Consultation Response

Ensuring Consumers Receive

Independent Advice

Separate Representation Consultation Responses

August 2013 v3

CONTENTS

Part A: Analysing the consultation responses 2

Introduction 2 Setting the scene 6 Executive summary (all responses) 12 Regulatory objectives 24

Part B: The Proposed Draft Rule Change 41

Part C: Extract from the Briefing Paper considering the 44 Conflict of Interest Practice Rules prepared by Brodies LLP

The Exceptions to Rule B2.1.4 and proposed amendments 44 Other potential Rule changes 47 Guidance 49

Appendix 1 51 This appendix provides various summary data on the level of responses, who responded, and an overview of how they responded to the multiple choice elements.

Part A: Analysing the consultation responses

INTRODUCTION The Law Society of Scotland aims to lead and support a successful and respected Scottish legal profession. Not only do we act in the interests of our solicitor members but we also have a clear responsibility to work in the public interest.

The Law Society of Scotland’s consultation on the issue of separate representation in conveyancing transactions opened on 18 June 2013 and closed on 21 July 2013. We received 279 responses from our members and from individuals and organisations outwith the legal profession and would like to thank everyone who took the time to respond.

The consultation sought views on mandatory separate representation in conveyancing transactions between borrowers and lenders. The consultation response evidences that this is very much a live issue, with strong opinions on both sides. This consultation response seeks to illustrate these opinions by providing a representative sample of views from the respondents as well as highlighting related issues raised by the consultation.

Following a majority vote at the annual general meeting (AGM) on 22 March 2013 on the principle of separate representation, members will vote on a proposed rule change at the special general meeting (SGM) to be held on 23 September 2013. We are encouraging as much debate as possible prior to the SGM for the benefit of our membership as a whole.

Consultees In addition to its members, the Society contacted a number of stakeholders whose details can be found at Appendix 1 Part E , and includes all solicitors in Scotland, all mortgage lenders (working to a list provided by the Financial Conduct Authority), and a number of consumer groups. The list of respondents can be found at Appendix 1 Part E, although a high number elected to remain anonymous and requested that their details were not published. All responses are available on our website (www.lawscot.org.uk/seprep) as we committed to in our consultation document, although these are redacted to ensure the privacy of respondents who requested this.

Solicitors The majority of responses came from solicitors. Of those responses, just under half were from solicitors operating in residential conveyancing. A full analysis of the statistics can be found at Appendix 1.

Lenders Knowing that lenders would have views on this, we wrote to them all and raised some specific issues such as a suitable timeframe for implementation. We received responses from three lenders, one of whom asked to remain anonymous.

Other Stakeholders We were pleased to receive responses from a number of stakeholders including Which?, the Council of Mortgage Lenders (CML), Homes for Scotland and Registers of Scotland.

Summary of responses Those responding through the online tool (251 out of 279) were asked whether, irrespective of the actual drafting, they were in favour of or against separate representation. Without any weighting (for organisation or individuals and other factors) the split was 48.9% in favour and 51.1% against.

If we look at individuals only it was 47.5% in favour and 52.5% against; if we look only at individuals who are solicitors and working in residential conveyancing the response was 47.7% in favour and 52.3% against. If we look at organisational responses only it was 59.1% in favour and 40.9% against.

Care must be taken with these numbers. For example, 12 individuals responded from one organisation, in addition to providing an organisational response. A further ten anonymous responses came from the same IP address (originating computer server). This was entirely legitimate within our consultation processes (and indeed although most of these responses favoured one side of the debate some favoured the other) but it does emphasise that the results are not the same as may occur in the one member one vote system at the SGM.

Where responses were received as a letter, email or document they did not always provide a ‘yes’ or ‘no’ answer to the question in the consultation around ‘in principle’ support of separate representation. Even where a clear view was expressed, this was not always in response to the question as phrased in the paper, so these numbers cannot be aggregated with the online responses discussed above. However, 24 were assessed as generally against the need for a rule change, 6 as generally in favour of a rule change, and in 1 no discernible position on the issue was taken.

Given the empirical and varied nature of the responses there is no clear and consistent consensus. Accordingly, all responses are treated equally in terms of their ability to assist our understanding of issues and ideas for drafting. It remains inconclusive as to how the consultation might relate to a vote of solicitors at the SGM – for example, we can analyse the law firms which responded organisationally and the number of partners and solicitors they may have, but we cannot ascertain whether all those individuals would vote or vote in a particular way.

Outcome and next steps The responses to the consultation have disclosed a range of robust views on both sides and highlighted other consequences that a rule change might create. There is currently no clear consensus that a rule change is required, however, the Society is mandated by its members, by their previous vote in March, to bring a rule change to the SGM.

The consultation response has produced a highly constructive platform to progress the debate i.e.: 1. Providing an evidence base on either side of the debate which will inform discussions in the lead up to the SGM. 2. Providing thoughtful analysis against the ‘regulatory objectives’ the Society must consider allowing us to better discuss issues around public and consumer interest 3. Illustrating potentially unintended consequences of the proposed rule change 4. Assessing, and recommending changes as well as specific amendments to the drafting of the proposed rule.

The Rule The drafting of the proposed rule change presented in the consultation was a clear prohibition on separate representation without exceptions. A number of respondents rejected the rule completely on account of being opposed to separate representation in principle. While some responses reflected support for the original drafting of the “absolute” rule, feedback as disclosed from the responses we have received, has also revealed support for a different approach. Accordingly, amended drafting, developed with the assistance of Brodies (the Society’s panel law firm) is provided for consideration within this consultation response reflecting this alternative approach and demonstrating the Society’s commitment to respond to real and often practical issues raised in the consultation response.

What next? This rule change will now be presented to the Society’s Regulatory Committee for discussion. The Regulatory Committee will decide the final form of the rule presented to members at the September SGM. The Council of the Society will also reach a policy view on the terms of the proposed rule change. Members will then vote in accordance with the normal arrangements for general meetings of the Society, and if any rule change is approved then it will be sent to the Lord President for the final substantive stage of the rule making process.

Conclusion The consultation response reflects that views on this issue are finely balanced. There is currently no consensus. Solicitors with strong feelings may wish to ensure they are fully prepared for the SGM and are encouraged to articulate and support their position in a vote at the SGM on 23 September 2013.

Stakeholder Responses Much of the debate on separate representation has focused on the public interest. A small number of bodies have been very vocal on the perceived possible detriment, and this has been widely reported in the media.

SETTING THE SCENE

Which? The Society believes that a rule change will ultimately be beneficial to the consumer and are delighted that consumer interest organisation Which? took the time to respond to the consultation. Which? describes its role as: “Which? exists to make people as powerful as the organisations that affect their lives. We don't accept any advertising, freebies or sponsorship. All our research and campaigning is completely independent and funded by subscriptions.”

In responding to the consultation they said:

“Which? believes that homebuyers should be able to choose to use the same solicitor as their lender for the conveyancing process.

While it is doubtless true that some consumers will prefer to have separate representation to avoid any possible conflict of interest with the lender's interest, for most transactions and most homebuyers, the interest of consumer and lender is usually aligned at this point.

The likelihood is that most homebuyers are not aware of this dual responsibility on the part of the solicitor, and we would like to see more transparency at this point, with the letter of engagement from the solicitor pointing out the solicitor's dual responsibility to the lender. There should be a clear explanation of the potential results, in relation to what is the biggest purchase most people ever make. It is imperative that they are able to make an informed decision in relation to this purchase.

It is then for the homebuyer to decide whether they consider there may be some conflict of interest, and whether they wish to secure separate representation.

The Conflict of Interest Rule B2.1.2 practice rule 2011 states that a solicitor shall not act for two or more parties whose interests’ conflict. One solution, as mentioned in the report from the Law Society's working group, would be for solicitors to return to the process of acting

for lenders purely on an 'execution only' basis, i.e., by not providing any specific legal advice to the lender. This solution could be re-examined.”

The working party found that if mandatory separate representation were introduced then lenders would be likely to operate vastly reduced panels- possibly just a handful of firms, with resulting savings in panel management costs. However there is an issue for consumers around the lack of choice and competition if fewer solicitors are on lending panels, and this requires further consideration.

By statute lenders are entitled to make borrowers responsible for their legal costs, and we believe this is highly likely to result from separate representation, so Scottish homebuyers would be likely to face additional legal fees, and indeed may face delays in homebuying and selling as a result. This is a concern to us, and although the figure of around £200 is considered likely to be the additional cost, there is no guarantee that this will be the upper limit or that this is an accurate average figure.

Another possibility is that the Scottish Government could consider legislating to prohibit lenders from recovering their legal costs from borrowers, as has happened in the Republic of Ireland.

The Law Society's working group also say in their report that 'speed and efficiency of processing would be another factor in competition between lenders', but it seems to us that consumers are probably not in a position to judge this in advance, so it would not much aid competition.

We would however support separate representation for commercial property, as recommended by the Professional Practice Committee in its report to Council in 2012, as we believe this is more usually the case already, and this may be a more risky area. We would also support the Society's working group's third option; a revisal of the CML's Handbook for Scotland, to take better account of Scots Law and conveyancing practice.” This response raises a number of issues which are discussed in further detail later in this response and illustrates that there are many competing considerations which require to be balanced.

The Scottish Legal Complaints Commission (SLCC) The SLCC also responded to the consultation. The SLCC stated that it receives a large number of complaints about conveyancing practitioners in relation to actual and perceived conflicts of interest in conveyancing transactions. The SLCC is of the view that the “clarification of the responsibilities of solicitors should help remove any possibility of a conflict of interest arising and will therefore, we believe, positively impact upon the number of complaints received in this area.”

The SLCC stated that “all clients of solicitors are entitled to independent legal advice focussed on their best interest” and is of the view that “irregularities may be spotted more effectively through separate representation, as greater review and focus should occur.”

This response highlights the benefits in separate solicitors representing the interests of clients/consumers and lenders with a view to removing or reducing the possibility of a conflict of interest arising. The Society is of the view that all clients of solicitors are entitled to and must receive independent legal advice focused only on their best interests.

Lenders’ interests and the Council of Mortgage Lenders (CML) Having considered the interests of the public it is also necessary to look at the interests of the banks and other lending institutions. Having only received three responses direct from these bodies the CML PR00267 response provides our best understanding of the lending sector’s interests.

The CML describes its role as: “The Council of Mortgage Lenders is a not-for-profit organisation and the trade association for the mortgage lending industry, and our members account for around 95% of UK residential mortgage lending.

