Consumer Protection for Lawyers Mortgage Clients Being Cut

	Extract from Hansard Legislative Council 9 November 1999

Ian Gilfillan Australian Democrats Member of the Legislative Council		Parliament Index 1999 Spring Session Index Browse by Subject About the SA Parliament Hansard on line

The Hon. IAN GILFILLAN: My understanding of the bill is that it does two things.

The Hon. IAN GILFILLAN: My understanding is limited. The interjection is, to my improvement, that there are apparently three, so I am enlightened by the Hon. Angus Redford. I will comment on just two. First, it excludes from both the Legal Practitioners' Professional Indemnity Insurance Scheme (LPPIIS) and the Solicitors' Guarantee Fund (SGF) any claims arising out of a lawyer's mortgage investment activities as distinct from a lawyer's legal practice. In his second reading explanation, the Attorney-General said:

Mortgage investment broking is not a general part of legal practice, and the government believes there is no justification for providing greater protection to a person who accepts mortgage investment services from a person who is a legal practitioner.

The government might have chosen to increase consumer protection for clients of other mortgage investment brokers rather than remove consumer protection from clients of lawyers. This can and should be attacked on the ground that it is anti-consumer.

In fact, we need to know the answer to three questions: how many claims against guarantee funds have been made as a result of lawyers' mortgage investment activities; how much has been paid out; and what consideration has been given to the alternative strategy of seeking higher contributions to the guarantee fund from lawyers engaged in mortgage investment activities? On 8 September this year my colleague the Hon. Mike Elliott sent a letter to the Hon. Trevor Griffin as Attorney-General asking those three questions. We have not as yet received an answer. It may well be - and I hope it is - that these questions are addressed by the Attorney-General in his second reading response.

In a letter dated 20 September from its then president (Lindy Powell), the Law Society welcomes the amendment but suggests a technical change is needed to clause 5 of the bill covering transitional arrangements where claims arise from moneys or instructions received before the commencement of the amendment. There is a potential anomaly in clause 5 because of the different treatment in part 5 of the principal act (the Solicitors' Guarantee Fund), as opposed to parts 3 and 4 (the Legal Practitioners' Professional Indemnity Insurance Scheme).

Secondly, the bill makes it an offence for a law firm to employ in any capacity a person who has been struck off the role of practitioners. Some ex-lawyers have been employed as para-legals or law clerks, and there is no restriction on that in South Australia, unlike in Victoria, Western Australia and New South Wales. I noted with some interest that the Hon. Angus Redford sought from the Attorney-General detail of where this has actually transpired. It will be possible to apply for an exemption from the ban to the Legal Practitioners' Disciplinary Tribunal, which can permit specified employment on such conditions as it sees fit. This measure sounds sensible to me, and the Law Society also views this second matter as appropriate and has no suggestions for change.

I indicate the Democrats' support for the second reading of this bill but we will be interested in looking more closely at the matters I have raised regarding the first part of the actual guarantee fund cover for mortgage investment broking after having heard the Attorney-General's answer to these arguments and in the committee stage.