the Act") intends primarily to lend statutory strength to much of the Keeper's current practice.  It also, however, introduces a number of substantial changes including the introduction of a criminal offence. We encourage solicitors to familiarise themselves with the impending changes as early as they can.

Registers of Scotland (RoS) is currently considering what the regulations that will underpin the Act will look like and this is your chance to inform that process. RoS has published its consultation paper on the implementation of the Act.

The Society's Property Law Committee will submit a response to the consultation and both RoS and the Property Law Committee strongly encourage practitioners to submit their own responses to the questions posed in the consultation.

The deadline for submission of responses to RoS is 9 December 2013. If you would also like to share your consultation response with the Society, please send it to professionalpractice@lawscot.org.uk.

Professional practice updates October 2013

New guidance from the Property Law Committee

New guidance will be issued to clarify the position of the Property Law Committee that letters of obligation should not be granted in respect of Section 75 Agreement transactions. This guidance will come into effect from 1 November 2013. Section 75 agreements are agreements usually entered into between developers and local authorities for the purposes of obtaining planning permission for the proposed development. 

The following wording will be added to the existing guidance on letters of obligation, immediately below the paragraph entitled "Should letters of obligation be given where there is no monetary consideration?"

 Is the grant of a letter of obligation where my client grants a Section 75 Agreement to a Local Authority in the same category?

 The answer to this is "no". The master policy insurers only regard such letters as classic where they relate to disposals such as a lease, disposition or security. A section 75 agreement is in the nature of a deed of real burdens or servitude. While there is insurance for a letter of obligation in such circumstances a "double deductible" will be made, as the letter is not classic and outwith our control. The Property Law Committee therefore recommends that a letter of obligation should not be given in such circumstances.

The guidance can be found in our Rule & Guidance section of the website from 1 November 2013. 

Professional practice updates September 2013

Family Law Scam - and other Scams (Update)

Electronic missives now a step closer to reality

Family Law Scam - and other Scams (Update)

Following on the Family Law Scam referred to in April 2013 Professional Practice Update, there are some new variations which have come to light, as follows:-

(a) It would appear from new information that the Family Law Scam may not be an attempt to money-launder funds which are actually supplied, but to attempt to obtain funds from the solicitors own client account after a counterfeit cheque from the alleged debtor has been paid into the solicitors client account. It is really a much cruder scam than that originally thought. However members should be alert to both possible "models".

(b) In the Family Law Scam the names Harmony Young and Huan Song have been used as the potential client. However, a useful web search to search names used in various worldwide scams can be found at http://avoidaclaim.com/confirmed-frauds/ using the Search box in the top right had side. Indeed the whole website at http://avoidaclaim.com/ designed for Ontario lawyers is of considerable help as a reference in relation to various "international" fraudulent schemes.

If solicitors suspect they are the target of a scam, they should adopt one or more of the following procedures:-

1. Submit a SAR to SOCA if they have any suspicion regarding a potential or existing client.

2. Email the Law Society at lawscot@lawscot.org.uk to report the matter.

3. Contact Action Fraud at http://www.actionfraud.police.uk/report_fraud to report the scam.


Electronic missives now a step closer to reality

Registers of Scotland has published a consultation on electronic documents and electronic signatures as part of the implementation of the new Land Registration etc. (Scotland) Act 2012. These provisions will amend part of the Requirements of Writing (Scotland) Act 1995.

It is the intention of the Scottish Ministers to introduce these provisions later this year.  When the provisions are in force, they will allow conveyancers to conclude missives electronically. Now is your chance to have your say.

Registers of Scotland invite solicitors to respond to the consultation.

Please take a look at the consultation paper and submit your response by close of consultation on Sunday 29 September 2013.

Professional practice updates August 2013

Reminder for Locum Solicitors

Notes Relative to Professional Practice Guidance on Division C: Gazumping, Gazundering and Closing Dates

Changes to the Consumer Credit Group Licence regime

Reminder for Locum Solicitors

Solicitors are reminded that when they work as a locum or when they take on criminal agency work for a firm, it is good practice to either take out their own professional indemnity cover with Marsh or to obtain a letter from the instructing firm confirming that the work will be covered by the firm's own insurance policy.


Notes Relative to Professional Practice Guidance on Division C: Gazumping, Gazundering and Closing Dates

Professional Practice frequently receive enquiries from Solicitors acting for prospective purchasers of residential property in circumstances where an offer has been made subject to satisfactory survey (or usually satisfactory Home Report or refreshed/updated Home Report) and the offer is accepted - either verbally or in writing. Our above Guidance states that Solicitors should withdraw from acting if the client subsequently wishes to re-negotiate the price downwards without having made the offer subject to a satisfactory valuation or obtaining satisfactory finance.