Our aim is to help to foster a favourable operating environment in the UK housing and mortgage markets. We are the representative voice for the residential mortgage lending industry, and the central provider of economic, statistical, legal, research and other market information.”

Irrespective of the outcome of the vote, the Society is keen to continue to engage with the CML in framing fairer and more relevant rules for Scotland, thereby making the CML Handbook more suitable for the Scottish legal system to reflect Scottish practice and procedure.

The CML provided a lengthy response to the consultation. The executive summary and our responses to the points raised therein are as follows (using their numbering):-

“3. We believe the consultation document has not been written in a very balanced way in relation to the arguments for and against separate representation, and has been very much written in respect of the case for separate representation.

4. Unfortunately, little or no evidence is provided to support a move to separate representation, and the opportunity has been taken in the consultation to misrepresent the position of the CML on this matter.

5. The main reasons for separate representation are put down to the changing requirements of lenders and increasing negligence claims against solicitors by lenders. No mention is made of the willingness of the CML to negotiate on the requirements of the CML Handbook which the LSS has concerns about. In addition, the evidence which we have from members and solicitors in Scotland acting for members is that the negligence claims are genuine. We would have expected in light of this that the LSS would be looking to improve quality standards in the area of conveyancing to prevent this happening and not simply relying on an additional solicitor to check another’s work.

6. The majority of the CML members have expressed a clear wish for joint representation to continue to be the norm in residential conveyancing transactions. There are obvious benefits to lender and borrower in sharing representation in a residential conveyancing transaction, particularly around efficiencies in time and cost. We believe that in residential conveyancing transactions the interests of borrower and lender are usually very closely aligned in that both parties want the same result – a good and marketable title. We do not see the need for mandatory separate representation, and we do not believe that this was the intention of the lending industry in its reviewing of conveyancing panels. The

position of the LSS is in direct contrast to the Law Society of England and Wales who have made clear that they want to see the same solicitor acting for borrower and lender in most domestic transactions. We are also concerned that the borrower will be faced with additional legal costs as the result of a move to separate representation, likely to be in the hundreds of pounds.

7. We do see the value of separate representation, but only where particular risk factors are identified in individual transactions and in cases where the borrower and lender clients’ choice of solicitor differs.

8. If, notwithstanding our concerns, LSS members vote in favour of the rule change we would urge the LSS to take on board the concerns of the CML and its members regarding early implementation of the rule change. Early implementation would have the potential to impact adversely on the housing and mortgage markets in Scotland and consequently on many member firms of the LSS.

9. We have noted that on 5 June the LSS announced it was setting up a working group to look into Scotland’s residential conveyancing practice and procedure with a view to enhancing and developing the process to meet the needs of home buyers in the 21st century. It seems strange that a move to compulsory separate representation is being considered in advance of this review, given the major impact which it will have on practice and procedure.”

Our response to this is:- The Society was mandated by its members following a vote at the AGM on 22 March 2013 to bring forth a vote on the matter at the SGM to be held on 23 September 2013. It is now our responsibility to do so.

Nationwide Building Society (Nationwide) Nationwide, the third largest mortgage lender in the UK, also responded to the consultation. Nationwide stated that it did not “support the view that conflicts of interest are the norm, or a major issue, in its mortgage lending activities.” Nationwide is of the view that mandatory

separate representation is not in the customer’s best interests and does not see merit in the proposed change.

The responses provided by Which?, SLCC, CML and Nationwide assist in highlighting a wide range of issues which require to be explored.

EXECUTIVE SUMMARY As can be seen from the analysis of the statistics in Appendix 1 Part B, the respondents were fairly evenly divided on whether there should be a rule change to introduce separate representation of borrowers and lenders in conveyancing transactions. Of those in favour, 81.4% stated this was because the commercial strength of lenders relative to purchasers creates a conflict and 83.7% stated this was because separate representation is right for both clients. Of those against, 92.5% stated this was because of the potential costs and duplication of work involved and 79.6% stated this was because purchasers’ solicitors may require to produce certificates of title to lenders’ solicitors which would mean that separate representation achieves nothing in practice

Given the relatively even split in opinion, this Response will provide representative examples of comments made from both sides of the debate in order to reflect the debate as fairly as possible.

Comments on the proposed draft rule change As can be seen from the analysis of the statistics in Appendix 1 Part A, 70.8% of the respondents were content with the way in which the proposed rule change was drafted, however, when this was broken down to reflect responses on behalf of organisations, this figure dropped to 53.8%.

It was highlighted in the consultation paper that the proposed draft rule would cause a number of unintended consequences, for example a prohibition on acting for group companies or family members where there is secured lending.

The main observations can be summarised as follows:-

1. A number of respondents stated that the effect of the “absolutist” rule change as proposed in the consultation paper was disproportionate. There was significant support for an approach aimed at only preventing dual representation where the lending was provided by an institutional heritable creditor to an individual or individuals.

For example: “… a blanket ban on all circumstances when acting for a lender and borrower would be wholly unacceptable and unworkable. What we are trying to address is potential mortgage fraud and conflicts of interest between individuals and mortgage companies when setting up the Security.” Andrew Ogilvie, Connell & Connell, Edinburgh

“The complete ban seems disproportionate” Anonymous, urban high street firm

“I wonder if new rules are required, which focus on the precise issue rather than make a change which may apply more widely” Anonymous, larger urban firm

“We have certain comments regarding the practicalities of the rule change and consider further guidance is required from the Society. While the general principle of rule changes to be welcomed, it would appear that further discussion and clarification is required regarding the practicalities of any new system.” Murchison Law, Inverness

2. There was support for not prohibiting waivers.

For example: “There should be exceptions and/or the ability to apply for waivers in circumstances where dual representation does not impact in the manner that the Law Society's Separate Representation Working Party considers that it does. There are, and will be situations where some of the main concerns of the Working Party such as assessment of credit risk and prevention of mortgage fraud and indeed all the advantages of separate representation that they have outlined simply do not apply…. Creating a rule with no scope for exceptions and/or the ability to apply for waivers is a folly as many of these may only come out of the woodwork after the event.” Brian Inkster, Inksters, Glasgow

3. The majority responses were not supportive of prohibitions on secured group company or secured inter/ intra family lending.

For example: “The ban on acting for related companies seems perverse. It is not uncommon to have subsidiaries grant securities to parent companies or other subsidiaries in the group, separate representation here will be difficult to explain to a client who finds himself on both sides of the same transaction, instructing two or more firms. Surely a test along the lines of the KYC rules of looking at ultimate ownership to determine the "client" would be a better approach.” Robert Binning, Edinburgh

“There may be some specific types of situation (e.g. family members) are acting for both MAY be permissible and acceptable” Anonymous, larger urban firm

“I wonder if it is truly necessary for a separate agent to act where there is a secured loan being granted between members of the family particularly given the current exemption to the conflict of interest rules for family members etc.” Sturrock, Armstrong & Thomson, Edinburgh

“We can see no reason why… there should be a prohibition in acting in relation to the creation of a security between family members or associated companies within a group.” Murray Beith Murray, Edinburgh

Whilst the majority of responses addressing this issue were not supportive of a prohibition in this way, the consultation received a few responses that specifically supported a prohibition on inter- and intra-family lending.

For example: “I am of the opinion that transactions where a family member wishes to lend money to another and take a charge over property to secure the loan are the very transactions that require sep rep.” Ceri Williams, Williams McRae, Cupar

4. The responses do not support a prohibition on acting for clients in preparation of discharges or deeds of restriction.

For example: “We do not think the rule change has the effect on Discharges suggested by the consultation document, as what struck at by general rule 2.1.2 is acting for two or more parties ‘whose interests conflict’. As the Discharge is usually granted when a client has repaid already or is repaid as part of the sale, it is an execution-type document not needing negotiation of terms and so there is generally a confluence of interest, not a conflict of interest. The same may go for Deeds of Restriction.” Michael Sheridan, Secretary, Scottish Law Agents Society

“I cannot see that there should in most cases be a difficulty in a solicitor acting for both parties in a discharge of security, particularly when it is practice of many lenders not release the discharge (or in some cases even to execute it) until the loan has been repaid.” Anonymous, niche commercial firm

“On the matter of Discharges, I cannot see any conflict. Even if the new rules came into force the banks will not execute a Discharge until after the mortgage has been redeemed. No conflict therefore exists at that time as the Discharge is prepared on behalf of the borrower not the lender.” Hugh D. McKay, Lawson, Coull & Duncan, Dundee

“Sellers and borrowers’ solicitors should continue to be able to obtain deeds of restriction direct from lenders in residential developments, and should also be to remit nets proceeds of plot sales direct but without acting for the lender or, owing the lender any duty of care.” Ann Stewart, Shepherd and Wedderburn LLP, Edinburgh

5. The responses support the continued use of certificates of title in commercial lending.

For example: “… think there should be ability for Certificates of title to continue to be granted - these in practice are extremely useful tools in commercial work-they create no solicitor client relationship and in commercial context are exclusively related to title issues as opposed to issues under CML which is where the problem lies.” Ross Kennedy, Warners, Edinburgh

“I am concerned by the Society's suggestion that solicitors may be banned from providing Certificates of Title as there is no reference to restricting this to residential transactions or to situations where there is not separate representation. Many commercial transactions rely upon Certificates being granted by the borrower/purchaser’s solicitor.” Robert Binning, Edinburgh

“We are strongly of the view that prohibiting the use of the commercial Certificate of Title, and thus putting us out of step with the rest of the UK, would have a materially prejudicial effect on the Scottish property industry.” Property Standardisation Group, Edinburgh

“I think that Certificates of Title, used correctly, play an important part in the provision of an efficient and timely client service that avoids delay and unnecessary costs.” Stuart J Rowson, Tods Murray LLP

Taking each of these in turn, we would comment as follows:-

1. We believe a more incremental approach to separate representation may be appropriate and will bring forward a revised rule change which can be found at Part B of this Response. We believe this responds to the main issues raised by the respondents.

2. We agree that an immediate prohibition on waivers would be disproportionate; however, it must be borne in mind that waivers will only be granted in exceptional circumstances. We will introduce guidance on this should the rule change be passed at the SGM. We are considering how to frame this in order that emphasis is put on waivers

only being considered to assist immediate and lasting detriment to a client, rather than to facilitate business interests.

3. It was noted with interest the number of responses that supported continued dual representation in inter- or intra-family lending. It was also noted that it would be rather perverse to prevent group companies from lending to each other where the companies share the same owner. Notwithstanding any exceptions made for these circumstances, the existing conflict of interest rules would still apply.

