122G   Requirement to obtain fidelity insurance in respect of pre-existing mortgages

(1)  Section 120 does not apply in respect of a regulated mortgage that was entered into before the relevant commencement date.

(2)  Despite subsection (1), section 120 applies in respect of a solicitor if money entrusted to the solicitor by a client (whether before, on or after the relevant commencement date) is advanced or proposed to be advanced on or after the relevant commencement date to a borrower for a regulated mortgage entered into before the relevant commencement date. In such a case:

(a)  the solicitor must ensure that a policy of fidelity insurance is in force in respect of the advance in accordance with section 120, and comply with section 122, and

(b)  section 121 (1) applies to any claim against the Fidelity Fund in so far as it relates to such an advance.

(3)  For the purpose of applying section 122 (1) in such a case, the date that money is entrusted to the solicitor by a client is taken to be the relevant commencement date, or the date on which the money is entrusted to the solicitor, whichever is the later.

(4)  This section is subject to section 122I (which allows solicitors to substitute lenders under a run-out mortgage without obtaining fidelity insurance).

(5)  In this section, the relevant commencement date means the date of commencement of section 120, as inserted by the Legal Profession Amendment (Mortgage Practices) Act 2000.