Conduct and service

Get it in writingComment has been made in previous case notes about the need to get completion statements right, and how failure to do so almost inevitably results in a finding of inadequacy of service.

This was given a recent twist in a case that came before the compliance and supervision committee that also highlighted the fundamental lesson of getting important information confirmed in writing.

Solicitors were instructed by Mr & Mrs A in a sale and purchase.

The clients had an existing mortgage under which the mortgagees were entitled to impose a penalty approaching 4,000 if the mortgage was redeemed before 2003.

Notwithstanding this, the A's had obtained an offer of a new mortgage on their purchase from the same mortgagees.

There was no mention of the penalty being waived in the new mortgage instructions or the redemption statement.

The solicitors telephoned the mortgagees and were informed the penalty would not apply as the mortgagors were taking out a new mortgage with them.

The solicitors, accepting this verbal assurance, deducted the 4,000 from the original redemption figure, discharged the original mortgage and accounted to their clients.

Some weeks later, the mortgagees wrote to the solicitors asking for payment of the penalty - the solicitors consequently requested the money from their clients.

They replied saying that, relying on the accuracy of the completion statement, they had spent the money.

Mr & Mrs A raised a formal complaint when the solicitors threatening proceedings.

The solicitors now wrote to the mortgagees who responded to the effect that their policy was not to give advice over the telephone and that any representation over waiver of penalty would have to be confirmed in writing.

They offered a 20% waiver because of the new mortgage taken out with them, but said a full waiver would only be offered if the mortgagors had bought an identical product.

Faced with their obligations to the purchaser's solicitors, the firm paid the penalty in order to obtain the discharge of the original mortgage.

They then pursued the A's for the money paid on their behalf.

The Office for the Supervision of Solicitors was unable to do anything about the legal position.

However, it considered the solicitors had been at fault by not getting written confirmation of the waiver of penalty advice or retaining an equivalent sum until the position had been confirmed on mortgage release.

The fact neither course had been taken had resulted in distress and worry to the clients and the solicitors were ordered to pay compensation of 350.

In the classic regulator position of not being able to please anybody, the clients appealed on the basis that they were still left owing thousands of pounds through no fault of their own.

The compliance and supervision committee rejected this appeal, confirming the award reflected the diminution in the standard of service the clients could reasonably have expected.

l Every case before the compliance and supervision committee is decided on its individual facts.

These case studies are for illustration only and should not be treated as precedents.