Alex Holt, Director of Business Development for The Cashroom has shared his thoughts with Today’s Conveyancer about the financial risks and compliance firms need to adhere to.
For a law firm providing conveyancing services to its clients, there is no scarier part of their business than their finance function.
Within that mysterious business area lies the perfect storm of compliance, risk and customer service.
Very significant sums of money flow through, with complex payments to be made at a speed which is demanded by Mr and Mrs Smith who are sat on a driveway with removal men, waiting for the keys to their new house. As well as the requirement for speed and efficiency, there is of course the risk element with which we are all too familiar- cyber attack.
It’s perhaps not surprising that the Solicitors Accounts Rules have significant measures which focus specifically on these issues.
Robert Blech, Accountant and compliance specialist at McIntyre Hudson points out that:
“the rules make it clear- a firm must have controls and systems in place to manage these challenges, and the requirement to keep accurate, contemporaneous and chronological records underpins this area.”
After all, how can any movement of money be carried out safely without the proper means of tracking it before, during and after the transaction? There is, however, another danger at this point. The whole question of whether a firm truly understands the rules and regulations.
Andrew Donovan, founder of The Compliance Office points out:
“ There is a lack of clarity in the stripped back SRA rulebook. Having discretion as to how you comply is wonderful when you already know the subject matter like the back of your hand. But you need a lot of expertise now to quickly and comfortably decide what moving money “promptly” means or what sort of marketing or conflicts will constitute a breach. Firms simply do not have the time to spend an afternoon on the SRA website looking for answers.”
These days, practice management systems and their accounts packages provide the means to record money movements compliantly, and the biggest challenge is often ensuring that the cashiers and fee earners understand how to operate the systems correctly. At The Cashroom, we support around 200 law firms, and we support any Practice Management System at all, so we understand that there are certainly nuances to utilising the PMS to its best effect.
Many firms still leave themselves open to significant risk be failing to take proper precautions when communicating with their clients.
Paul Saunders, Managing Director of Legal Eye commented:
“Prioritising risk in the property sector when people are so stretched and working remotely is one of the biggest challenges firms have faced throughout the pandemic. Now volumes are at their highest, and increasing, the pressure on staff cannot be overlooked. Firms need to look for tools to help them adapt, support their staff, protect their clients and satisfy their regulators”.
There is a delicate balance to be achieved between managing risk, maintaining efficiency and achieving compliance. Despite the particular challenges faced by the sector due to the pandemic, the SRA maintain a strict requirement for compliance- far from ease off their policing of the rules, they have been keeping an even closer eye on certain things.
Denise Butler, founder of Peacock Risk Management warns:
“The property market is currently extremely busy and keeping on top of compliance is suffering as a result of this.
“However, the SRA are being very proactive regarding AML compliance ,and financial crime is on the increase. It is a challenge for firms to keep on track, but if they are to avoid complaints, claims or regulatory difficulties further down the line, they need to address it and ensure that they have proactive compliance support in place.”
It’s clear that for the conveyancing sector, compliance is crucial. The trick is clearly in making sure that the business avoids risk and operates effectively (and profitably) while meeting the regulatory requirements.
If you would like any more information about The Cashroom and what we offer, then please get in touch. Alternatively, if you would like a confidential chat about any aspect of running your law firm, we are more than happy to do so.
The Cashroom can help with your cashiering, payroll, management accounts, and compliance checks throughout the year in anticipation of an inspection / audit. We can help you with all of these, any one individually, or a combination of our services.
