Solicitors: Beware the Lender Panel Request for Policy Documents

As the dust settles on the PII renewal season it is now the time of year when many solicitors are submitting various re/applications for the Conveyancing Quality Scheme, Practicing Certificates and also Lender Panels.

We will assist where-ever we can in supplying Confirmed Claims Experiences, Certificates of Qualifying Insurance and general “confirmation of cover” letters to various regulators and lenders. This year we have noticed a trend in that some solicitors are being asked to provide copies of policy schedules and policy wordings to certain lenders. This is a new requirement as far as we can ascertain and is not something that should be readily complied with…….and here is the reason why:

In common with many professional indemnity and other liability policies the solicitors professional indemnity policy wording will include in some cases an explicit ‘no admissions’ clause along the lines of:-

The insured shall not admit liability or responsibility, incur any costs, make any offer of settlement or otherwise prejudice the conduct, settlement or defence of any claim or circumstances without the insurer’s prior written consent.

There are variations on this wording in the form of ‘co-operation’, ‘defence’ and ‘consent’ clauses, however even in the absence of such a clause we firmly believe there is an implied duty on solicitors to mitigate potential claims under their policy. Whether this duty is explicit or implied we suggest that to furnish a potential claimant with a full copy of the policy wording could indeed prejudice the conduct of a claim as it could be framed in such a way as to maximise both quantum and chances of success.

Ultimately we understand the commercial considerations involved here in that the prospect of being denied access to a lending panel could have a seriously adverse affect on a conveyancing department. Thus this is simply a word of caution. Our recommendation is to resist these requests where-ever possible and in any event to speak to us.

DT HeadShotIt may be possible in time to educate lender panels that this sort of a request is one step too far that their stance will have to change. This of course may be pie in the sky and ultimately we would like to see the Law Society taking a stand and lobbying on your behalf to assist in situations such as this.

In the interim ProAktive are on hand to assist wherever possible.

By Dane Turner Cert CII

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