LSB review puts holding of client money in question
The Legal Services Board has issued its thematic review relating to the regulation of conveyancing in England and Wales.
The report issued on Friday looked at a number of issues relating to conveyancing risk and mortgage fraud.
The report recognises there are a number of problems being reported in the conveyancing market, particularly relating to mortgage.
However it states that: “The evidence that we have to date shows little evidence that there is widespread systemic failure.
“That is to say that there are issues for the regulators to manage, but the regulators are aware of the risks and are taking steps to respond.”
The LSB has focused on three main questions; (a) whether confidence in the conveyancing market is undermined by mortgage fraud committed by laywers, (b) whether confidence is undermined by negligence and (c) whether complex cost information prevents informed decisions by consumers and causes them detriment.
It goes on to make recommendations to help the Solicitors Regulation Authority, the Council for Licensed Conveyancers and to a lesser extent the Master of Faculties (which the report reminds us regulates notaries) regulate effectively.
The seven key recommendations include considering whether the costs and benefits of holding client account money are justified. They specifically recommend considering exploring alternatives to conveyancers holding client account funds.
Thirdly it also says that regulators should consider whether the client account rules are proportionate. It recommends that regulators should have a better understanding of the conveyancing market and suggests a framework to consider it within.
The fifth recommendation is that training should be based on competency rather than CPD hours.
The sixth recommendation is that professional indemnity insurance should be reviewed in light of new alternative insurance products.
Finally they say that regulators should track new trends in the market and look out for systemic risks.
Despite the SRA saying referral fees are one of the main key areas of risk in conveyancing, the report makes little mention of them.
Other issues are considered to be more important to consider in relation to potential consumer detriment.
The report draws attention to the statistic that only 49% of consumers felt that the conveyancing service that they experienced was value for money.
It will be interesting to see how the behaviour of the key regulators, the Solicitors Regulation Authority and the Council for Licensed Conveyancers, alters following this report.