Thursday, 6 February 2014

Conveyancers Take Care: A Hot Market is Fertile Ground for Fraudsters

A hot market can blind conveyancers from seeing that their newest client could be a fraudster.

Criminals are stealing identities and using false documentation to take out loans using the victim's name and details. Also on the rise are cases of vendor fraud where the fraudsters have successfully sold other people’s homes. Their "modus operandi" is to get access to properties first by renting them and then acquiring fake documents in the real owner’s name and attempting to sell the flat or house.

For conveyancers, fraudsters are most likely to be new clients trying to fool you while you're under pressure. Arguably, it's the so-called bulk or online conveyancers who are the most exposed.  


(1) They rarely see their clients in person

(2) The transaction may be split amongst a team of people who are conducting the work
(3) Some, not all, firms of this profile set targets for exchanges and completions for their lawyers--and the busier they get, the more chance there is to overlook something. 

What to do?

Wherever possible, meet clients in person and at their homes or workplaces. Fraudsters generally insist that you don’t meet them face to face, and if you do, they will come out to meet you at your office.

Deal only with original documents and test all phone numbers received.

Admittedly, this is not practical for all firms.  It may be inconvenient, but nowhere near as inconvenient as finding out that your firm acted for a fraudster. Imagine trying to get insurance or remaining on a lender panel after being the victim of fraud.

Some of you reading this blog may have spotted the irony here. The most common reason given by lenders to remove sole practitioners or high street practices from their panel is that they are compelled to take a more restrictive approach to their selection process all in the name of their ongoing battle to combat fraud.

If HSBC would have had their way, there would have been 43 firms on their panel with little chance of those firms ever meeting their clients in person. Most sole practitioners that I talk to meet over 90% of their clients in person.

Perhaps it’s time for the CML Handbook to require every lawyer to meet their client face to face. Perhaps we should revert back to the days when a mortgage deeds had to be witnessed by a solicitor. Call me a skeptic, but I fear that such a change is unlikely to happen because large firms would raise objections.

In time, increased regulation and better data and technology will highlight the need to meet all clients face to face. The shame is that by the time lenders realise this necessity, there may be very few small firms around.


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