By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Bar Association’s failure to properly discipline wayward members is why many banks will only deal with “approved attorneys” for mortgage transactions, a top executive said yesterday.

Gowon Bowe, Fidelity Bank (Bahamas) chief executive, told Tribune Business the Bar was being “a little bit sensitive and a little bit disingenuous” in its attacks against the commercial banking sector’s practice of employing “lists of approved attorneys” for mortgage work.

Emphasising that the banks have a responsibility to protect both their shareholders and depositors by perfecting mortgage loan security, he argued that the Bar’s failure to properly self-regulate the profession and take action against attorneys guilty of “poor work and shoddy practices” (see lead article on Page 1B) meant other safeguards were required.

The Fidelity chief warned that “a few bad apples could spoil the entire bunch” when it came to the Bahamian legal profession, which on Friday railed against a practice that it says undermines consumer choice and effectively acts as a restraint on free and fair trade for practitioners.

Khalil Parker, the Bahamas Bar Association’s president, in a May 14, 2021, message to members said the Central Bank had informed him that all commercial banks had fallen into line with the Homeowners Protection Act which requires all institutions to make public their “approved attorney” lists and the criteria for qualifying as such.

“We have continued to work on the long-standing and vexing problem of commercial banks’ use or arbitrary closed ‘lists of approved attorneys’ as a means of unlawfully interfering with members’ business relationships with their clients and arbitrarily and unfairly excluding members from meaningful participation in mortgage work, a fundamental practice area,” Mr Parker wrote. 

Pledging that the Bar had been, and will continue to, work with the Clearing Banks Association on the matter, he added: “In light of commercial banks’ continued failure to comply with the letter and spirit of section 16 (2) of the Homeowners Protection Act 2017 to the detriment of members’ practices, and homeowners’ reasonable right to the attorney of their choice, we advised the Ministry of Finance of our concerns on members’ behalf and made a formal complaint to the Central Bank.”

The Central Bank’s bank supervision department, Mr Parker said, responded to him on April 22, 2021, by confirming that all Bahamas-based commercial banks are now compliant with the Act’s requirement to publish their list of ‘approved attorneys’ and the qualifying criteria.

Mr Bowe’s Fidelity Bank (Bahamas) was the only exception, the Central Bank explained, because it does not maintain an ‘approved attorney’ list for its mortgage clients to choose from, although it does have a qualifying criteria they must meet.

However, Mr Parker warned that the Bar Association was braced for further action if its members were excluded from mortgage work, saying that “we recognise that the banks continue to arbitrarily exclude members on the basis of these closed lists”. He also blasted unnamed attorneys who he accused of collaborating with the banks in creating ‘approved’ lists.

He added: “Should members find that any institution fails to provide clear and objective criteria for inclusion on their list of approved attorneys, fails to provide a reasonable response to an application for inclusion on the said list or is otherwise conducting business in breach of its statutory duty under the Homeowners Protection Act, we ask that you forward a complaint with respect to the same to us along with any supporting correspondence and documentation, without prejudice, of course, to members’ right to take individual remedial action should they deem fit.

“We remain cognisant of the fact that this problem did not arise, and could not persist, without collaboration between financial institutions and members of our association in breach of our professional code of conduct.

“We invite members at both the private bar and employed bar to consider the impact of arbitrary, oppressive and unlawful closed lists of attorneys on their colleagues and wider public.”

Mr Bowe, in response, said that while commercial transactions typically involved different attorneys representing the different parties, in The Bahamas a practice had arisen where mortgage lender and borrower were often represented by the same counsel.

This, he explained, had arisen out of a desire to make home ownership more affordable for Bahamians because otherwise the bank’s legal fees would be embedded in the mortgage loan. And, given that the interests of borrower and bank were aligned when it came to securing title to the property, and the filing and recording of the necessary document, “conflict of interest” provisions could be waived.

However, Mr Bowe said it would be “unreasonable” to expect the banks to waive this for every Bahamian attorney - especially those with a history of flawed title searches and failing to file conveyancing documents with the Registry of Records on time or at all.

At Fidelity Bank (Bahamas), he explained that mortgage clients are free to employ the attorney of their choosing, but if those practitioners do not meet its qualifying criteria or have produced poor work in the past then the bank will require its own counsel to be hired - at the customer’s expense - to verify and check all work performed.

“To be very honest with you, this is one where the legal fraternity are being a little bit sensitive and a little bit disingenuous,” Mr Bowe told Tribune Business. “They appreciate the reason the lists came about is because self-regulation at the Bahamas Bar leaves much to be desired and there are too many instances where financial institutions have received poor work or shoddy practices from legal professionals that has not led to disciplinary action and recompense to those affected....

“Self-regulation comes with tremendous responsibility. It does not come with peer review [for attorneys] like the accounting profession, and in that regard there’s an opportunity for a few bad apples to spoil the entire bunch.”

Mr Bowe suggested that the Bar had been “emboldened” by the Homeowners Protection Act, which he described as needing “much work to be done”. He added: “It’s at the behest of the banking industry as to whether or not it’s prepared to waive the conflict of interest provision.

“The main message is this issue in truth boils down to having a well-regulated fraternity that disciplines, and is seen to be disciplining, wayward members and maintain standards if there is poor workmanship, while maintaining a mechanism to ensure there is recompense to parties who are aggrieved.”