Conveyancing firms were concerned about being removed from a lenders panel according to a study - PropertyBlawg

Conveyancing firms were concerned about being removed from a lenders panel according to a study

by duncan12 on November 10, 2012

According to a research conducted by the Solicitors Regulatory Authority (SRA) the biggest risk faced by conveyancing solicitors and firms was being removed from a lender panel.

The findings have emerged after the regulator had visited to 100 firms over the summer most of who were members of at least one lender panel, said SRA manager Helen Venn.

The visits were part of the SRA’s conveyancing strategy review, which aims to identify and provide tools to manage regulatory risk in this sector.

Majority firms in the sample carried out residential conveyancing and the biggest risk they saw was being removed from a lenders panel as a result of the recession, Venn said.

Venn who a former crime solicitor said that over dependence on panel appointments could be a significant regulatory risk as it can undermine a firm’s financial stability.

Venn said the trouble with identifying financial risk was that it tended to become apparent late in the day, typically on a Friday, the date property transactions usually complete.

She said that firms were traditionally reluctant to notify the SRA of their financial difficulties early on for fear the regulator would intervene and close them down.

But if an early notification was given then it would allow the SRA to help organise a timely wind down rather than intervene at the last minute and ensure that work in progress was distributed to other conveyancing solicitors locally.

The research also showed that property fraud remained a major concern for conveyancers, with 1 in 4 saying they had experienced money laundering attempts.

In these cases firms said they were alerted by early warning signs and refused to act, but Venn said she was concerned that firms were vulnerable.

According to the research, comparatively few firms, two in five, were part of a quality assurance scheme such as Lexcel or the Law Society’s Conveyancing Quality Scheme, which aim to improve risk management.

Where fraudsters managed to get into a firm, convincing the firm, often unwittingly, to act for them, it was a lot more difficult for conveyancing solicitors to extricate themselves from the fraud and the risk of future criminality increased Venn added.

She warned conveyancing solicitors about clients coming with a large amount of cash, no local connection, or no clear reason they would be coming to you.

On the positive side, she said three in four wanted more training on money laundering and property related crime. Other findings indicated that 34 per cent of conveyancers had some sort of referral arrangement in place but firms were less concerned about those. One in three said they had a referral arrangement with estate agents, with few reliant on a single referrer for leads.

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