SRA wants to help prevent mortgage fraud
The SRA is hoping to engage with conveyancing firms in order to reduce the risk of mortgage fraud.
As well as being the subject of a number of complaints, conveyancing accounts for a high proportion of claims against solicitors’ insurance and Compensation Fund.
The SRA said that whilst a number were a result of poor quality work, most are a result of weak risk management and compliance systems.
These poor systems are leading to a failure to detect fraudulent activities or other dishonesty on the part of third parties or within firms themselves.
The SRA has been focussing for the last three years on risks posed by a small number of individuals and firms involved in property-related fraud and money laundering.
They now want to extend this work to help a greater number of firms and are re-visiting their draft Conveyancing Strategy to ensure it provides appropriate support to solicitors.
This starts with a comprehensive review of current practices, which will run until the end of 2013.
Richard Collins, SRA Executive Director for Policy, said: "As a risk-based regulator we continually analyse the key risks posed to the achievement of our regulatory objectives.
“It is clear that we need to continue to target resources on conveyancing — both to assist firms in managing their own risks and compliance and to identify and prevent dishonest behaviour; either by third parties seeking to use solicitors’ firms for fraudulent transactions or by a small proportion of firms themselves.
"As a public interest regulator we need to ensure firms take seriously the risks in this area and establish good compliance and risk management systems so as to demonstrate an effective degree of internal control.
“In order to help firms do this, we are undertaking a review that will give us a better information on the risks they face when conducting conveyancing work to ensure that the transaction they’re dealing with is genuine and above-board.
“We will aim to identify best practice to guard against risks and reduce the number of firms and clients who fall victim to such scams."
The SRA’s main focus will be on areas which can lead to financial loss, such as the holding of client money and the use of undertakings.
They will look at whether it is possible to amend elements of the underlying conveyancing process in order to reduce the extent to which firms need to hold client money, enhancing the safety of client funds and protecting the profession against criminal elements.
They have already visited 100 firms to look at the risks they face during conveyancing work as part of the draft Supervision and Enforcement Strategy for Conveyancing.
The feedback from this work is being analysed.
The draft Supervision and Enforcement Strategy for Conveyancing is available here