CLC’s first Compliance Risk Agenda highlights compliance priorities
The Council for Licensed Conveyancers (CLC) has published its first Compliance Risk Agenda to highlight issues that the firms and individuals it regulates need to be mindful of to ensure that they do not find themselves out of compliance.
It details issues that CLC staff have encountered during their monitoring and inspection work, from those that affect every practice – such as anti-money laundering – to those that become problematic for a relative few, like storing files after closure.
For example, inspections have discovered different interpretations of what practices have to do, and the evidence they need to obtain, to ensure they are complying with their duty to check the source of a client’s funds and wealth.
The Risk Agenda provides advice as well on undertaking due diligence checks at a time when lawyers often cannot meet the client in person and view physical identity documents.
Meanwhile, regulatory obligations to store files do not end on a practice’s closure. While historically appropriate physical storage was the main problem, maintaining electronic files is increasingly the issue. The CLC requires that files are stored on a ‘durable medium’ – which does not include case management systems – and the regulator is investigating whether it could maintain a central database for all files of closed firms stored as PDFs.
Other issues covered by the Risk Agenda are aged balances, conflicts of interest – as CLC-regulated practices can act for both sides in a transaction, subject to informed consent – transparency and informed choice, professional indemnity insurance, and business continuity planning.
The document highlights particular risks around acting on buyer-funded developments and investment schemes, new-build developments, and break clauses in leases.
CLC Chief Executive Sheila Kumar says:
“We regulate a profession that constantly demonstrates very high levels of compliance. We should all be proud of the effort that goes into ensuring that the public has full trust in licensed conveyancers. This reputation is hard won and, of course, easily lost.
“Naturally, nothing is perfect, and the aim of the Risk Agenda is to highlight the issues that do trip up some practitioners. None of them are widespread or systemic but even isolated failures can have a significant impact on perceptions of the profession and stakeholders’ approach to dealing with CLC-regulated firms.
“Running a legal practice involves juggling many balls and this document may help our community identify one or two that have inadvertently fallen by the wayside. We will also be taking these findings into account generally in our regulatory processes.
The CLC intends to update the Risk Agenda on an annual basis.