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CQS Dealing with Lender Policy – Confidentiality

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A firm’s CQS Dealing with Lender Policy must specifically address the issue of confidentiality. Upon reviewing a recent audit, I came across the following policy language:

“It is imperative to give special attention to the duty of confidentiality when the Firm is representing both a borrower and a lender simultaneously. The Firm must thoroughly consider the implications if there are any changes in the purchase price or if it becomes aware of any other information that the lender would reasonably consider important in determining whether or on what terms to provide the mortgage advance. In such circumstances, the duty to act in the best interests of the lender necessitates the transmission of such information to the lender with the consent of the borrower. If the buyer does not consent to the information being shared with the lender, a conflict* arises between the Firm’s duty of confidentiality to the borrower client and the duty to act in the best interests of the lender. In such a case, the Firm must cease representing the lender and carefully consider whether to cease representing the buyer as well.”

*See CQS Conflict Handling Policy.

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