Seven tips for a successful 2013
A new year always brings with it both challenges and opportunities. We thought you might be interested in what our editor Chris is watching this year.
2012 was described as the “perfect storm” for conveyancers by Eddie Goldsmith of the Conveyancing Association.
But what does 2013 hold? Will it be any better?
Well to start with, let’s consider the economic position.
According to the HMRC stamp duty statistical releases November one of the busiest months of last year, with 82,000 transactions in England and Wales. There are also signs that when the full housing market activity figures for 2012 are released they will show a much improved position, compared with 2009 and 2010. The growth seems slow but steady.
The Funding for Lending programme also seems to be playing a small part and according to The Telegraph has already increased lending. It’s still in its infancy but transactional figures may improve through 2013.
That said the latest Bank of England figures show people are still paying back more money on their mortgages than they are borrowing.
So, what does this all mean for conveyancers?
Well firstly things aren’t as bad as they once were. But many conveyancers still aren’t operating optimally and have financial risk associated with them. There has been no quick fall in house prices to stimulate high transaction levels because cash buyers and buy to let landlords continue to acquire at prices that work for them. Other younger buyers are often supported by loans from the bank of mum and dad.
Our first tip for 2013 is to continue to be very wary of where funds are coming from. I don’t need to remind you of the issues associated with cash and money laundering offences, or cash and gifted deposits to perpetrate frauds on lenders.
One conveyancer that I spoke to last year as a consultant had been removed from a lender’s panel because he had failed to notice that work from one broker included a gifted deposit in five consecutive cases which the broker had referred to him. Despite the fact that he had disclosed all the gifted deposits to the lender concerned they removed him from the panel because they suspected that he was complicit in fraud or should have raised a more general concern with the lender about the common factor on all the loans.
That leads to our second tip – be wary of where you receive work from and who your clients are. Lenders are increasingly using data matching services to create patterns to understand where you get work from. If they think you are working with a dodgy broker or estate agent your panel status will be under threat.
Thirdly – we suggest that you keep a close eye on the Green Deal. Later this month home owners and tenants will be able to have environmental improvements on their properties repayable via their electricity bills. The cost of these improvements will remain with the property even if the people taking the Green Deal sell the property. It won’t be long before conveyancers are asking to see electricity bills to determine if their client will be inheriting a Green Deal loan as they buy their dream home.
Fourthly – we would draw your attention to staff fraud and encourage you to ensure your internal risk control processes are reviewed. The Telegraph and The Daily Mail reported a story in October 2012, which we are embarrassed to admit we missed. Ruth Turner, a legal executive working at the time for Kundert Solicitors in Coventry, stole in excess of £200,000 from her clients in what was described as an elaborate fraud. She was jailed for three years and the SRA issued a warning not to employ her. According to The Telegraph the impact on her ex employer was a doubling of their professional indemnity insurance premium, and about £100,000 in investigation costs.
I have been into a number of firms in the last two years where control mechanisms for staff, in particular their accounting processes, are very weak. An external consideration of these issues often raises things that the business owners are too close to.
Fifthly – the Legal Ombudsman is changing his fee structure. From the 1st April 2013 LEO will no longer include two free cases per annum. If you don’t agree with the change you are welcome to comment on the business plan by Friday 1st March. More information is available from the Legal Ombudsman’s website.
Our sixth tip relates to flood searches. We are not yet aware of a conveyancer being sued for failing to conduct a flood search. We also know that they are very controversial with some practitioners and that there are many leading industry figures who feel that they should not be conducted by conveyancers. However I think 2013 will be the year when a test case is brought against a conveyancer for failing to offer a client the choice or properly explaining their advice on flood data. Whether you are pro or anti flood searches it might just be time to review your standard advice and consider giving your clients the choice. In the same way that dogs are not just for Christmas, flood searches don’t go away in the dryer parts of the year.
Finally, we would remind you about the growing risk of vendor conveyancer fraud and whether you should be accepting undertaking from all firms before you send money. A series of cases like Acorn Solicitors, Orient Solicitors, Lloyds Bank v Markandan and Uddin and Nationwide v Davisons show that criminals are turning to try to con conveyancers for purchasers to try to get money from them. The SRA issued its Bogus Firm warning notice in March 2012 explaining that you can’t rely on the Find a Solicitor Directory to satisfy yourself that a firm is legitimate. It also issued a warning before Christmas about Aplins Stockton Fairport having their website cloned. Whilst the fake website remained openTo get an idea of how far criminals will go have a look at the two websites www.aplinslaw-uk.com and www.aplins.co.uk. The first site is the fraudulent site.
Lawyer Checker is a business that is associated with Today’s Conveyancer parent business which enables you to check that the sort code and account number of where you are sending your clients money has a track record of success in the conveyancing market. It was launched last November and an increasing number of firms are using it.
Tracey Carr, Financial Crime Manager — Mortgage Fraud, Santander has said about Lawyer Checker: “We have done a lot of work to reduce fraud but vendor conveyancer fraud remains an area of growing concern. That is why I welcome initiatives like Lawyer Checker that help our panel firms manage the risk associated with transmitting our money to vendor conveyancers. All conveyancers should reassess the checks they make before they send money to organisations offering undertakings.”
I hope these reminders are things your business is already both aware of and exercising tight controls over. But if this article just helps you refocus on the challenges ahead and you take one thing from it then I hope it has been a worthwhile read.