Lawyers Mortgage Broking Clients; Consumer warnings to be compulsory

	Extract from Hansard Legislative Council 19 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. K.T. GRIFFIN: I have just put on file an amendment which will be considered later in committee. After the extensive debate on this last evening, I have given some consideration to several issues. I recognise that last night we had all had a fairly heavy few days and we may not all have been appreciating each other's point of view. I will deal with the amendment when we get to that part of the committee, and I hope it meets the concerns raised particularly by the Hons Angus Redford and Ian Gilfillan about notice to a prospective lender and a prospective borrower.

95BA. (1) On and from the commencement of this section, mortgage financing is not to be regarded as part of the profession of the law.

(2) A legal practitioner who engages in mortgage financing must inform each prospective lender and borrower, orally and in writing, that any loss suffered as a result of mortgage financing will not be compensated by the guarantee fund or covered by professional indemnity insurance required under this act.

(3) It is not the intention of the Parliament that any implication be drawn from this act (or the act that inserted this section) that mortgage financing when engaged in by a legal practitioner before the commencement of this section was part of the practice of the profession of the law.

The amendment will not mean that a legal practitioner cannot be involved in mortgage financing in some way, but it will ensure that all parties are aware that it is not part of legal practice and will not be subject to the protections offered by the guarantee fund and professional indemnity insurance.

The Hon. IAN GILFILLAN: I indicate support for the new clause. Can the Attorney advise whether there is any avenue for a member of the legal profession who is practising mortgage financing to get indemnity? Is he aware of an area in which clients can have protective cover?

The Hon. K.T. GRIFFIN: That normally would be through any insurance agency; they would organise professional indemnity or other insurance if they could possibly do so. It depends on the risk the insurer would perceive as pertinent to that person or enterprise.

The Hon. IAN GILFILLAN: Would it be specific to that business or could it be generic to cover the whole of the activity in that area?

The Hon. K.T. GRIFFIN: The legal profession has, by virtue of the operation of the Legal Practitioners Act-as do conveyancers by virtue of the operation of the Conveyancers Act-a master professional indemnity policy. So, there is a master policy covering the profession, and all lawyers are required to contribute to it: it is a compulsory scheme. Also, all conveyancers are required to contribute to get that cover. There are some suggestions interstate that that might now be regarded as anti-competitive but, putting that issue to one side, that is the way that they group together to arrange that finance. If the finance brokers, mortgage financiers, want to band together as a group to arrange a master policy cover, then I presume they could do it. I must confess I do not think I can give any more definitive answer than that.

In the new clause which we have just inserted we have specifically declared that mortgage financing is not to be regarded as part of the practise of the profession of the law, so we achieve in that positive declaration what is sought to be achieved by this paragraph (a).