Usually things only come to the "attention" of the Lord Lyon when someone refuses, point blank, to obey the law. Something that "denmcdough" and others may not be aware of is that it is an actual offense under the laws of Scotland to use any heraldic device that has not been sanctioned by the government. It is exactly the same as trespassing on the legal rights of a copyright holder, and the courts take a dim view of it.

While it is easy to be dismissive and say, "oh come on, it's only a harmless bit of design," the foundation for the prosecution is based on the accused having defrauded the government out of the statutory fees it collects on each and every grant of heraldic devices, badges included. So why is it necessary to collect statutory fees, at all?

Think of a grant of an heraldic devise in the same terms you would a building permit. You apply for a building permit, pay a fee, and then put up your shed. Why pay a fee? Why not simply put up the shed and be done with it? Here's why: Because the fee guarantees that the shed is built to a standard, and that it is placed on your land, not your neighbors. If you don't apply for the permit, and the building department finds out about it, your shed can be ordered torn down.

The function of the office of the Lord Lyon is exactly the same: (1) to maintain standards [would it really be appropriate for a club to use a swastika as a badge?] and (2) to make sure that the design doesn't accidentally-- or on purpose-- copy someone else's design. Now if someone uses a badge without the authority to do so, then it is up to the the Lord Lyon to insure that (a) the badge falls within the guidelines of his office, (b) that it does not trespass on the (intellectual) property rights of others, and (c) that all applicable fees due the government are paid.

As far as "massive fees" are concerned, these are generally encountered only if the defendant in the case wishes to challenge the law. The penalties assessed by the court are a paltry few hundred pounds. Broadly speaking this sort of case comes before the Lyon Court (the Lord Lyon being a sitting judge in the law courts of Scotland) on a somewhat regular basis -- often the arms used by a school -- and are resolved with little or no hassle on either side of the bench.