Money paid out on property related issues by the Solicitors Regulation Authority (SRA) through the compensation fund has increased for a third year in a row.
According to the data released from the SRA’s 2017/18 Annual Review, which was released yesterday, conveyancing problems resulted in £7.9 million of the £18.1 million being paid out to individuals and businesses affected by property sales.
In the 2013/14 report, a record breaking £23.6 million was paid out through the compensation fund, yet only £2.4 million was used for property issues. As conveyancing fraud becomes an increasingly significant issue, this number more than tripled in 2015/16’s report to £7.4 million; with property sales problems topping the charts.
In the most recent report, payments made for property fraud exceeded the previous year by an additional £500,000.
Although probate issues topped the charts this year, conveyancing fraud was second with the SRA paying out £3.7 million. A year earlier, conveyancing fraud did not even make the top five pay outs, suggesting that less was paid out on conveyancing fraud in 2017/17 than the £800,000 spent on fifth placed mortgage fraud.
£2.8 million was also paid out on sales proceeds with £1.4 million being used for unredeemed mortgages.
Despite the fund paying out £2.6 million more in 2017/18, the number of complaints received by the SRA last year dropped marginally. In 2016/17, the SRA received 11,879 complaints about solicitors and firms. However, this figure dropped to 11,508 in the most recent report.
The main complaints involved deception and dishonesty, inadequate client care, breaching confidentiality, incompetent or delayed client care and a lack of competence.
In the SRA Annual Review for 2017/18, the SRA said of compensation fund grants:
“We paid out £18.1m from the Compensation Fund to members of the public and businesses who suffered financial loss as a result of a solicitor’s or law firm’s dishonesty or failure to return client money. The top two reasons for compensating people were:
- replacing people’s inheritance – £5.3m
- replacing funds that were intended to pay for people’s property deposits – £3.7m.
“The largest single payment was for just over £820,000. We closed down a firm while it was administering an estate. We paid a beneficiary the money they were owed and later recovered it from the estate.”
Anna Bradley, Chair of the SRA Board, said:
“Publishing the Review is an important part of our commitment to transparency and accountability and provides a wealth of information on how we work and what we do.
“As well as a full range of performance information, the Review covers our work with the public and the profession on key issues such as improving access to legal services, anti-money laundering, diversity and the development of the SQE. As the new Chair of the SRA, I warmly welcome the good progress that was made as we look ahead to the next stages in our reform programme and our plans to implement and evaluate any changes.”
Have conveyancers noticed an increase in conveyancing fraud over the past year? How significant is this issue to conveyancers?
