The debate surrounding the duty to advise clients on climate change risks continued its ascension towards the top of the conveyancing industry’s agenda at the Law Society’s National Property Law Conference on Thursday.
Taking to the stage was Charles Roe, Director of Mortgages at UK Finance, with his views on what is expected of conveyancers by lenders.
Roe suggested that, when addressing post-valuation queries, conveyancers should be going further when addressing any issues raised, including offering advice on next steps lenders should take – even suggesting that, for some lenders, conveyancers will be their “in-house legal team”.
This doctrine also applies to climate change risk assessments, said Roe, adding that lenders need to be responsible, and with the country facing increased flooding, overheating, subsidence, and more, climate change risks are a concern for lenders – especially with the FCA’s Consumer Duty in the pipeline.
“Lenders need to embed [climate-focused] thinking into their strategy,” said Roe, adding:
“The government is making it mandatory for parts of the financial sector to report their exposure to climate risk, which inevitably means gathering more information from conveyancers […] It also means conveyancers need to highlight climate change risks to our joint customers.”
Lenders are “increasingly concerned” about the move to net-zero, something Roe said has “real world implications which need to be worked through if we’re not to end up in a situation where we can’t move or access finance”. He continued:
“It’s a situation we want to see the government take swift action to address, but conveyancers will also have a key role to play in this. It’s important you explain the risks to clients. The Law Society is developing guidance on this, and we look forward to working with you closely on this.”
Yet, it is quite apparent that conveyancers do not see this issue the same way, suggesting that they are not climate change experts – they are legal experts – and as such do not feel inclined to advise clients on climate change risk. One conveyancer in attendance at Thursday’s conference put this to Roe.
“We in the room all understand lenders need to protect the money they lend. Do they appreciate the needs of solicitors to meet the needs of their clients without opening themselves up to liability?
Our duties are fundamentally made by law and court decisions and painful experience when it all goes wrong. It is incumbent on lenders to define what our responsibility is to you, the lender, as a client. We will tick the boxes, check the evidence, but do not expect us to go out to the market, scour the market… [advise] you whether we think it affects your liability. We cannot do it. Take knotweed as an example, the surveyors have a view, they’re up to speed, they run it. Your questions on climate change should all be directed to valuers and surveyors… We need clarity from lenders on what you’re expecting us to do.”
Roe responded that UK Finance “is in conversations with RICS with regards to whose responsibility it is to advise on climate change when purchasing a property”, suggesting that, in light of the Consumer Duty, lenders have a responsibility to understand any events which could have an impact on property in the future, whether it be cladding or a new motorway 500 yards away.
When a similar question was posed to RICS’ Charles Golding, he said:
“There is a responsibility [for] all. Conveyancers, valuers, accountants, building surveyors, structural engineers. Lots of people we must involve and engage with their expertise.”
With the Law Society’s guidance on these issues not expected for several months yet, there is currently a vacuum of defined responsibility.
The view of many in and around the industry is that the conveyancer is the natural incumbent of the responsibility, and that they can defer the attached liability to search companies in much the same way they do with environmental searches which, compared with climate change searches, are, some say, six and half a dozen. “If you’re the lawyer transferring the title of a property from one to another, and said property isn’t going to be there in five years, the client needs to know that,” they suggest.
Yet, with conveyancers in short supply and transactions showing no signs of slowing down, many feel that they simply do not have the capacity nor the expertise to advise on climate-related issues.
In any case, views on the issues seem polarised, as was clear following the industry’s mixed reaction to the opinion of Stephen Tromans KC on the issue published earlier this year.
