New rule proposals aim to improve consumer protections on trusts

Proposals for new Law Society of Scotland rules will increase protections for people who have set up trusts with solicitors.

The new rules, which will be considered by members at the Law Society’s annual general meeting in June, would require law firms to ensure they maintain a central record of trusts where the firm or solicitors at the firm are involved as trustees in their professional capacity.

Additionally, in the situation where a firm takes custody of another law firm’s clients’ assets, including trusts, the receiving firm would have new obligations to identify the owners as soon as practicable, as well as assess any action required to protect their best interests, including seeking and acting on instructions. The rules would also place an obligation on solicitors to safeguard these assets in the same way as for their own clients.

David Gordon, lay convener of the Law Society of Scotland’s Regulatory Committee, said: “These proposals will mean better protections for consumers in addition to increased clarity on where trusts are held and by whom, with additional assurance that, where there has been a transfer of business, clients whose files or assets have moved to a new firm will be contacted within a reasonable timeframe.

“While ensuring greater protection for consumers, the proposals will also mean there are no unnecessary barriers to law firms taking custody of client files in the unfortunate circumstances of another legal firm going into administration. Safeguarding all client files and assets and ensuring an orderly transfer are of the highest priority in such cases.”

There are also proposed updates to the Law Society’s rules in relation to anti money laundering (AML). These limited changes will allow a more flexible approach to firm reinspection charging and will also replicate a provision from the Society’s accounts rules regarding a solicitor’s duty not to act dishonestly, within the AML rules. It is also proposed that a rule on incidental financial business (IFB), is amended to reflect a more proportionate annual IFB Certificate requirement.

AGM papers will be sent to members in advance of the meeting on 19 June 2025.