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TSLE2020: Dual representation can create ‘conflict of interest’

  • 07/02/2020
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TSLE2020: Dual representation can create ‘conflict of interest’
Dual representation can create an “inherent conflict of interest” as the solicitor may be not always be working in the best interests of a borrower, Octane Capital CEO and co-founder Jonathan Samuels has warned.


Samuels was speaking at The Specialist Lending Event in Birmingham, when the question was raised about the “poor service” and delays brokers experienced from the solicitors on lender panels. 

He said the solicitors on his panel refused to do dual representation, as they felt it “contravened” the rules of the Solicitors Regulation Authority.  

“You’ve got to be really careful. If it’s a vanilla product, it’s probably okay. If it’s a more complex, structured solution and it’s a lot of money, then be careful around dual representation and the representation your borrower is actually getting,” he added.



Lack of communication

However, other lender representatives suggested dual representation could be a positive and help smooth the completion.

Alex Upton, sales director of specialist mortgages at Hampshire Trust Bank, said lenders could help by being clearer in telling advisers that dual representation was an option. 

She said: “An application will come in and the broker will have their own solicitors but will automatically instruct a lender’s solicitor and the customer’s solicitor because they believe that’s what the customer wants to do.

“Then further down the line the lender will tell them they could have used their representation. A lot of intermediaries don’t realise they don’t have to go for that [separate representation].

“I don’t think the lenders are educating the brokers enough to say who can do that.”

Upton argued that with just one solicitor it could become “much slicker as a process” with less back-and-forth and blaming each other.

“We need to put it on ourselves and make sure we are educating the brokers enough to say they can do that. It’s always worth asking a lender ‘do you offer that facility?’ before putting an application in,” she added. 

Liz Syms, CEO of Connect Intermediaries, who was chairing the panel, said it was especially important to be clear about legal issues in the specialist arena, as cases were more complex.  

She added: “The takeaway for advisers is to have those conversations in a lot of detail with clients upfront and explain dual representation might give a smoother process, but may not protect them as fully in this complex situation compared to if they had their own representation.” 


Being responsible 

Regarding the quality of service provided by solicitors, Upton said she was “frank” with the those on her panel and let them know if their services were not up to standard, she would not hesitate to replace them. 

“Lenders need to take responsibility for holding those third parties accountable because they’re not the only ones available,” she said. 

Samuels agreed that it was the responsibility of the lender, as he said: “The lender should be leaning into those solicitors and telling them to get it together.” 

Simon Cockerill, head of sales at Kent Reliance, said a refined panel could give lenders more say in how things were handled. He added: “Having a smaller panel allows lenders to have more control over the process and communicate with solicitors.” 


The Specialist Lending Event 2020 continues next week with free registration still available for the events at York and Liverpool.


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