SRA thematic review results published
Concern about financial stability was one of the key issues identified in the latest thematic review by the Solicitors Regulation Authority (SRA).
Whilst financial stability was seen as the biggest risk to firms undertaking conveyancing, the risk of removal from lenders panels was seen as the biggest risks for the conveyancing activities specifically.
Conveyancing was chosen for the thematic review on the basis of risks to the public that the process presents.
The SRA pointed to the fact that conveyancing accounts for a high proportion of claims made by solicitors on Professional Indemnity Insurance as well as being a service that generates a high level of customer complaints.
As part of the review 100 firms who undertake conveyancing were surveyed for their views on a range of matters including;
- Had the recent economic downturn reduced conveyancing work to levels which affected firms’ financial stability?
- How prevalent are conveyancing referrals arrangements and what levels of dependency are there on such arrangements?
- How do firms present costs to their clients? Is this fair and transparent?
- How do firms identify, manage and perceive the risks which surround conveyancing work (e.g. conflicts of interest or mortgage fraud/money laundering)?
- What are the levels of ‘first-tier’ complaints from clients in relation to conveyancing services and how are firms dealing with these?
40% stated they had to make redundancies or implement cost cutting measures as a direct result of reduced conveyancing work. 80% said that they now had fewer clients as a result of the economic downturn.
The review showed that most firms did more residential than commercial conveyancing, used fixed fees for conveyancing and were members of at least one lender panel. Two firms in five were also members of either Lexcel or the Law Society’s Conveyancing Quality Scheme.
Conveyancing referrals are common with a third of firms having referral arrangements in place, mostly with estate agents.
The review identified a number of issues for concern, for example that around a third of respondents believed that other firms were not disclosing full information about the existence of referral fees to their clients.
Cost transparency was identified as a problematic area; more than half of respondents felt that other firms’ publicity was unclear about costs, two thirds of firms felt that when a consumer feels unhappy with the cost of conveyancing, it is usually because the firm they have used quoted a figure that does not accurately reflect the final bill.
Following the visits the SRA have decided to take the following steps:
- Development of case studies to assist firms in managing the identified risks.
- Ensuring that the Ethics Guidance Helpline remains well briefed on the issues facing firms offering conveyancing services in this challenging economic climate. This allows firms to access key information directly from the SRA when matters of concern arise.
- Taking forward a review of the SRA’s policies in relation to the holding and protection of client money.
- Development of the Draft Supervision and Enforcement Strategy for Conveyancing.