Tuesday, 21 October 2014

Is a 'major glitch' for the BOE a 'minor breach' for a solicitor ?

Was your firm - or more importantly were your clients - affected by the technical issues experienced by Bank of England yesterday?

It is understood that many conveyancing transactions were delayed as a result of system problems with the Clearing House Automated Payment System (CHAPS) used by solicitors to transfer same-day mortgage payments during the property buying process. The Chaps system processes on average 5,000 conveyancing completions every day meaning that over 10,000 clients may have had their move delayed or put in jeopardy.  

Quite aside from the stress to the clients (and individual lawyers) hundreds of COLPs will now be on call to decide if the delay to a client's completion should be considered and recorded as a 'minor breach'. Firms must provide services which protect their clients’ interests O(1.2) in a timely manner O(1.5).

Each case needs to be decided on its merits. With many buyers and sellers not being able to move by early afternoon many a COLP will have to consider whether more could have done more to manage expectations.

How many firms considered personal completions, for instance, where the distances involved made this a viable option? Were banks prepared to waive the usual requirement for 24 hours’ notice for banker’s drafts?

Consideration should be given as to whether clients ought to be warned about this possibility in the future - especially given the problems RBS previously encountered. Perhaps a warning in the appropriate letter or report on title for example about the aspects of the transaction that are outside your control?

Food for thought.

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