The Guidance goes on to state that where an offer has been submitted subject to survey, and the survey discloses a problem - eg unauthorised alterations; new windows; damp or rot requiring specialist treatment - the Solicitors would be entitled to accept instructions to seek to adjust the price in the light of that problem. However if the offer is only subject to survey and the survey discloses no such problem but the valuation is regarded as too low by the offeror, Solicitors should not accept instructions to withdraw the original offer and re-submit a lower offer (unless the original offer was clearly subject to satisfactory valuation) but should refer the client to other solicitors if the client insists on doing so.

The remedy to this situation where Solicitors might otherwise have to withdraw from acting and hence lose the business, would seem to be for all offers made subject to satisfactory survey (or Home Report) to also be made subject to satisfactory valuation. This is particularly relevant in the continuing climate where a property may take some time to sell and the original Home Report obtained may well show a valuation higher than the one which appears in the refreshed/updated Home Report.


Changes to the Consumer Credit Group Licence regime

The UK system of regulating consumer credit is changing from 1 April 2014. From this date the new Financial Conduct Authority will assume responsibility from the OFT for the regulation of all consumer credit activity. The Society is bringing to this year's Special General Meeting on 23 September rules to amend the current Incidental Financial Business Rules which will make consumer credit activity a new category of incidental financial business. These draft rules were put out to consultation with members last month.

Professional practice updates July 2013

Continuing and Welfare Powers of Attorney - updated guidance

Safeguarding the vulnerable - new guidance

Equality Act 2010 - new advice & information

Change to the CML handbook for Green deal properties

Nationwide panel renewal

Law Society advises solicitors to check panel status with lenders

Continuing and Welfare Powers of Attorney - updated guidance

Updated guidance on Continuing and Welfare Powers of Attorney will apply from 1 August 2013. The guidance applies whenever a solicitor is consulted or instructed with a view to preparing and/or certifying a continuing or welfare Power of Attorney under the Adults with Incapacity (Scotland) Act 2000.

This guidance should be read in conjunction with, and subject to, the Society's vulnerable clients guidance. Both this guidance and the vulnerable clients guidance have been issued following publication of a report by the Mental Welfare Commission for Scotland ("MWC") on "An investigation into the response by statutory services and professionals to concerns raised in respect of Mr and Mrs D" (published 13 February 2012) ("the D Report"). The D Report can be accessed here


Safeguarding the vulnerable - new guidance

New guidance on how best to safeguard the interests of vulnerable clients will be issued by the Society on 1 August 2013. This guidance will be important to those working in the mental health and disability area, and any solicitor who may come into contact with vulnerable clients in their day to day work.


Equality Act 2010 - new advice & information

A new guide to assist members with complying with the Equality Act 2010 when providing services to disabled people is being published by the Society on 1 August 2013.

Advice is also provided for solicitors and firms who wish to operate best practice and thereby exceed the requirements of the law. The guide has been produced by Capability Scotland on behalf of the Society.


Change to the CML handbook for Green deal properties

The CML has confirmed that the following additions to the CML Handbook will come into force on 8 July 2013:

Part 1
5.14 Energy Technologies Installed on Residential Properties
5.14.1 Check part 2 to see whether we require you to disclose the details of any existing Green Deal Plan(s) on a property

Part 2
5.14.1a Does the lender require you to disclose the details of any existing Green Deal Plan(s) on a property?

All practitioners acting for a member of the CML will now need to check whether the property is affected by any Green Deal Plans and check that lender's requirements for disclosure.

Practitioners may wish to consider adding this question to any property questionnaires they use and ensure that the existence of any technologies is commented on by surveyors.


Nationwide panel renewal

The Society's Professional Practice team has received a number of calls from members who have received panel renewal letters from Nationwide and who are concerned at the extent of disclosure required about their firm's financial arrangements, amongst other matters.

Whilst it will ultimately be a decision for every solicitor as to whether they wish to provide the information requested, it is hoped that the following statement obtained by the Society from Nationwide will be of some assistance.

"Nationwide continues to operate a large and diverse panel of over 4,000 firms across the UK. In order to oversee the panel effectively we require all panel firms to provide us with standard information and for that information to be maintained and updated. We are currently undertaking our annual UK-wide update which firms can undertake through our web portal.

"This process includes requesting updated financial information on firms. This data has already been provided in the past. We do however require the latest details to ensure our records to not get out of date.

