SRA rebuke firm who transferred £333k to fraudster

A law firm has been rebuked by the Solicitors Regulation Authority (SRA) after sending £333,000 to fraudsters masquerading as property sellers.

Occurring in 2015, the case highlighted the increasing frequency of conveyancing transactions being intercepted and the need for firms to have effective safeguarding measures in place.

Based in Richmond, Perry Hay & Co admitted that they had transferred funds – destined to be sent to the client – to an unrelated third party bank account. For a period of 36 weeks, the clients (known as Mr and Mrs L) were left with a shortfall of nearly £50,000.

The recently published regulatory settlement agreement indicated that the firm had acted on behalf of a married couple in regards to a property sale. This occurred through email correspondence between the couple and a partner at the firm – Henna Lynch.

On 20 February 2015, contracts were exchanged, and the clients were sent an email five days later from Lynch’s secretary. This requested that bank details were sent in order for the proceeds were transferred. The client responded to this email on the same day.

However, Perry Hay & Co then received a further email, allegedly from Mr L. This stated that new bank details would be sent the following day and that the firm should wait before any money was sent.

In order to confirm the bank and account holder name, Perry Hay & Co quickly responded to this email – to which the supposed Mr L swiftly replied to.

Without contacting the clients through any alternate means, the payment was then authorised by Lynch.

However, the real Mr L contacted the firm the following Monday, questioning why there had been a delay in the funds being sent.

The firm at this point realised that the email requesting the change of account details had not been from Mr L.

After immediately making sure the bank, the firm’s insurers and the police aware of the events, Perry Hay & Co were told by the police that the money had indeed been sent to a company with whom the clients had no connection.

In March 2015 the firm recovered around £271,000, with a further £14,000 being recovered in May of the same year. The remaining £48,500 was not replaced until later in November 2015 by the firm’s insurers.

As well as admitting to breaching account rules, the firm also stated that they had failed to report what had happened to the SRA. It was stressed by the firm during mitigation that no financial gain had been made through the misconduct. After the start of enquiries, Perry Hay & Co claimed that they had then begun co-operation with the SRA.

They also stated that as well as reviewing current procedures, the firm had evaluated IT system security and increased levels of staff training.

The outcome from the SRA was that the firm would be rebuked and required to pay £1,350 in costs. This was deemed ‘proportionate and in the public interest’ as well as recognising ‘the loss and inconvenience’ to the clients which was caused by the firms’ conduct.

 

 

 

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