Supporters of ‘sep rep’ argued the move would help borrowers by removing the potential for conflicts of interest. In March, lawyers voted to hold a consultation on the issue.
However, at a general meeting of the Law Society of Scotland on Monday, they voted against the proposals.
The CML has been a constant critic of the move. A spokesman said: “It is encouraging that the legal profession in Scotland has recognised that the best outcome for borrowers is not a move to compulsory separate representation because that would be costly and cumbersome.
“We are pleased there has been a change of heart.”
Law Society of Scotland president Bruce Beveridge said the society had consulted solicitors, banks, the CML and consumer interest groups: “The responses to our consultation revealed the strength of feeling within the profession, whether for or against the proposed rule change.”
He said homebuyers continued to be unaware their solicitor was acting for the lender as well. “We will have to consider what we should do to ensure that all clients are clear about the duties and responsibilities of solicitors to both the housebuyer and the lender,” he added.