4. There was much support for allowing solicitors to continue to act in preparation, execution and registration of discharges or deeds of restriction on the grounds of expediency. Given that a solicitor prepares a discharge or deed of restriction for the benefit of his or her client for signature by the lender, there should be no conflict of interest provided however that the solicitor acts for the lender on an execution-only basis. We will introduce guidance on this should the rule change be passed at the SGM.

5. While there was a great deal of support for not making any changes that would affect certificates of title for commercial property, the response was more mixed when it came to residential property.

Currently, certificates of title in residential transactions are issued to the lender client itself and usually require the solicitor acting for the lender to warrant or confirm that the title is good and marketable and that there are no other circumstances of which the lender should be aware, which could encompass anything that the solicitor has learned about the purchaser even if in confidence. Many respondents felt that certificates of title could be used to circumvent the principle of separate representation.

In commercial transactions, the purpose of certificates of title is simply to report on, and warrant, matters relating to title only to the solicitor acting for the lender.

The online response questionnaire posed a number of questions. We provided a number of ‘tick-box’ options, to save respondents from having to submit their own wording, but we

are particularly grateful to those who took the time to provide their own more detailed thoughts on why they were in favour of, or against, separate representation.

Given the equality of opinion as shown in the online response, we consider that the range of views would be best illustrated by taking an equal number of responses received in respect of all questions.

The following illuminating responses illustrate a broad range of views on the question of whether separate representation should be introduced and which we believe speak for themselves:

Question: “In principle, and without reference to the way the proposed amendment has been drafted in the consultation paper, do you believe there should be a change to the Practice Rules?”

Answer: Yes 1. “It is in the interests of public confidence in an independent legal profession.” Michael Sheridan, Secretary, Scottish Law Agents Society

2. “The SLCC receives a large number of complaints about conveyancing practitioners in relation to actual and perceived conflicts of interest in conveyancing transactions. Clarification of the responsibilities of solicitors should help remove any possibility of a conflict of interest arising and will therefore, we believe, positively impact upon the number of complaints received in this area. We also consider that it will help clarify fundamental principles in line with the rule of law.

Separate representation should help support interests of justice. We concur that all clients of solicitors are entitled to independent legal advice focussed on their best interest. We believe irregularities may be spotted more effectively through separate representation, as greater review and focus should occur. There should be good publicity on the changes.

The need to be clear about rules and extent of obligations is fundamental. Being mindful of access to justice, we aver the changes are unlikely to affect access to justice, provided the cost is not passed on. We would be concerned to see this increasing the number of complaints about costs. We expect if solicitors act expeditiously, there will no delays and any initial delays may reduce or be avoided as the process becomes more common. Nevertheless, we would suggest it would be good to monitor this area. SLCC could offer to monitor delay/cost should we receive complaints in this respect.” The Scottish Legal Complaints Commission

3. “The simple fact is the world has moved on from where it was when the exception to the rule was introduced. Lenders' requirements have changed significantly from what was previously essentially no more than an execution only exercise. Lenders in residential transactions and in some commercial transactions have exploited the exception to place an unfair onus on the solicitor who is more than likely to be "the purchasers' man" but has to comply with the lenders' requirements which, by being more stringent, often conflict with the purchasers' requirements from day one. The exception is a convenience for lenders and has skewed property transactions in favour of protecting lenders at the expense of purchasers and their solicitors. Lenders have a valid concern with their lending risk but for them to be properly served then they require to be separately represented and to be charged accordingly. The real nub of the issue is whether that cost should be passed on to the purchaser. As regards lending for owner/occupier property then it certainly should not be and that will have to be looked at as a separate matter. Commercial lending including ventures such as buy-to-let may merit different treatment. However, whilst the question of cost is a factor it should not be the deciding factor in a matter which I believe has more to do with abolishing an exception to a fundamental rule of the profession. Rule 2.1.2 protects public and profession alike and whilst the exception may have been appropriate when it was introduced, I do not believe that it is now.” Alistair Duncan, Miller Hendry, Dundee

4. “Separate representation will reduce risk to lenders and borrowers - CML creates a massive conflict because of disclosure requirements which are too onerous.” Ross Kennedy, Warners, Edinburgh

5. “The CML handbook is a fiction, an artificial contract designed to make it as difficult as possible for a solicitor to avoid breaching in some regard however minor and for one reason only - to enable the lenders to claim from solicitors' PI in respect of a notional breach of contract to recover what is an issue of economic loss or market performance loss which has nothing to do with the fact of or severity of any breach.” Alasdair Sampson, Financial Services Advocacy Limited

6. “There has been a fundamental shift in the property market in Scotland as elsewhere in the UK and in my opinion, it is no longer appropriate for Solicitors to represent both borrowers and lenders. This change has been brought about by the change in the mortgage market and by the tightening of lending criteria. Above all, the attitude of lenders seeking to pass liabilities to Solicitors or Surveyors has produced an understandable reaction. I am fundamentally in favour of separate representation. From the profession's point of view, the biggest issue has been the number of claims on the master policy and spurious claims by lenders minor breaches of the CML handbook have caused them loss. The profession has been asked to underwrite lenders’ bad practices and the Society has been complicit in enforcing the lenders’ view. I am of the opinion that the advantages of separate representation massively outweigh those disadvantages.” David R. Adie

7. “We are supportive of the proposed rule change in principle. The current rules and practice lead to the solicitors bearing the risk, responsibility and cost along with being responsible for various matters for which they are not qualified and which are properly within the role of mortgage advisers and other bank staff. The current economic climate has highlighted these issues, with more properties having negative or very low equity and lenders seeking to recover sums from solicitors or the master policy insurers. The consultation paper identifies the issues with the current system and we would agree with statements made in that regard. An important issue that has been brought to light by this economic climate is the issue of potential conflict of interest between lender and borrower. This situation is not helped by a significant proportion of borrowers not fully appreciating that the solicitor is also acting for the bank. As highlighted in the consultation, there are many matters of the borrower would tell “their” solicitor, but may not wish or choose to tell the lender’s agent. We consider that this rule change will better protect both solicitors and borrowers.” Murchison Law

8. “We can confirm that we generally favour going to Separate Representation. We are aware that initial comment from CML was that they were against on the ground of cost. However, since (1). Most lenders now charge mortgage set-up costs that are equal to or exceed the fees that most solicitors charge for the purchase transaction; (2) lenders do not appear to think twice about litigating against solicitors and (3) mortgage interest rates are still considerably more than the lending base rate, we feel the time has come to minimise the risk to solicitors like ourselves.” Cameron Stephen & Co

Answer: No 1. “Generally speaking I believe that dual representation is beneficial in most domestic conveyancing transaction. Clearly there will be exceptions and a solicitor can always opt out if so advised. Most commercial transactions probably require separate representation.” James E Marr, JE Marr & Co, Glasgow

2. “Over-regulation which has deemed this the vote necessary should be tackled.” Anonymous, larger rural high street firm

3. “Timescales for concluding missives in both sale and purchase transactions will be extended which is not in the best interests of clients.” Anonymous, larger urban firm

4. “(a) The creation of a whole range of uncertainties which will disrupt the typical purchase and sale transaction. (b) Missives could only be concluded once the despatch of loan funds has been sanctioned by the lender's solicitor, with significant knock-on effects. (c) Drawing down a mortgage should be a co-operative process, not an adversarial one. (d) Commercial transactions are different: there are no furniture vans waiting at the door, fewer chains of sellers and purchasers, and a week's delay may be within the contemplation of the parties. (e) The problem regarding claims should hopefully be diminishing: house prices have moderated by virtue of the credit crunch, lending is now more responsible, and repossession sales on recent mortgages are more likely to achieve an appropriate figure.

(f) There is no need to involve another solicitor in a Discharge situation.” Anonymous, rural high street firm

5. “There is a common interest in achieving a good and marketable title to the property being secured. Whilst conflicts of interest will arise from time to time (very limited) it would be the solicitor’s responsibility to resign agency as would be the case in any other area of law where a conflict can (and often does) arise. This is a system that (whilst not perfect) has operated well for many years and retains the capability to provide a consumer service second to none.” Anonymous larger urban firm

6. Pulling no punches,… separate representation is a politically motivated, opportunistic, regressive, anti-competitive suggestion which sullies the great reputation and name of the Law Society of Scotland forged over so many years; it would rightly be seized upon by competition authorities with dire consequences for the Scottish legal profession…. There is a disparate nature to the profession, especially on separate representation. There was a feeling of astonishment on the part of many that the initial vote for separate representation was achieved by 58 souls raising their hands…. It is highly ironic that many of the same people suggesting that separate representation is necessary put forward the opposite argument in the 1990s. Then they felt it was important that the solicitor should act for both the customer and the lender so that the customer was fully advised! The clamour for separate representation is overtly anti-competitive. Lending claims issues and some academic opinion about the nature of conflict-of-interest have been seized upon and aggrandized by parts of the profession as a means of throttling competition.” McVey & Murricane

7. “I am generally against the Society's proposals for separate representation for Lenders in domestic conveyancing transactions. My objections to separate representation are made purely on practical grounds…. I can see the reasoning behind separate representation, but like others I believe that the way forward is to attack the CML Handbook and force amendments. Separate representation is not a practical solution.” Hill & Robb

8. “I am unconvinced that lenders’ CML or commercial requirements, however tiresome or puerile, conflict with the interests of borrowers. In my view borrowers require to be

advised of the risks of borrowing, the attitudes of lenders and the requirement for candour and that lenders are entitled to full disclosure uberrimae fidei. One solicitor acting for borrower and lender is in my view most appropriate to procure full disclosure. The requirement for another solicitor will render that less likely, increase delay and expense and may be inappropriate job creation which will damage the reputation of Scots solicitors and with ABS result in lenders establishing their own conveyancing entities. There is also my view a danger that lenders may require borrowers to buy US style title insurance and conveyancing will thus become a clerical activity with assignations of insurance policies and the Sasine & Land Registers unreliable” A.D. Moffat

REGULATORY OBJECTIVES We were also pleased to receive so many considered responses to the questions that, in order to comply with our regulatory objectives, we must ask. These objectives are set out in s1 of the Legal Services (Scotland) Act 2010. The statutory Regulatory Committee of the Society must ensure these objectives are being met in any rule, or rule change, proposed and the Lord President must also consider these when independently assessing the rule. Again, given the equality in split, the intention is to show an equal number of responses received in response to each question.