"Nationwide uses this information to build a more informed picture of a firm's activities than we can get solely from our own interactions with that firm. Nationwide understands the confidentiality of the information provided. Information is only used for assessment of firms, on a case by case basis, for the purpose of panel membership. For clarity, Nationwide does not have a limit to panel size nor does it use the data to select between firms. Nationwide does not use the data in any other way (for example to seek to sell banking services or similar to firms).

"Nationwide is happy to deal with any individual questions from LSS members or firms on any specific points however we hope that this statement will comfort firms that the collection of this data is for the general benefit of the all parties."

Members with queries can contact Kaira Massie, solicitor in the Professional Practice team at Kairamassie@lawsco.org.uk or 0131 226 8894.


Law Society advises solicitors to check panel status with lenders

The Law Society of Scotland is advising solicitors to check their panel status with lenders before accepting client instructions to act.

A number of mortgage lenders remove solicitors from their panels without prior notice as part of their panel management system, which can lead to some solicitors discovering this only once instructed.

In a letter to the Society Property Law Committee, Yorkshire Building Society confirmed that it carries out periodic reviews and removed all firms that have not acted for the lender for at least 12 months to ensure that it did not retain firms which were no longer trading or had become dormant for other reasons.

While the lender would not write to inform firms of their removal, they are invited re-apply to join the panel at any time, although success would depend on satisfactory answers to all questions on the application form and submission of required documentation.

Professional practice updates June 2013

Lively discussion on sep rep at sole practitioner's conference

Rule Change - signing of documents by unrepresented parties

Lively discussion on sep rep at sole practitioner's conference

Alison Mackay and Kaira Massie, both solicitors in the Professional Practice Department of the Law Society of Scotland, led several lively and constructive discussions at the Sole Practitioner Symposium held in Stirling on 12 June 2013 on the impending consultation on the removal of the exception to the conflict of interest rules that allow solicitors to act for both borrowers and lenders, otherwise known as the 'separate representation' debate.  

The sole practitioners in attendance were each given a copy of the proposed amendment as approved by the Rules and Waivers Sub-Committee on 6 June 2013 for discussion.  Following the vote at the Society's AGM in March, the Rules and Waivers Sub-Committee held that the issue should be framed as strictly as possible, therefore, should the rule be passed in its current form, any lending secured by a heritable security will be affected whether this be conventional residential or commercial lending, inter-family lending or inter-company lending.  

Members' views ranged widely from being completely in favour of a wholesale removal of the exception to the conflict of interest rule to preserving the status quo. Overall, there was a strong sense from those in attendance at the discussion sessions that they were firmly in favour of the rule change because this will benefit consumers. Alison and Kaira received many helpful comments to assist with progressing the issue and they are grateful to all those sole practitioners who took part and engaged with them. 

The Law Society of Scotland expects to move to consultation with its members on the proposed rule change next week. We would be delighted to receive as many responses on the proposed rule change as possible following publication of the consultation, as this feedback will inform the proposed rule change to be taken to vote at the Society's SGM on 23 September 2013.

Rule Change - signing of documents by unrepresented parties

With effect from 1 June, 2013 there has been a change to Rule B2.1.7 dealing with the signing of documents by unrepresented parties.

The words "another party or prospective" have been deleted and replaced with the words "an unrepresented"

The replacement words are shown in italics in the following paragraph:

2.1.7 When you are acting on behalf of a party or prospective party to a transaction of any kind you shall not issue any deed, writ, missive or other document requiring the signature of an unrepresented party to that party without informing that party in writing that:

(a) such signature may have certain legal consequences, and

(b) he should seek independent legal advice before signature.

Professional practice updates April 2013

Family law scam

The Society has been alerted to a family law scam which solicitors should be aware of. Via an email, the "client" claims to be the divorced or separated spouse of a person ("the other party") who owes money to the "client" in respect of maintenance etc., whether under the terms of an agreement or court order or otherwise.

The solicitor is instructed to recover from the other party, the monies which are due to the "client".

On receiving the demand for payment, the other party immediately makes payment to the solicitor by bank draft or cheque or other payment method direct to that solicitor. Once the solicitor accepts that payment into his or her client account then it is effectively laundered, whatever the original source of it might be. The solicitor then pays out the laundered money to the "client".

Alternatively the other party seeks details of the solicitor's bank account in order to "make a payment" direct to that bank account, and once the bank details are released, some illegal usage is made of them with a view to extracting money from them.

If you receive an email that makes you suspicious, you are advised to contact the Serious Organised Crime Agency (SOCA). If you wish to discuss matters with the Society's professional practice team, please call 0131 226 8896 or email profprac@lawscot.org.uk.

