Bank of Scotland Conveyancing Panel Information

We can't comment specifically on Bank of Scotland. Many major lenders are now introducing ‘file auditing’ as standard practice in relation to completed matters. This raises questions of confidentiality in relation to the borrower and the purpose to which the results of such audits will be put. The starting point is to remember that the file does not belong to your firm, it belongs to the ‘client’. But, of course, we will normally have two clients – the buyer and the lender - and you will owe a duty of confidentiality to each. So basically, you have to separate the file and just send the lender the parts solely relating to themselves. But, of course, as this will basically be correspondence with the lender, mortgage instructions etc.

Check with your COLP but a firm should not send the complete conveyancing file without the buyer client’s express consent – and if he is in dispute with the lender he is hardly likely to agree. However, if the lender can establish a prima facie case of fraud, then you may be under an obligation to disclose the whole file.

The emerging convention is that lenders are including an authority to disclose in loan application forms to counter this problem. Mortgage Express v Sawali, [2010] EWHC 3054 (Ch) indicates that such provisions are valid. Please click here for more information about that case.

One might ordinarily expect Bank of Scotland via their Part Two conditions to address this but the Handbook makes no mention on time frames. Do look at the Terms of Bank of Scotland’s Conveyancing Panel Appointment that you are bound by. For many lender's these Terms contain a clause along the following lines: ‘To keep us informed of the reasons for any delay in your being able to send the title deeds and documents we require to us within 3 months of completion or evidence of proof of registration within that period. (We will send reminders if the deeds have not been received but will not acknowledge receipt of deeds’ It is imperative to keep Bank of Scotland informed. Law firms can often compound their problems by not communicating with the lender when there is a delay or problem.

What you should do largely depends on the reason that your firm has been removed off the Bank of Scotland conveyancing panel. The top 3 reasons are as follows:

1. lack of transactions
2. the lawyer is a sole practitioner
3. as part of the HSBC panel reduction.

In these three circumstances it is unlikely that you would expected to take any action. Disclosure and other compliance considerations are more likely to be relevant if the reason for removal is due to breaches of lender requirements or allegations of fraud or negligence. Whether the reasoning should trigger a disclosable 'material' breach will depend on the firm and the circumstances around possible failures to comply with the SRA Authorisation Rules, and the SRA will judge each case on its own merits. Factors such as the detriment or risk of detriment to clients, the scale of the issue and overall impact on the firm will need to be considered in deciding whether a failure is 'material'. As the compliance officer you will need systems to identify patterns of breaches. Even if you don't consider there to be regulatory implications the firms COFA should give some thought to whether she/he needs to take any action as result of being removed from the Bank of Scotland conveyancing panel.

On the basis that your practice in is on the Bank of Scotland conveyancing panel and you are representing them in relation to a leasehold property, you must report to them if it becomes apparent that the landlord is either absent or insolvent. If Bank of Scotland are to lend, they may require indemnity insurance. In any event,you will need to check Bank of Scotland’s specific requirements. Notwithstanding whether Bank of Scotland will lend in such circumstances you still need to advise the borrower (unless you are acting for Bank of Scotland alone) as to the risks of buying a property with an insolvent or absentee freeholder.

In this situation please explain on the form what action you have taken to find out the reasons behind cancellation of your Bank of Scotland panel status. In particular please provide details if you have received communications from the lender. E.G. before revocation of your panel membership did you receive any letters or calls from the lender putting you on notice?

You should contact Bank of Scotland to obtain standard documents. The CML Handbook has an explicit question for banks to reveal who to contact to obtain standard documents. Bank of Scotland in their Part 2’s state: It helps to disclose your Bank of Scotland conveyancing panel reference.