The following responses illustrate a broad range of views and which we believe speak for themselves:

Question: “Does the proposed rule change support the constitutional principle of the rule of law?”

Answer: Yes 1. “As an Officer of the Court, the solicitor has a duty to act fairly and give impartial advice. For this reason, he should not be acting for two parties whose interests may be in conflict. To do this brings the rule of law in to disrepute.” Anonymous, professional body

2. “It assists the society by supporting independent legal advice being given to a purchaser in what in most cases is the biggest purchase and loan that that person will make during his or her lifetime. It therefore avoids occasions of acting in a conflict of interest situation.” Michael Sheridan, Secretary, Scottish Law Agents Society

3. “Removing the exception will ensure that a solicitor can continue to act for his client without fear or favour. Informed consent with list of sites for both parties can only be justified when both parties interests at the same and did not conflict. A lender and borrower have different interests. Two unrelated parties both getting together the first time to purchase a house may well have similar and common interests which do not conflict but in certain circumstances may have conflicting interests.” Anonymous, rural high street firm

4. “The SLCC receives a large number of complaints about conveyancing practitioners in relation to actual and perceived conflicts of interest in conveyancing transactions. Clarification of the responsibilities of solicitors should help remove any possibility of a conflict of interest arising and will therefore, we believe, positively impact upon the number of complaints received in this area. We also consider that it will help clarify fundamental principles in line with the rule of law. Separate representation should help support interests of justice. We concur that all clients of solicitors are entitled to independent legal advice focussed on their best interest. We believe irregularities may be spotted more effectively through separation representation, as greater review and focus should occur.” Scottish Legal Complaints Commission

5. “It is fundamental that the interests of each section of society are protected and not defeated or prejudiced by more powerful groups. The action proposed is consistent with this objective. The reasons given in the Consultation paper are agreed. However, another risk has been introduced by the increased tendency of lenders to appoint only a small number of firms to their panel of solicitors authorised to act on their behalf in loan transactions. While it is entirely reasonable that lenders should have the right to appoint their own solicitors, there is an unacceptable consequence; intending purchaser/borrowers may be persuaded by the lender's staff to appoint the lender's solicitor to act on their behalf in the purchase as the purchaser/borrower's solicitor "is not on our panel". The unfortunate result is that the solicitor on the lender's panel may be acting in many transactions for both the lender from whom he is deriving a major volume of business and borrower/purchasers. The difference in the respective strengths of the two clients creates a serious risk that the interests of the borrower/purchaser will be treated as subordinate to those of the lender. The proposed removal of the exception would eliminate this risk.” Anonymous, retired

Answer: No 1. “The interests of the purchaser and the lender are similar and have both parties have been represented successfully by a single solicitor that, adding additional time, money to the client and potential delays seems unnecessary and outweighs the benefits of separate representation.” Anonymous. urban high street firm

2. “I can't believe we as a profession are even considering this.” Anonymous, urban high street firm

3. “We all want to uphold the rule of law but just quite how the separate representation debate materially impacts on that, I am not sure. It should not be beyond the wit of the profession to devise a regulatory regime that allows solicitors in the normal case to act on behalf of both lender and purchaser and sets out clear exceptions to that general rule.” James E Marr, JE Marr & Co., Glasgow

4. “The interests of purchasers in residential transactions are not so far removed from the interests of the lenders as to require the wholesale change now being contemplated; where the solicitor involved is professional, ethical and honest in his dealings. I oppose Separate Representation on this basis.” Robin Leith, andersonbain LLP, Aberdeen

5. “Raises expense and therefore materially limits access to legal representation contrary to the rule of law.” Anonymous. larger urban firm

Question: “Does the proposed rule change support the interests of justice?” Answer: Yes

1. “It is in the interests of justice to ensure that both sides are equally represented. This cannot happen when one party has more "clout" as is the case when a solicitor is also acting for a lender and an individual client. Invariably the pressure will be on the solicitor to bow to the pressures placed on him or her by the lender.” Anonymous, rural high street firm

2. “Again it is in the interests of justice to ensure that the advice given to all clients is not influenced by other factors and acting for a client and a lender is not in the interests of justice or the client even though the funds are coming from the lender. It is in the interests of justice that the lender obtains their own advice as they are taking the risk of lending. The borrower will always want their own advice not influenced by the lender.” Magdalen Andrea Ogilvie, Forrester Ogilvie and Co, Edinburgh

3. “Independent advice is a cornerstone of justice and this rule change ensures independent advice.” Alistair Duncan, Miller Hendry, Dundee

4. “It must be self-evident that where there are two parties to a transaction, and one of those parties is a mortgage lender who has a lot of power in the market place and the other party is a borrower who has no power, then it cannot be right that both parties are employing the same solicitor to look after their respective interests. Accordingly the current system which allows a solicitor to act for both Borrower and Lender is not operating truly in the interests of justice.” Anonymous, urban sole practitioner

5. “Proposal for separate representation may in theory support "justice" but in reality lenders do not want to be consulted on title issues etc., they simply want confirmation a title is good and marketable (which it may be even if flawed in some respects). This is a matter of professional judgement and improved by having two firms working in parallel looking at the same title to the same property to confirm that it is valid and marketable.” Anonymous, larger urban firm

Answer: No 1. “It will not assist but will in fact detract. In most cases there is a commonality of interest between lender and client. Conflicts will occasionally continue to arise but they are very rare and do not warrant a change to the system.” Anonymous, larger urban firm

2. “I cannot agree that separate representation will support the interests of justice or promote the interests of consumers. Whatever issues exist in the present system could be remedied by minor tinkering of the system. Separate representation will involve further expense for the consumer and two solicitors effectively doing the same job for different clients. There will be delays - this is inevitable just because of the mechanics involved. There will be polarisation of views too. The traditional merits of the Scottish system i.e. speed and certainty - will be lost. This is far too zealous an approach and is being resorted too without enough thought or discussion with lenders. As importantly, it will be a PR disaster for solicitors.” Stuart Bain, andersonbain LLP, Aberdeen

3. “Don't Agree. No doubt this will suit the large corporate practices who have diversified to the extend where the solicitors role has been delegated to no more than devising the tick list and employing underpaid unqualifieds with little discretion or understanding of principles to dictate to the profession.” Ronald Hastings, Hastings & Co., Scottish Borders

4. “This issue is primarily a reaction of the legal profession to being put under pressure by the big lenders who are exerting their commercial influence. I see little relevance to the rule of law in this debate. Trying to bring this issue into it is clutching at straws.” Alan Livingstone Hastings & Co, Scottish Borders

5. “The proposal does not serve the interests of Justice.” Robert Fitzpatrick, The Glasgow Law Practice, North Lanarkshire

Question: “Does the proposed rule change protect and promote the interests of consumers?”

Answer: Yes 1. “It assists the society by supporting independent legal advice being given to a purchaser in what in most cases is the biggest purchase and loan that that person will make during his or her lifetime. It avoids occasions of acting in a conflict of interest situation. The present contractual duties placed by CML Handbook on a solicitor to reveal confidential information about the client to the lender is not in the consumer interest. There is serious abuse of the contractual strength of lenders with their disproportionate CML Handbook requirements and evasion of costs shifted on to the consumer so lenders do not pay. The Master Policy cover is being abused by lenders making claims on a massive scale on technical breaches. This leads to more claims and increases the cost of the Policy and thus costs of consumers while only the lenders pay nothing. Michael Sheridan, Secretary, Scottish Law Agents Society

2. “The current position permitting dual representation is based on a historic understanding that the lender requires "execution only" from the solicitor. That was not the legal position but it was how lenders tended to behave. Matters have developed over the

years to the extent that it is crystal clear that the lender requires and expects a "real" solicitor/ client relationship. This involves their solicitor telling them everything in his knowledge that may affect their willingness to lend. A solicitor therefore is in an impossible position where his purchasing client may want to discuss something fully and confidentially, such as an impending redundancy but find that the solicitor judges that he must tell his "other" client about it. If the solicitor instead says to the lender that he cannot continue to act for the lender because of circumstances that he cannot divulge then this rings warning bells with the lender anyway. The current position therefore interferes with the essential benefit of legal representation i.e. the ability to speak freely and frankly in a confidential relationship. When a purchaser asks a solicitor for advice he expects independent impartial advice. How can a solicitor give for example advice to the purchaser that the loan terms are dreadful and can be bettered elsewhere if at the same time the solicitor has a duty to the his other client, the lender, to promote that lender's interest?” Peter McFarlane P.C.Mcfarlane & Co, West Lothian

3. “Lenders’ increased requirements serve THEIR interests - not those of consumers. The increased requirements imposed on solicitors by lenders give lenders increased scope to make a claim on the solicitor's professional indemnity insurance without any noticeable benefit to the consumer. E.g. bank impose lengthy requirements on solicitors to check that a purchaser's buildings insurance policy complies with their requirements; it is very time consuming to comply with their requirements; if we miss something, the lender can make a claim on us (and when did solicitors become experts in checking buildings insurance policies?) but there is no noticeable benefit to the consumer. As solicitors we have to start charging extra if we have to spend a considerable amount of time checking buildings insurance policies - so the consumer gets an additional bill for a service that is not designed to protect them.” Anonymous, rural sole practitioner

4. “The lenders operate with a very heavy hand and there is no 'equality of arms'. The residential conveyancer is drawn into various reporting matters - whether the buildings insurance policy is index linked or not, etc., and then the purchaser has to meet the costs. The lenders have no flexibility and refer matters back to the solicitor requesting that the solicitor exercise judgement. The lender is unforgiving if, with hindsight (possibly years later), they decide that they are now not in agreement with the professional judgement

made. The solicitor has two masters to please. Given the commercial pressure exercised by the lender over the solicitor (threat of removal from the panel etc.) this is not satisfactory. The solicitor must be free to do their best to represent the interests of the client(s) without potential conflict.” Anonymous, rural high street firm

5. “No doubt consumer groups will complain that the costs to consumers will increase and no doubt this will be deliberately portrayed as the legal profession seeking to feather its own nest. But, as I see it, there is a very real benefit to consumers in that their solicitor will now have no need to look over her/his shoulder all the time and worry more about some inadvertent breach of some obscure condition in the CML Handbook and instead will be able to focus more on doping the job that he or she is trained engaged and paid to do - that is, represent the house purchaser.” Alasdair Sampson, Financial Services Advocacy Ltd

