Conveyancers beware of who you take a conveyancing undertaking from.
Firms that failed to secure a new professional indemnity insurance policy by 1 October automatically entered the extended policy period (EPP), which provided a 90-day extension. That period ended on 29 December and firms that still did not have cover should now have closed.
The SRA has worked with all firms in the EPP to ensure they were prepared for this eventuality and could cease trading in an orderly way. Compliance plans were agreed to by managers providing undertakings for the orderly wind down of the practice, including dealing with client matters and monies.
Firms that did not co-operate with the SRA could have jeopardised their clients’ interests. Investigations officers from the SRA have visited some firms where there was a failure to co-operate in the process or to agree to the compliance plan.
The SRA is now making sure those firms with no insurance do not carry out work on live matters. Those firms who fail to co-operate when contacted will face enforcement action by the Authority.
Mike Haley, SRA Director of Supervision, said: "We accept that facing closure is a difficult situation for firms, so during the EPP, we endeavoured to protect clients’ interests while also making sure we did not add to the pressure the firms were under. However, since no firm should now be carrying out live matters unless they have secured a new policy, our primary concern is that consumers are not put at risk.
"Firms without insurance should not be practising, they should not be working on live matters and, above all, they should have informed us of their position. Those that continue to avoid disclosing their situation to us will be dealt with robustly."
The firms have been aware that they were unable to accept new instructions since 31 October, and that they should have finalised all existing matters or arranged their transfer to other firms, with the client’s consent, by 29 December 2013. All firms were directed to the SRA’s published guidance on closing down, which includes details about what could and could not be done after closure of the firm, as well as steps that need to be taken in terms of signage, websites, letterhead etc so that clients and others are clear about the status of the firm no longer practising.
Firms have been reminded of their obligations under Principle 7 to co-operate with the SRA during the process. The guidance on closing down is available here: http://www.sra.org.uk/closingdown.