Professional practice updates 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.