Answer: No 1. “There can be little doubt that the proposal will result in higher costs for the consumer. Whether their interests will be protected to a greater extent by the proposal is debateable to say the least. It would appear that the proposal is designed to protect the interests of solicitors as opposed to the interests of the consumer who will see little difference apart of course from increased costs.” Anonymous, niche conveyancing firm

2. “It will not protect consumers but will in fact cost them more in money, time and stress. The examples of sep rep we already have in place … show how badly this system will work. Missives will be delayed and we will end up with a system similar to that in England whereby contracts are not concluded until a matter of days prior to settlement.” Anonymous, larger urban firm

3. “While protecting consumers against the risks arising out of potential conflicts of interest is a positive thing, in the current sluggish property market it would seem to be counterproductive to institute changes likely to both slow down and increase the cost of buying/selling property. Furthermore, in economic times in which individuals are finding it difficult to afford homes (particularly first-time buyers) it seems unduly burdensome to increase the cost of buying/lending (since it is highly likely that lenders will pass this cost to their clients rather than 'take the hit' themselves).” Anonymous, larger rural high street firm

4. “The Society argues that this change is necessary due largely because lenders' requirements have become more onerous, yet the change is not to the CML handbook per se (although that will undoubtedly require to be changed at least to reflect the sep rep position) but the change is to the Law Society's own practice rules. This does not necessarily therefore mean that the borrower will not still be subject to the same requirements to satisfy the lender or the lender's agents. The lender's agents will not know or act for the borrower and will be required to rely on confirmation/undertakings from the borrower's agent.” Anonymous, urban firm

5. “I do not believe the proposals promote the interests of consumers and I believe they detract from the Law Society's responsibilities in this regard. As a result of these transactions, consumers will be required to pay more for domestic mortgage transactions. This would be true regardless of a ban on the payment of legal fees by borrowers. The large financial institutions will recover their costs whether directly through the borrower paying the increased fees on the lender's side of the transaction or by other increased administration and entrance fees placed on mortgages. Fees for lenders are often higher than for borrowers in relation to the amount of work carried out because of the nature of the law firms used by lenders. Fees will increase disproportionately for domestic borrowers. In order to stay competitive, firms handling domestic conveyancing will be forced to reduce their fees for carrying out the same amount of work (examining title for two parties takes around the same time as for one). In terms of business consumers, these borrowers do not require the level of protection that domestic borrowers are assumed to require and can understand and accept the risks associated with lower fees for dual representation by a single firm. Even so, these risks are low in larger firms which tend to act for business consumers because of the natural separation between teams of lawyers acting in different capacities. Business consumers want lawyers they can trust to act on their behalf, and would rather have the risk of a lawyer they know will represent their best interests (and tell them if they cannot) than a lawyer with whom they have had no previous relationship. The lower fees resulting from dual representation are not as a result of a lesser quality of advice, but because there is not the same level of duplication in work which is unavoidable where different firms are acting for different parties.” Anonymous, larger urban firm

6. “We doubt that clients will perceive this as being for their benefit in any way, and it is inevitable that there will be additional delays and increased costs, and to assume otherwise is unrealistic.” MacPhee & Partners

Question: “Does the proposed rule change protect and promote the public interest generally?”

Given the above question, many respondents considered the interests of purchasers and the public to be convergent, fewer yes/ no style responses were offered. We also received a number of comments in respect of this question which make excellent points but do not necessarily categorise neatly as a yes or no answer.

Answer: Yes 1. “Frankly, mortgage lenders and the CML are guilty of rapacious opportunism and have been since the property recession on the 1980s. The legal profession and its PI Master policy have taken the hit for this. A purchaser's solicitor ought to have only one client and only one duty - to protect the interests of that purchaser client. It may well be that the interests of purchaser and lender were at one time seen as more or less aligned but no more and the application of the rules as regards representation need to reflect the actuality. Solicitors will now be more free to comment on the terms and conditions of the loan offer and whether they are suitable to and for that client in a way that I do not believe they are at present.” Alasdair Sampson, Financial Services Advocacy Ltd

2. “The policies of lenders are anticompetitive. This stranglehold on choice (as it is generally more expensive to hire your own solicitor than to use the banks solicitor) is against the interests of consumers. In addition, the due diligence questionnaires prepared by the bank put the solicitor in the difficult position of potentially disclosing the borrower's confidential information in circumstances where he would not otherwise have to.” Anonymous, Glasgow

3. “In my view it is a basic tenet of our system that the client should receive independent advice. If sep rep delivers that then this will serve the wider public interest.” Anonymous, urban high street firm

Answer: No 1. “The public are not interested in unnecessary duplication of work and I cannot see how such inbuilt inefficiencies can benefit public interest.” Anonymous, larger urban firm

2. “Seriously detracts. The public interest is served by having a streamlined and efficient property market in traditional Scottish style, without fear of agreed mortgages being withheld or delayed by a further bureaucratic hurdle.” Anonymous, rural high street firm

3. “We all want to reduce the risk but improvements to lenders panel management and some form of accreditation scheme are the answer NOT sep rep.” Anonymous, larger urban firm

Answer: Other 1. “The Society claims that "many of the lenders' requirements are out of step with conveyancing practice in Scotland. Some of these requirements are often in practice unachievable, thus placing the solicitor unavoidably in breach of the lender's requirements." Sweeping generalisations are headline grabbing but meaningless without examples. Similarly, the consultation paper mentions "increased pressures from lenders" and some examples might be useful. The Final Report of the Working Party details that there has been a 'significant hardening of attitude by lenders to solicitors' breach of their instructions...'. Is the issue therefore not that solicitors need to stop 'taking a view' and report everything to the lender, leaving the decision with the lender and ultimately the realisation with the lender that the CML Handbook requirements are far too onerous and unnecessary.” Anonymous, urban firm

2. “We cannot be left at the mercy of lenders. They have lost a lot of respect, but continue to take out their woes by making matters worse for the public who have suffered due to no fault of their own.” Struan Douglas, Purdie & Co, Edinburgh

3. “If a majority are in favour of a rule change then we hope that at least further consideration can be given to restricting the application of the prohibition so that it affects only commercial lenders and financial institutions. We cannot see the justification in

prohibiting solicitors acting on both sides in “private” loan transactions when they are still permitted to act in conveyances and leases on both sides (where the appropriate exceptions apply).” Duncan Hill, Lows Orkney Limited, Orkney

Question: “Does the proposed rule change promote access to justice?”

The majority of respondents who answered this question indicated they thought that the proposed rule change would have negligible or no effect on this. Beyond these comments, there was a cross-section of views, which are represented below:-

Answer: Yes 1. “By lenders restricting their panel membership they are discriminating against consumers in rural areas where the only solicitor in the area may be a sole practitioner and as such is not deemed "good enough" to be on many lenders panels. … Bank recently took the decision to restrict our membership of their panel to transactions in which the consumer was borrowing less than 80% of the value of the property - thereby implying that we constituted a risk if the consumer was borrowing more than this (somewhat ironic given that in three decades of house purchases and sales we have never had a claim). The consumer in that case was given a choice by the lender - use their solicitor or travel some distance to instruct another solicitor.” Anonymous, rural sole practitioner

2. “It is desirable that legal services should be available as widely as possible. The move towards smaller panels of lenders' solicitors could have the effect of driving smaller firms out of business, particularly because purchasers may be persuaded to instruct lenders' favoured solicitors. The removal of the exception is therefore desirable in this respect.” Anonymous, retired solicitor

3. “It will promote and it is absolutely essential.” Anonymous, rural high street firm

Answer: No 1. “Sep rep will make it more difficult for clients to get access to justice. They may in fact end up losing purchases because of this.” Anonymous, larger urban firm

2. “Raises expense and therefore materially limits access to legal representation and therefore also limiting access to justice.” Anonymous, larger urban firm

3. “Consumers will not be able to have the same local input regarding their loans.” Anonymous, rural sole practitioner

Answer: Other 1. “Yes and no. In some ways clients may be restricted due to costs - they may not have expected to incur additional cost by the lender charging an additional fee to instruct their own agents. “ Anonymous, larger rural high street firm

2. “Not relevant - allowing dual representation does not hamper access to justice. If anything it might give consumers access to a better quality of solicitor who has to satisfy a lender that they merit a place on that lender's panel. It ought to be possible for the same firm to represent two parties by putting in place robust information barriers to ensure separate representation.” Anonymous, larger urban firm

3. “Are you serious?” Alan Livingstone, Hastings & Co, Scottish Borders

Question: “Does the proposed rule change promote competition in the provision of legal services?” Again, the majority of respondents who answered this question indicated they thought that the proposed rule change would have negligible or no effect on this. Beyond these comments, there was a cross-section of views, which are represented below:-

Answer: Yes 1. “If the lenders continue to restrict panels a lot of firms may go out of business leaving a few very big ones with little competition price wise. Conveyancing is highly competitive compared to other areas of the law just now- perhaps almost too much so, but this would change if lenders continue to railroad their wishes, making the whole process more expensive as the banks continue to make more money- maybe before the next big crash!” Struan Douglas; Purdie & Co Edinburgh

2. “SepRep will make it possible for large and small firm alike to compete on an equal footing. It will discourage a practise that seems to be growing of lenders appointing their solicitor to act in a loan but insisting or attempting to insist that the consumer borrower uses that same solicitor. That restricts choice. It also puts legal firms at a disadvantage with such lender based solicitors.” Michael Sheridan, Secretary, Scottish Law Agents Society

3. “The removal of the exception would certainly promote the said provision. The determination of one Lender to restrict the number of legal firms that can act for it not only shows the power and arrogance of the Lender but surely demonstrates a very dangerous trend towards turning lawyers into the poodles of big business.” Anonymous, urban sole practitioner

Answer: No 1. “I think your proposals act entirely detrimentally toward competition in the provision of legal services. The rule change will restrict business streams for a number of firms currently representing both private clients and lenders. The change appears primarily to protect the interests of those firms who are unable to comply with the increasingly formal panel requirements of the larger lenders - this is not promoting competition.” Richard Street, Aberdein Considine & Company , Aberdeen

2. “Let’s be practical about this all that is going to happen is that the lenders are going to instruct a handful of large firms to act on their behalf. Consumers will in theory still be able to instruct their own choice of solicitor but who knows what pressure the lenders may bring to bear here. This is playing into the hands of the large firms acting for lenders and is likely to do little to promote competition within the smaller firms.” Alan Livingstone, Hastings & Co, Scottish Borders

3. “The proposal is the Society's response to its catastrophic failure to formulate rules and protocols with the CML which would allow most solicitors who wished to remain on the lending panels of CML members. Instead of saying to the CML that unless there are clear and transparent rules allowing solicitors to apply for lending panels of CML members the Society has tacitly admitted that it is unable to negotiate effectively with the CML and brought forth this ridiculous sledge hammer to the detriment of the profession, the public,

consumer choice and one would imagine the mortgage lenders themselves. The mortgage lenders will be able to concentrate the number of solicitors they choose to instruct to a very small and select number reducing competition.” Robert Fitzpatrick, The Glasgow Law Practice, North Lanarkshire

Question: “Does the proposed rule change promote an independent, strong, varied and effective legal profession?”

