Bank liaison back on track

At the Society’s request, annual meetings have resumed between representatives of the Society and the legal committee of the Committee of Scottish Clearing Bankers (CSCB). Among matters raised at a meeting on 30 March:

1. In relation to the return of paid cheques to solicitor customers, a solution may lie in the production of digital images rather than the return of actual cheques. This will ultimately be decided on the basis of the required standards of evidence.

2. The Society made representations regarding difficulties arising over received cheques not clearing before cheques sent out have been presented for payment. The relatively new 2-4-6 clearing process is probably the underlying reason for some of these difficulties. In this context the timing issues relating to settlement by CHAPS were aired and it was observed by CSCB that online banking systems permit the faster payment of funds from one account to another. Subject to compliance with the Society’s Accounts Rules, it was suggested that individual solicitors discuss with their relationship managers how such systems might be used for the settlement of transactions.

3. With regard to protocols for exchanging information between banks and solicitors on the death of a mutual client, it appears that discussions between the British Banking Association and the Law Society of England & Wales are well advanced. CSCB undertook to make enquiries as to progress and report back to the Society.

4. In the context of common anti-money laundering issues, the Society reported that a frequent source of frustration for members is the difficulty in obtaining letters or some form of transaction receipt from banks, evidence being required as to the source of funds transferred to firms’ client accounts by clients. CSCB acknowledged that the sources of the inconsistencies are often “system issues”. It would appear that the banks are more concerned with obtaining sufficient information to identify the solicitor to whom the funds are to be sent rather than to allow that solicitor to identify from whom the sums have been received. CSCB agreed to investigate the system issues and revert to the Society.

5. The Society reported the issue raised by members regarding the requirement by banks that they produce personal identity at their home address when an appointment as executor, trustee or attorney solely relates to them acting in a professional capacity under the badge of solicitor, regulated by the Society, and where all the relevant addresses in their appointment and actings are their business addresses. CSCB observed that headed notepaper is easily reproduced and that banks have onerous duties to discharge in relation to customer identification. It was not seen how a special case can be made for solicitors.

6. Another “system issue” already raised with the Bank of Scotland relates to powers of attorney, and this bank’s failure on occasion to register attorneys adequately and appropriately on an account. This is a systems issue about which the bank is aware and it is hoped will be cured when HBOS accounts are migrated on to the Lloyds platform, probably within the course of the next year.

7. Finally, the Society raised the issue of delays by banks in issuing facility letters. CSCB acknowledged that this is a continuing issue for all the banks. The challenge is adhering to the Government’s policy that funding is to be made available while complying with the sometimes contradictory risk control constraints promulgated by different branches of the FSA.

Comments on this note, or any further issues that could be raised with the CSCB legal committee, can be sent to Stella McCraw, Professional Practice Department at the Society (e: stellamccraw@lawscot.org.uk).