SPECIAL FEATURE: The Sep Rep debate

Robyn Hall

May 15, 2013

The recent decision from the Law Society of Scotland to vote that separate solicitors should act for the purchaser and the lender in a property purchase raises valid questions about how property transactions are currently carried out in England and Wales.

To understand whether the same system could work south of the border, it’s important to examine the driving forces behind the decision to make separate representation mandatory, and the questions it raises around transparency and customer service.

Increasingly complex property transactions and a higher risk of fraud have led to a crisis of confidence amongst property buyers which affects each party in the property transaction.

Numerous surveys have highlighted this issue of confidence and it’s important for solicitors, conveyancers and lenders to address these concerns.

Separate representation could go some way in tackling consumer confidence as it will boost transparency and ensure that buyers have a dedicated solicitor to act on their interests.

There are certainly benefits to this arrangement, but it’s likely that dual representation will remain the norm in England and Wales for some time. With this in mind, property professionals need to look at other ways in which they can build consumer trust.

A key part of this is simply taking time to remember just how significant property purchasing is. Handing control over to a solicitor and dealing with lenders can be hugely daunting so it’s important to make this process as painless as possible.

The key is to ensure that both buyers and sellers are kept well informed at all stages of the process.

Conveyancers must be transparent throughout, outlining the sale or purchasing process from the outset and providing a clear and visible audit trail as highlighted in the principles of the SRA’s outcomes focussed regulation.

A further concern for all parties is fraud. The risk of fraud within conveyancing has risen considerably in recent years with losses reaching an estimated £1bn.

Separate representation could help mitigate this by establishing stronger relationships between lenders and conveyancers.

Avoiding fraudulent transactions should be a priority for all parties involved; working together, being aware of the warning signs and keeping an eye on SRA notices about bogus firms and identity theft is essential.

Implementing good compliance and risk management systems and regularly assessing their effectiveness will also help to combat the problem.

While greater transparency and potentially stronger relationships between all parties are likely benefits of separate representation, one big disadvantage is the need for two different sets of searches which could complicate and delay what is often already a long and unpredictable process.

It will be interesting to see how this is approached in Scotland. Ensuring that all parties are facilitating the easy sharing of information and guaranteeing an honest line of communication will help the process run as seamlessly as possible in either a dual or separate representation system.

If anything, the ‘sep rep’ debate is a valid wake-up call to the conveyancing sector to review its current systems, embrace more advanced technology to speed up processes and keep consumers informed.

Many solicitors are now adopting web based services which enable them to communicate more quickly and effectively with colleagues, clients and other solicitor firms.

It is essential that this spreads to those in our industry who have up until now been more resistant to change.

Our legislation and indeed our approach has changed little since the 1970s and, as a result, our processes lag behind those in many other Western economies.

The changes in Scotland, whilst unlikely to be adopted in England and Wales in the foreseeable future, represent an opportunity for the property industry to re-evaluate the way in which we operate and to make changes that will restore consumer confidence and ultimately make us a more efficient, profitable sector.

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