Answer: Yes 1. “Lenders have a disproportionate level of power over conveyancing solicitors. They can, and frequently do, ignore the difference between the Scottish jurisdiction and others. They unilaterally change conditions for panel membership. This does not encourage an independent and strong profession. While some solicitors will choose to engage in criminal activity, others will be tempted to turn a blind eye to poor practice which ultimately affects the whole profession. If separate representation does no more that save some weaker members from closing their eye to fraud by ensuring they do not act for lenders, this will assist the whole Profession. The reputation of the Profession as a whole should improve.” Anonymous, professional body

2. “Rule 2.1.2 is a fundamental principle of the legal profession. Exceptions erode that and hence the profession is compromised. Adherence to Rule 2.1.2 without exception promotes an independent, strong, varied and effective legal profession de facto.” Alistair Duncan Miller Hendry, Dundee

3. “How can we be independent if we are controlled by the lending institutions?” Ronald Grant Fulton, HBM Sayers, Glasgow

4. “Separate representation would promote independence within the profession as the everyday high street residential conveyancer will no longer have to prioritise the interests of the lender. In time, this would also hopefully lead to a stronger and more effective legal profession where each solicitor can be confident in knowing that they are serving the best interests of their client. It would also lead to variety within the profession as it would no

doubt result in the emergence of a niche of firms who specialise in residential security work where now this is lacking.” Anonymous, rural firm

Answer: No 1. “Sep rep will leave purchasers dismayed with our profession. In many cases our hands would be tied and we would be unable to carry out our clients' instructions without consulting with another solicitor.” Anonymous, larger urban firm

2. “Exactly the opposite. An independent, strong, varied and effective legal profession and more significantly its regulator, would have taken on the CML and formulated panel membership regulations which were clear and transparent and in the interest of the profession and the Clients it serves. That is not what is happening here. The examples given in the consultation documentation are utterly embarrassing.” Robert Fitzpatrick, The Glasgow Law Practice, North Lanarkshire

3. “Do not believe this is applicable indeed the opposite may happen if lenders restrict their panels Where major lenders are involved are solicitors really independent or are they dependent on the income from the volume work they receive?” Anonymous, retired solicitor

Answer: Other 1. “If the profession was strong and effective it would have stood up more effectively to the CML before now. This has all come about because the profession has been backed into a corner in terms of what lenders require us to guarantee for them and do for them. Bolting the stable door after the horse has gone springs to mind.” Alan Livingstone Hastings & Co, Scottish Borders

2. “It will promote mediocrity because it will allow those Firms who are not deemed good enough by lenders to be on their panels currently, to continue to represent purchasers.” Robert Fraser, Aberdein Considine, Aberdeen

Question: “Does the proposed rule change promote and maintain adherence to the professional principles?”

Answer: Yes 1. “The exception to the conflict of interest rule which allowed solicitors to act for both borrowers and lenders was always in my view an exception which has created to serve the ends of those who wished it at that time. There was absolutely no valid justification for it at the time and there certainly isn't any now.” Anonymous, rural sole practitioner

2. “The conflict of interest rule is a fundamental principle underpinning the provision of impartial and confidential legal advice without any risk of the relationship being distorted by other interests. We cannot even act in our own firms making a Will where we are benefitted or act for the lender if we are buying a house. The conflict rules are correctly strict. The current purchaser / lender exception is a historical anomaly designed to protect the legal profession so we could also get a fee for the security work. It is simply absolutely wrong in principle.” Peter McFarlane, P.C.Mcfarlane & Co, West Lothian

3. “If solicitors are representing either or not both of a buyer or lender in any transaction then situations where the solicitor requires to " make a call" on an issue or is pressurised to do so by the buyer or a third party i.e. estate agents, mortgage brokers etc. should not arise. This should significantly reduce CML breach claims to the Master Policy.” Christopher Tulips, Strefford Tulips, South Lanarkshire

4. “Matters were getting to a stage where it was almost impossible for a solicitor to properly represent both clients.” Anonymous, urban high street firm

5. “Our whole raison d'etre is integrity, reliability and trustworthiness. The standards of business are light years removed from the standards of our profession.” Ronald Grant Fulton, HBM Sayers, Glasgow

6. “The Lenders do not have a good track record when it comes to matters such as mis-selling policies, endowment loan difficulties, and money laundering. It can only be good for the whole purchase and lending systems that the solicitors involved are free from any

commercial pressures and freely able to apply proper professional principles to the work involved.” Anonymous, urban sole practitioner

Answer: No 1. “Completely the reverse. Panders to an intellectual debate which has no relevance in the real world.” Anonymous, rural firm

2. “I do not believe the proposals promote or maintain adherence to the professional principles. It makes it near impossible for conflicts of interest to occur, which will lead to a tick box analysis of conflicts, rather than the common sense approach so well exercised by firms at the present time.” Anonymous, larger urban firm

3. “Detracts. Breaking the direct line of responsibility between the purchaser's solicitor and the lender may lead to some purchasers applying inappropriate pressure (e.g. for non- disclosure) in certain situations, getting in the way of fair dealing between all the parties.” Anonymous, rural high street firm

4. “Having undertaken both residential and commercial lending work for a good number of years it seems to me that the issue here is one of commercial pressure both from the lenders who seek to commoditise mortgage work by reducing panel sizes but at present are restricted by consumers who perceive that having their own agent deal with their mortgage results in an lower cost overall, and from the larger players in the legal profession who would like to be in a position to secure the business. Frankly I do not think that professional principles are a factor here. There have been numerous times in my professional practice where I have had to advise a purchaser/ borrower that I have encountered a defect in title / unusual circumstance which will need to be disclose to their lender.” Anonymous, urban high street firm

5. “I don't think your proposals affect this in any positive way.” Richard Street, Aberdein Considine & Company, Aberdeen

6. “These are perfectly well protected under the existing system.” Iain Considine, Aberdein Considine, Aberdeen

Part B: The Proposed Draft Rule Change

The Conflict of Interest Practice Rules with suggested amendments shown in tracked changes

2.1.2 You shall not act for two or more parties whose interests conflict.

2.1.3 Without prejudice to the generality of rule 2.1.2, where you are an employed regulated person and your only or principal employer is one of the parties to a transaction you shall not act for any other party to that transaction; provided always that you may, where no dispute arises or appears likely to arise between the parties to that transaction, act for more than one party thereto, if and only if: (a) the parties are associated companies, public authorities, public bodies, or government departments or agencies; or

(b) the parties are connected.

2.1.4 Without prejudice to the generality of rule 2.1.2, a regulated person, two or more regulated persons practising either as manager or employee in the same practice unit or in the employment of the same employer shall not, at any stage, act for both seller and purchaser in the sale or purchase or conveyance of heritable property, or for both landlord and tenant, or assignor and assignee in a lease of heritable property for value or for lender and borrower in a loan to be secured over heritable property; provided, however, that where no dispute arises or might reasonably be expected to arise between the parties and that, other than in the case of exception (a) hereto, the seller or landlord of residential property is not a builder or developer, this rule shall not apply if: (a) the parties are associated companies, public authorities, public bodies, or government departments or agencies, provided that in the case of a loan to be secured over heritable property, the terms of the loan have been agreed between the parties before the regulated person has been instructed to act for both the borrower and the lender, and the granting of the security is only to give effect to such agreement;

(b) the parties are connected, provided that in the case of a loan to be secured over heritable property, the terms of the loan have been agreed between the parties before the regulated person has been instructed to act for both the borrower and the lender, and the granting of the security is only to give effect to such agreement;

(c) the parties are related by blood, adoption or marriage or civil partnership, one to the other, or the purchaser, tenant, assignee or borrower is so related to an established client, provided that in the case of a loan to be secured over heritable property, the terms of the loan have been agreed between the parties before the regulated person has been instructed to act for both the borrower and the lender, and the granting of the security is only to give effect to such agreement; or

(d) both parties are established clients or the prospective purchaser, tenant or assignee or borrower is an established client, provided that nothing in this paragraph (d) shall permit acting for lender and borrower in a loan to be secured over heritable property; or

(e) there is no other regulated person in the vicinity whom the client could reasonably be expected to consult, provided that nothing in this paragraph (e) shall permit acting for lender and borrower in a loan to be secured over heritable property.; or

(f) in the case of a loan to be secured over heritable property, the terms of the loan have been agreed between the parties before the regulated person has been instructed to act for the lender, and the granting of the security is only to give effect to such agreement.

2.1.5 In all cases falling within exceptions detailed at paragraphs (c), (d) and (e) of rule

2.1.4 both parties shall be advised by the regulated person at the earliest practicable opportunity that the regulated person, or his practice unit, has been requested to act for both parties, and that if a dispute arises, they or one of them will require to consult an independent regulated person, which advice shall be confirmed by the regulated person in writing as soon as may be practicable thereafter.

2.1.6 Unless the contrary be proved, for the purposes of rules 2.1.3 and 2.1.4, you shall be presumed to be acting for a party for whom you prepare an offer, whether complete or not, in connection with a transaction of any kind specified in this rule 2.1, for execution by that party.

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.

2.1.8 Where a practice unit knowingly intends to act on behalf of two or more prospective purchasers or tenants (other than prospective joint purchasers or tenants) of heritable property (in this rule 2.1.8 referred to as "the clients"), the clients shall be informed of such intention, and a single natural person shall not, where he has given any advice to one of the clients with respect to the price or rent to be offered, or with respect to any other material condition of the prospective bargain, give advice to another of the clients in respect of such matters.

Part C: Extract from the Briefing Paper considering the Conflict of Interest Practice Rules prepared by Brodies LLP

3 The Exceptions to Rule B2.1.4 and proposed amendments

3.1 This section considers the six exceptions to the Rule B2.1.4 prohibition and sets out the amendments which it is proposed to make to those exceptions.

