(March 3 update: Updated files/links)
Queensland Law Society, in consultation with its Banking and Financial Services Committee, has extensively reviewed the practice and procedure associated with providing independent certification services.
The review identified opportunities for improvement and additional guidance for Queensland solicitors when preparing a certificate of independent legal advice.
QLS is proposing updates to the forms and members are welcome to provide input on these by emailing email@example.com by 31 March.
An independent solicitor’s certificate has become a standard component of lending transactions. It is increasingly common that banks and other lenders require borrowers or guarantors to obtain independent legal advice about their rights and obligations.
What things need to be certified?
Certifying solicitors must carefully read the independent solicitor’s certificate to ensure they can comply with the explanations and advice a certifying solicitor must give, including:
- explaining the nature and effect of the relevant documents to the borrower or guarantor
- careful identification and consideration of the risks, financial or otherwise, of entering into the transaction
- advising the borrower or guarantor to make appropriate enquiries in relation to matters such as the risks involved in the loan or guarantee and associated security
- clarifying and confirming with the borrower or guarantor that they have read and understood the relevant documents and they are entering the transaction without undue influence.
What amendments does QLS propose?
QLS proposes that the current independent solicitor’s certificate be replaced with the following prescribed forms, notes and rules.
- Schedule 1 – QLS Solicitor’s Certificate (Borrower)
- Schedule 2 – QLS Solicitor’s Certificate (Guarantor)
- Schedule 3 – QLS Certificate by Interpreter/Translator
- Practice notes for solicitors signing certificates of independent legal advice
- Legal Profession Legal Practice (Solicitors) Rules 2023.
Two draft forms of solicitor’s independent legal advice certificate are available for review by members – one for where you are providing independent legal advice to a borrower (Schedule 1) and another for where a solicitor is providing independent legal advice to a guarantor (Schedule 2). A draft form of translator / interpreter certificate (Schedule 3) is also available for review. Notable practical and procedural changes include:
1. the inclusion of an additional step to be taken by the certifying solicitor, namely verifying the identity of the proposed signatory by:
- using the Verification of Identity Standard contained in Schedule 8 to the Model Participation Rules determined by the Registrars’ National Electronic Conveyancing Council as adopted and made by each jurisdiction pursuant to section 32 of the Electronic Conveyancing National Law, or
- in some other way that constitutes the taking of reasonable steps.
2. the evidence of advice must be provided by a solicitor in the form of a Queensland Law Society Solicitor’s Certificate – Borrower (Schedule 1);
3. the evidence of advice provided by a solicitor to a guarantor must be in the form of a Queensland Law Society Solicitor’s Certificate – Guarantor (Schedule 2);
4. where an interpreter or translator is present while the advice is being provided:
- the name of the interpreter or translator must be included on the relevant Queensland Law Society Solicitor’s Certificate; and
- the interpreter or translator must be asked to complete a certificate in the form of a Queensland Law Society Interpreter/Translator Certificate (Schedule 3) and attach it to the Solicitor’s Certificate.
The objective of the review and proposed changes outlined above, in particular the mandatory use of Queensland Law Society solicitor certificates (in their respective forms), seeks to ensure the interests of borrowers and guarantors are protected and certifying solicitors are properly informed about their responsibilities when providing this service.
Similar to the position in Victoria, it is proposed that the updated certificates will be mandated for use by all Queensland legal practitioners under a set of Legal Profession Legal Practice (Solicitors) Rules 2023.
Members are welcome to provide input on the QLS’s proposed updated forms by emailing firstname.lastname@example.org by 31 March.
Bridget Cook is a Queensland Law Society Senior Policy Solicitor.