Professional practice updates March 2013

The Courts Reform (Scotland) Bill

Undertakings in relation to executry bonds of caution

The Courts Reform (Scotland) Bill

The Scottish Government have begun a consultation on the way civil cases and summary criminal cases are dealt with by the Scottish Courts. The Courts Reform (Scotland) Bill provides the legal framework for implementing the majority of the recommendations made in the Scottish Civil Courts Review, led by Lord Gill. These include redistributing business from the Court of Session to the sheriff courts, creating a new lower tier of judiciary in the sheriff court called summary sheriffs. Other proposals include a new national sheriff appeal court and a new national specialist personal injury court. The Society's Civil Justice Committee are leading a working party who are preparing a response to the Consultation. If members wish to make comments to the working party, please send then to the Committee Secretary - fjrobb@lawscot.org.uk by the end of April. The consultation closes on 24 May.

Undertakings in relation to executry bonds of caution

It has been reported to the Professional Practice Department that in relation to a recent application for  an executry bond of caution, submitted via a firm of solicitors, the insurers sought an extremely onerous undertaking, not from the executor applicant but from the solicitors dealing with the administration of the estate.

The Professional Practice Department has not received any other reports about such undertakings, but it is keen to draw this development to the notice of the profession, so that all members involved in this work consider carefully the terms of any such undertakings sought from them.

The Professional Practice Department is also keen to gather information about the prevalence and terms of such undertakings currently being sought from solicitors in relation to such executry bonds of caution. Solicitors involved in such work are therefore requested to email to stellamccraw@lawscot.org.uk by 26 April 2013 samples of such undertakings recently granted or currently sought from them, redacted as appropriate in relation to client information.

Professional practice updates January 2013

Proposed change to Rule B2.1.7: Conflict of Interest

Santander residential conveyancing panel

ECHR decision in Michaud v. Franc

Proposed change to Rule B2.1.7: Conflict of Interest

The Society is proposing to change the wording of Rule B2.1.7 so that the words "another party or prospective" occurring after the words "signature of" shall be deleted and the words "an unrepresented" substituted therefor.

The proposed new wording of Rule B2.1.7 is: "When you are acting on behalf of a party or prospective party to a transaction of any kind you shall not issue any deed, writ, missive or other document requiring the signature of an unrepresented party to that party without informing that party in writing that:

(a) such signature may have certain legal consequences, and

(b) he should seek independent legal advice before signature"

If you have any comments or queries, please email stellamccraw@lawscot.org.uk by 31 January 2013. These comments will then be considered by the Rules & Waivers Sub-Committee. The proposed change to Rule B2.1.7 will go before the Society's AGM on 22 March 2013.

Santander residential conveyancing panel

Santander have accepted the Society's representations on Santander's requirement to upload certified copies of Solicitor's practising certificates onto their online portal. Santander have been persuaded by the Society's move toward online PC renewal and the Society's plans for smart card PCs.

ECHR decision in Michaud v. Franc

The ECHR held unanimously on 6 December 2012, that the obligation on lawyers to report suspicions in the context of the fight against money laundering does not interfere disproportionately with professional privilege. The case was brought by a French member of the Paris Bar who argued that the obligation to report suspicions was incompatible with the principles of protection of lawyer-client relations and respect for professional confidentiality.

As this is a Chamber judgment, it is not final as any party may, in the three months after delivery, request that the case be referred to the Grand Chamber of the Court.

The original application was lodged in January 2011 and there has been considerable interest in the case. The CCBE, amongst others, were granted leave to submit written observations as third party interveners.

The case relates specifically to French lawyers, but it is relevant as it stressed the  importance of confidentiality and of legal professional privilege. At the same time, the court considered the obligation to report suspicions was necessary in pursuit of the legitimate aim of prevention of disorder or crime, since it was intended to combat money laundering and related criminal offences. The court gave careful consideration to the European money laundering directives, article 8 of the European Convention on Human Rights and the importance of the confidentiality of lawyer-client relations and of legal professional privilege.

The court held that the obligation to report, as implemented in France, did not interfere disproportionately with legal professional privilege since lawyers were not subject to the requirement when defending litigants and there was a filter put in place by the legislation ensuring that the lawyers submit their reports to the president of their Bar Association and not to the authorities.

Although the regimes are not identical, as the UK legislation goes further than the French legislation, the decision is of interest as it maintains the status quo and reinforces that lawyers are gatekeepers and must report in certain circumstances. However, subject to those obligations, confidentiality and legal professional privilege remain fundamental principles on which the administration of justice in a democratic society is based.

This summary of the case was submitted by - Alison Matthews, Compliance Consultant, Alison Matthews Consulting Ltd, 89 Oakfield Road, Selly Park, Birmingham.B29 7HL Tel: 0121 4728638