3.2 The first amendment is that exception (f) to Rule B2.1.4 will be revoked. This goes to the heart of the issue of separate representation and should not remain in any form. The effect of this is that acting for both lender and borrower in any loan to be secured over heritable property, whether residential or commercial, will be prohibited by virtue of the introductory paragraph of Rule B2.1.4. This is considered appropriate in light of the already existing Society guidance in relation to commercial property transactions which acknowledges that separate representation is the norm and effectively envisages that acting for both parties would be only permitted below a loan value threshold of £250,000. The Society may wish to consider revoking such guidance should the proposed rule change be passed. The rules should be clear on their face both as to the position in residential and in commercial security transactions, rather than leaving commercial security transactions to be regulated by existing guidance which, in effect, requires separate representation anyway. It is understood, however, that guidance may require to be produced by the Society on certain specific aspects of commercial security transactions, some of which are referred to in paragraph 5 below.

3.3 As regards exception (a) it is not considered that this should be revoked. The exception relates to parties which are associated companies, public authorities, public bodies or government departments or agencies. It is not considered that if one of these bodies were the lender in a heritable security transaction and the other the borrower, there would be significant risk either to the public or to the profession if a regulated person were to act for both. However, because of the revocation of exception (f) to Rule B2.1.4, a proviso is required to this exception to make it clear that where the transaction is a loan to be secured over heritable property, the loan terms have been agreed between the parties

before the regulated person has been instructed to act for both parties. That is currently a requirement because exception (f) applies to all loan transactions which are to be secured over heritable property and therefore the proviso requires to be added in light of the revocation of exception (f), otherwise the existing exception (a) will be extended in scope beyond the current position.

3.4 Exception (b) allows a regulated person to act where the parties are "connected". The term "connected" is defined in Rule B2.1.1. Parties are connected if at least one of them is a body corporate and one is controlled by the other or both are controlled by the same third person. This exception therefore covers holding company/subsidiary company/common holding company connections, and similar connections in respect of non-Companies Act bodies corporate such as industrial and provident societies. Again, it is not considered necessary to revoke this exception either in the interests of the public or in the interests of the profession because the risk is not considered to be significant. However, a proviso requires to be added in the same terms and for the same reason as referred to in paragraph 3.3.

3.5 Exception (c) covers situations where the parties are related by blood, adoption or marriage or civil partnership, one to the other, or where the purchaser, tenant, assignee or borrower is related by blood, adoption or marriage or civil partnership to an established client. The term "established client" is defined in Rule B2.1.1 as a person for whom a regulated person or their practice unit has acted on at least one previous occasion.

3.6 Because of the way exception (c) is drafted it can only apply where the parties are natural persons, i.e. individuals. It is, of course, perfectly possible that one individual may lend to another and take security over heritable property in respect of that lending. Although that is a standard security transaction, considered against the background of the issues of separate interests (of borrower and lender) which were of concern to the separate representation Working Party (such as disclosure of all relevant circumstances, defects of title and imbalances in the respective power of clients where the lender is a commercial lender) it is not felt necessary to revoke exception (c). It is not thought that these separate interests issues arise so obviously in a case where individuals are concerned. However, a

proviso requires to be added in the same terms and for the same reason as referred to in paragraph 3.3.

3.7 Exception (d) applies where both parties are established clients (defined as set out in paragraph 3.5) or where the prospective purchaser, tenant, assignee or borrower is an established client. This exception covers two circumstances. The first is where both parties are established clients and the second is where the borrower is an established client. It could equally cover individuals as well as corporate entities, but exception (c), which it is not proposed to revoke, addresses individuals related by blood, adoption or marriage or civil partnership.

3.8 It is considered that amendment is required to exception (d) to remove the established client exception for heritable security transactions at least where the borrower is an individual and the lender a commercial lender, and one or both are established clients. If this is not done there will be significant numbers of cases where the established client exception would go against the principle of mandatory separate representation.

3.9 A further issue is whether the established client exception should cover (as it arguably does currently) situations where both lender and borrower are individuals but not related by blood, adoption or marriage or civil partnership. After consideration, it is not thought that acting in such circumstances in the case of a loan to be secured over heritable property should be permitted given that exception (c) is the principal exception in respect of individuals and is clearly focussed only on specified relationships. It follows that a proviso to exception (d) will require to be added to the effect that the exception will not apply in any case of a loan to be secured over heritable property.

3.10 Exception (e) covers situations where there is no other regulated person in the vicinity whom the client could reasonably be expected to consult. This exception has been and is interpreted as being restricted to isolated rural and island communities. Circumstances giving rise to the possible application of this exception in the context of loans to be secured over heritable property will involve either an individual for whom a regulated person is acting, then followed by an instruction from a lender, or vice versa. With respect to any lender, where that lender is a commercial lender, it is not considered to

be problematic for the lender to be advised by another practice unit, even if it is not in the vicinity. That may be less the case, of course, for the individual. However, overall, it is considered that the interests of the public and the interests of the profession are such that the exception must be amended.

3.11 Therefore, a proviso to the same effect as specified in relation to exception (d) in paragraph 3.9 will be added.

4 Other potential Rule changes

4.1 Consideration has been given as to whether any other provisions of Rule B2 or rules elsewhere in the Conflict of Interest Practice Rules require to be amended to give effect to mandatory separate representation in standard security transactions.

4.2 It is not considered that any other changes are required to Rule B2. Rule B2.1.1 contains definitions which do not require to change. The general prohibition in Rule B2.1.2 should not change.

4.3 Rule B2.1.3 is addressed to employees. Provided that no dispute arises or appears likely to arise between the parties, it permits an employed regulated person (as defined in Rule B2.1.1) to act, in a transaction to which their only or principal employer is a party, for other parties to that transaction but only where the parties are associated companies, public authorities, public bodies or government departments or agencies; or where the parties are connected, as defined in Rule B2.1.1 (see paragraph 3.4). The transaction in question could, of course, be a loan to be secured over heritable property. However, for the same reasons as set out in respect of exceptions (a) (associated companies etc) and (b) (connected persons) to Rule B2.1.4 (see paragraphs 3.3 and 3.4) it is not proposed to amend this Rule in respect of secured loan transactions.

4.4 Rule B2.1.5 requires that, where exceptions (c), (d), and (e) of Rule B2.1.4 apply, both parties are to be advised that the regulated person has been requested to act for both parties and that if a dispute arises they, or one of them, will require to consult an independent regulated person. This provision does not require amendment.

4.5 Rule B2.1.6 contains a presumption that a regulated person is acting for a party for whom that regulated person prepares an offer in connection with a transaction of any kind specified in Rule B2.1. This provision does not require amendment.

4.6 Rule B2.1.7 addresses the issuing of any deed, writ, missive or other document, requiring the signature of another party, to that other party. It requires that other party to be informed in writing that signature of the document may have certain legal consequences and that the other party should seek independent legal advice before signature. This provision does not require amendment.

4.7 Rule B2.1.8 addresses the situation where a practice unit knowingly intends to act on behalf of two or more prospective purchasers or tenants of heritable property and requires that where that is the case, the clients must be informed and that different persons within the practice unit must provide advice to each client. This Rule is not relevant to loans to be secured over heritable property and therefore does not require amendment.

4.8 Rule A5.1 confers a power on the Council to waive the provisions of any of the Conflict of Interest Practice Rules in any particular circumstances or case. Any waiver may be granted subject to such conditions as the Council may in its discretion determine. Rule A5.2 disapplies the power to waive in the case of the limited number of rules listed in Schedule 2 to the Conflict of Interest Practice Rules. The rules listed there do not include Rule B2 or any of its provisions.

4.9 It is considered that the power to grant waivers should continue to apply, both in respect of Rule B2 generally, and specifically in respect of its provisions capable of relating to loans to be secured over heritable property. It cannot be assumed that there could never be a situation where a waiver would be appropriate. However, given the changes to be made to Rule B2 in respect of standard security transactions, i.e. the move from permission to act subject to conditions to a prohibition on acting in most cases, it is likely that fewer circumstances will arise where a waiver is appropriate.

5 Guidance

5.1 It is anticipated that guidance will require to be produced by the Society on various aspects of Rule B2.1.4 as amended.

5.2 One aspect concerns the preparation of a security discharge documents or deeds of restriction. It may be argued that the preparation of such documents is not caught by Rule B2.1.4 as it is not acting in a loan "to be secured" over heritable property. Equally it may be thought that there is no breach of the general prohibition in Rule B2.1.2 on the assumption that, if the loan is to be repaid, then the interests of the parties coincide. However, the Society may wish to produce guidance on deeds of discharge and restriction, to the effect that there would not be considered to be any conflict of interest provided that it is made clear to any lender that a regulated person is acting on an execution-only basis.

5.3 The use of certificates of title in commercial property transactions, including those involving the taking of security, is common and in particular where solicitors acting for the purchaser or borrower provide such certificates to the lender and their solicitors. The Society may wish to produce guidance on the use of certificates of title in light of the rule changes. However, where lenders are separately represented, the view may be taken that, providing the certificate a) relates only to matters of title and other matters commonly disclosed by searches in the public registers and b) allows for disclosures to be made against that title, the provision of the certificate does not constitute a breach of the proposed rule changes.

5.4 The Society may also wish to consider producing guidance on the use of certificates of title in respect of residential property transactions to align their use with commercial property transactions.

5.5 There may also be transactions where security over heritable property is to be taken and in which the borrower's solicitor may provide a legal opinion to lenders. This may, for example, be the case in respect of mortgage-backed securitisations. Again the Society may wish to consider producing guidance on this, if felt necessary. However, where

lenders will also be separately represented, the view may be taken that the providing of a legal opinion to lenders does not constitute a breach of the proposed rule changes.

5.6 We understand that the Society may wish to provide guidance on other matters in addition to those which have been discussed above so as to align these with the proposed rule changes.

Appendix 1 This appendix provides various summary data on the level of responses, who responded, and an overview of how they responded to the multiple choice elements.

A full copy of all responses is made available on our website, redacted to assure anonymity where this has been requested.

Care should be taken in interpretation. Information is provided in relation to each table as to what is contained within it, and the general points on quality of data made in the main summary paper also apply.

