Legal Futures has reported that the SRA is considering significant changes which may impact conveyancers. Specifically in respect of the holding of mortgage advances and insurance renewals.
In July 2010, the SRA commissioned Charles River Associates (CRA) to undertake a “root and branch” review of the current financial protection arrangements and in particular to look at:
i. the scope of protection offered to consumers of legal services,
ii. ii. the means by which that protection is delivered, and
iii. the impact of those arrangements on consumers, individual firms, the legal services sector as a whole, and the SRA itself.
The full report is available to download here Review of SRA client financial protection arrangements PARA The independent study recommended that the regulator conduct a general investigation of the regulatory approach to the conveyancing process to determine whether more stringent regulation is required, owing to ‘evidence of market and regulatory failures’, and the fact that conveyancing accounts for 50% of PII claims. The SRA says this “has highlighted concerns that our underlying approach to the regulation of conveyancing might not be providing sufficient protection to consumers”. PARA – The primary objective is to protect clients from financial loss caused by impropriety by firms, such as negligence, dishonesty and insolvency and – A secondary objective is to protect the reputation of the profession from the actions of individual solicitors.
The Council of Mortgage Lenders are also investigating alternative methods of transferring funds between banks to reduce their exposure to “unscrupulous” lawyers who collect mortgage monies but do not pass them on.
The SRA is considering CRA’s recommendations with a view to consulting on a set of proposals for reform in December. Changes could be effected for the 2011/12 renewal period.