Wednesday, 24 April 2019

SRA Shine a Light on Inadequate Leasehold Reports on Title

The recent review of the conveyancing sector by the Solicitors Regulation Authority found that 23 percent of conveyancing firms are inadequately advising leasehold homebuyers.

In what the SRA describes as a 'dangerous assumption', several firms said that they saw no reason to explain the difference between freehold and leasehold, assuming the client would already know or the estate agent would have already explained it. Ultimately this leads to the question as to whether the solicitors have breached their duty of care.

As a result of the SRA's review, six law firms have been referred to the regulator's internal disciplinary processes. No doubt these firms will have their Reports on Title scrutinised.

Regarding leasehold advice, the SRA report found:

  • Nearly a quarter of firms did not explain the difference between freehold and leasehold properties, with some relying on the client’s knowledge or information provided by an estate agent.
  • One out of five people who had purchased a leasehold property did not remember being provided with any information on the length of the lease, service charges and other payments such as ground rent.
  • 26% of clients did not recall being given a draft copy of the lease to review prior to signing it.
  • 17% did not think that their solicitor had clearly explained the features of their lease – rising to one in three among first-time buyers.

Leasehold reform campaigner Louie Burns of The Leasehold Group of Companies, said: “Conveyancing solicitors who are found to have given inadequate or misleading advice should be held accountable and leaseholders must be given adequate compensation.”

Lexsure are running a series of free webinars next month focussing on the leasehold section of their Report on Title technology (known as e-ROT).

This "Mini" Report accommodates the trend of law firms increasingly reporting on individual sections of the conveyancing documents. This also addresses recent identified failures by firms to report adequately on leasehold as a tenure.

Webinars can be booked here.

Tuesday, 2 April 2019

Is Your Firm Ready for a SRA AML Audit?

The SRA have recently warned that it will be writing to a “large number” (400) of firms in the coming weeks requiring evidence of compliance with the 2017 Money Laundering Regulations. The likelihood is that firms with a focus on conveyancing will be targeted.

The regulator confirmed that in the last five years, sixty cases linked to potential improper money movements have been referred to the Solicitors Disciplinary Tribunal. The stark warning is “Those who do not treat the Regulations seriously should expect similar treatment.”

Law firms making proper and full use of COMPLETIONmonitor’s AML Search and associated bespoke risk alerts have little to fear from an audit.

Delivering comprehensive reporting and dashboard functionality, COMPLETIONmonitor enables MLROs and authorised officers to quickly assess the overall effectiveness of the AML policies. The filtering functionality provides a firm with tools to identify, red-flag or block suspicious fraudulent and money laundering activity. Firms can configure and selectively apply scenarios to different client categories. The technology enables the firm to filter alerts based on various parameters, view certain background information on each client, delegate analysis and supervise alert resolution. Alerts can be configured on the basis of clients, counter-parties, regions, employees and departments.

For law firms with more than two or three staff and more than a handful of clients, it is extremely difficult, if not impossible, to satisfy the 2017 regulations and monitor compliance solely using paper-based records.

Lawyers can certainly not afford to be complacent – the conveyancing industry is a primary target and firms must be vigilant and prepared to demonstrate compliance or face serious consequences.

Property law solicitors who have not yet done so need to get their houses in order as soon as possible.

Lexsure offer COMPLETIONmonitor firms a free consultation twice a year on the various optional facilities within the software to assist in combating fraud and money laundering.

COMPLETIONmonitor firms can book a free online demonstration or training on the AML features here