The information includes the following tables:

A. Yes / No breakdown of ‘in favour of separate representation in principle’ B. Why respondents are in favour of, or against, separate representation C. Employment type and area of practice D. Geographical location E. Names of Respondents (organisations/stakeholders and individuals)

A. Yes / No breakdown of ‘in favour of separate representation in principle’

INFORMATION

This information shows various breakdowns of the agreement (‘yes’ or ‘no’) with the following statement: The consultation paper shows a proposed amendment to the Conflict of Interest Practice Rules. In principle, and without reference to the way in which the proposed amendment has been drafted in the consultation paper, do you believe that there should be a change to the Practice Rules? If you answer yes here, you will be given an opportunity at the next question to confirm whether you are happy with the proposed rule change is drafted or to make any comments and/ or suggestions as to how this should be drafted. Note: 95 anonymous responses were received, of these 14 answered the yes/no question. These are counted as ‘individuals’ rather than ‘organisations’. This does not include responses by letter, as they were not giving feedback against the exact wording of this question and are not directly comparable. The main consultation summary document notes some further issues about multiple responses etc.

Simple breakdown of all responses If yes, content with drafting? Yes 48.9% 90 70.8% 63 No 51.1% 94 29.2% 26 Base 184 89

Simple breakdown of ORGANISATIONS (only) responding If yes, content with drafting? Yes 59.1% 13 53.8% 7 No 40.9% 9 46.2% 6 Base 22 13

Simple breakdown of INDIVIDUALS (only) responding If yes, content with drafting? Yes 47.5% 77 73.7% 56 No 52.5% 85 26.3% 20 Base 162 76

Simple breakdown of INDIVIDUALS who work in RESIDENTIAL If yes, content with CONVEYANCING responding drafting? Yes 47.7% 41 68.3% 28 No 52.3% 45 31.7% 13 Base 86 41

B. Why respondents are in favour of, or against, separate representation

INFORMATION

This information shows where respondents provided information against the reasons for and against separate representation. The same caveats as noted above in relation to the ‘yes/no’ question apply. A lower number of respondents provided answers in this section. Where a respondent selected ‘other’ they also had the opportunity to provide a free-text responses, and these are incorporated in the main consultation response document where relevant, and can also be viewed in the complete pack of consultation responses provided on our website.

I am in favour of separate representation because of the following (tick as many as apply):- Issue % responses No. of responses i. The commercial landscape and the attitudes of lenders means separate representation will become a reality whether solicitors 66.3% 57 like it or not; we might as well get on board now ii. It is in my best interests commercially 30.2% 26 iii. The commercial strength of lenders relative to purchasers 81.4% 70 means there is a conflict iv. Separate representation is right for both clients 83.7% 72 v. Other 23.3% 20 Base 93

If no, is this because of the following (tick as many as apply):-- Issue % responses No. of responses i. The costs and duplication of work involved 92.5% 86 ii. It is in my best interests commercially 31.2% 29 iii. Purchasers’ solicitors may require to provide certificates of title to lenders’ solicitors which will mean separate 79.6% 74 representation achieves nothing in practice iv. Dual representation is right for both clients 37.6% 35 v. Other 25.8% 24 Base 86

C. Employment type and area of practice INFORMATION This information shows where respondents provided information against these questions. The response rate was high, even for anonymous and/or organisation responses.

Which most closely describes your employment? Private practice 86.9 % 218 In-house solicitor 8.0% 20 Local government 2.0% 5 Central government 2.0% 5 Financial institution 1.2% 39 Other 7 Base 251

Please tick which most closely identifies your main area of practice I am responding on behalf of a financial institution 2.0% 5 I am a member of the public 1.6% 4 I am responding on behalf of a consumer body 0.8% 2 Administrative Law 0.8% 2 Agricultural Law 1.2% 3 Banking Law 3.6% 9 Child Law 0.4% 1 Commercial Leasing Law 0.4% 1 Commercial Property Law 12.0% 30 Construction Law 0.8% 2 Contract Law 1.2% 3 Corporate Law 2.8% 7 Employment Law 0.8% 2 Family Law 2.4% 6 Insolvency Law 0.4% 1 Incapacity & Mental Disability Law 0.4% 1 Liquor Licensing Law 0.4% 1 Litigation Law 4.0% 10 Mental Health Law 0.4% 1 Planning Law 0.8% 2 Private Client Law 11.6% 29 Professional Negligence Law 0.8% 2 Public Procurement Law 0.4% 1 Residential Property Law 49.8% 125 Tax Law 0.4% 1 Other 13 Base 251 Options offered but with no one selecting: Arbitration Law, Charity Law, Constitutional or Parliamentary Law, Freedom of Information and Data Protection Law, Immigration Law, Environmental Law, Crofting Law, Debt & Asset Recovery Law, Discrimination Law, Intellectual Property Law, IT Law, Medical Negligence Law, Medical Negligence Law (Defender only), Oil and Gas Law, Pensions Law, Personal Injury Law, Private Client Tax Law, Projects Law, Sports Law, Trusts Law

D. Geographical location

INFORMATION

This information shows where respondents provided information against these questions. The response rate was high, even for anonymous and/or organisation responses.

Pease confirm the geographical area in which you work Aberdeen 22.3% 56 Aberdeenshire 4.0% 10 Angus 3.2% 8 Argyll and Bute 1.2% 3 Clackmannanshire 0.4% 1 Dumfries and Galloway 1.2% 3 Dundee 4.4% 11 East Ayrshire 0.4% 1 East Lothian 0.4% 1 East Renfrewshire 0.4% 1 Edinburgh 24.3% 61 Fife 2.0% 5 Glasgow 13.9% 35 Highland 4.0% 10 Inverclyde 0.4% 1 Midlothian 1.2% 3 Moray 0.8% 2 North Ayrshire 0.8% 2 North Lanarkshire 1.2% 3 Orkney 0.4% 1 Perth and Kinross 2.0% 5 Renfrewshire 0.4% 1 Scottish Borders 2.0% 5 South Ayrshire 0.4% 1 South Lanarkshire 4.0% 10 Stirling 0.8% 2 West Lothian 0.8% 2 England (London) 0.4% 1 Elsewhere in the UK (please specify) 2.4% 6 Base 251 Options offered but with no one selecting: East Dunbartonshire, Falkirk, Na h-Eileanan Siar, Shetland, West Dunbartonshire,

Outside the UK

E. Names of respondents (organisations/stakeholders and individuals)

INFORMATION The lists below provide information on the organisations who have submitted responses, and who they were submitted by, and the individuals who have submitted responses. All names and spelling are as per submission (for online submissions). Many responses were anonymous, or requested anonymity, meaning names respondents listed here are in a minority. The consultation document made clear we intended to publish the names of respondent. Those responding outwith the online responses system, and not flagging a wish for anonymity, have been listed below.

Firms / Organisations / Stakeholders Submitted by Adie Hunter David R Adie Alexander Moffat and Co Alexander Douglas Moffat Andersonbain LLP Calum Bell Aviva Martha Bergin Blackadders LLP Johnston Clark Blair Cadell Solicitors Andrew Macdonald Brodies - - Burness Paull & Williamsons Mandy Soppitt Cameron Stephen Cameron Stephen Connell and Connell WS Andrew Ogilvie Council of Mortgage Lenders - - Doughtys WS Sheila Stoddart Ferguson Whyte Martin Ferguson HBJ Gateley Alastair Shepherd HBM Sayers Ronald Grant Fulton Hill and Robb James Davidson Homes for Scotland - - James & George Collie Anne-Maryse Churchill Lawson, Coull and Duncan Hugh D. McKay Lloyds Banking Group Stephen Noakes Lows Orkney Ltd Duncan Hill MacPhee and Partners Keith Falconer McVey and Murricane - Murchison Law - - Murray Beith Murray -- Nationwide Andrew Baddely-Chappell Pinsent Masons Purdie & Co Alexander Struan Douglas Registers of Scotland Keeper - Scottish Law Agents Society Michael Sheridan Scottish Legal Complaints Commission Matthew Vickers Shepherd and Wedderburn Ann Stewart Shepherd and Wedderburn Ann Stewart Stewart and Osborne J S Paterson Sturrock Armstrong and Thomson Alan Davidson Tods Murray LLP Stuart Rowson Walker and Sharpe Neil Webster Which? Julia Clarke Williams McRae Ceri Williams Andersonbain LLP Calum Bell Blackadders LLP Johnston Clark Blair Cadell Solicitors Andrew Macdonald Ferguson Whyte Martin Ferguson HBJ Gateley Alastair Shepherd HBM Sayers Ronald Grant Fulton

James & George Collie Anne-Maryse Churchill Lows Orkney Ltd Duncan Hill Purdie & Co Alexander Struan Douglas Scottish Law Agents Society Michael Sheridan Scottish Legal Complaints Commission Matthew Vickers

Individuals Responding Firm Names Sampson Alasdair Financial Services Advocacy Ltd peter anderson andersonbain Stuart Bain andersonbain LLP Alan Borthwick bto stewart brymer Brymer Legal Limited IAIN CONSIDINE ABERDEIN CONSIDINE Lindsay Darroch Blackadders llp Alan Davidson Sturrock Armstrong & Thomson Terence Docherty A & S Ireland Chris Dun Maclay Murray & Spens LLP Alistair Duncan Miller Hendry Ian Cameron Ferguson Mitchells Roberton Robert Fitzpatrick The Glasgow Law Practice Robert Fraser Aberdein, Considine Alastair Gordon Alastair J Gordon WS Ronald Hastings Hastings & Co. Brian Inkster Inksters Steven Jansch Gillespie Macandrew LLP Matthew Joan M J Brown Son & Co., Ross Kennedy warners robin leith andersonbain LLP Alan Livingstone Hastings & Co James E Marr J E Marr & Co Andrew Michael Marwick Marwicks Solicitors Alison J. McLeod Mackinnons stephen murray morisons Magdalen Andrea Ogilvie Forrester Ogilvie and Co MCFARLANE PETER P.C.MCFARLANE & CO Kevin Rattray Andersonbain Binning Robert N/a Donald Ian Scott Skinner-Reid MHD Law LLP Kenneth Stanley Aitken Nairn rule stephen watersrule Richard Street Aberdein Considine Richard Street Aberdein Considine & Company David Strefford Strefford Tulips David Syme Burness Paull & Williamsons LLP Christopher Tulips Strefford Tulips Ritchie Whyte Aberdein Considine Fiona Wildgoose Aberdein Considine

For further information and alternative formats, please contact: Kaira Massie DD: 0131 226 8894 E: [email protected] The Law Society of Scotland Atria One, 144 Morrison Street Edinburgh EH3 8EX www.lawscot.org.uk