Bogus law firm issues increase

Bogus law firm issues increase

Following 7 alerts since the 8th February regarding bogus solicitors firms the Solicitors Regulation Authority has issued a warning notice that is of particular relevance to all conveyancers entitled “Bogus law firms and identity theft”. 

Due to the high levels of sums involved in conveyancing, conveyancers are at particular risk of inadvertently sending funds to criminals.  A number of cases are emerging that leave the liability with the purchasers conveyancer when they fall victims of a criminal scam.  Cases include Lloyds TSB Bank PLC v Markandan and Uddin [2012] EWCA Civ 65 which we have previously reported on. 

The SRA warning notice indicates: 

“The fraudsters are pretending to set up branches of legitimate law firms, but listing business addresses that are merely empty offices that have been rented out. The advice is available at www.sra.org.uk/identitytheft  It includes searching the internet and the "Find a Solicitor" page." 

The notice  states “There are serious and continuing risks to the public arising from the activities of criminals and criminal gangs who are setting up bogus law firms or bogus branch offices of genuine law firms with the intention, usually, of stealing mortgage loans.” 

David Middleton SRA Executive Director said: "We’ve had a number of bogus firms in operation in recent years and we want to help protect genuine firms from having their identity stolen in such a way. Any firm that discovers its identity has been stolen should contact us and their insurers and also consider legal action such an injunction either to stop misleading statements or to freeze assets if money has gone missing. 

"Firms are at risk because even if they are said to be the victim of the fraud, they could be held liable for breach of trust in paying away mortgage monies. For that reason, we’ve listed a number of steps firms can take and some of the things they should look out for to protect both themselves and the public. 

"Firms cannot assume that we or the police can take direct steps to protect your firm. We each will do what we can, but we do not regulate the people perpetrating these frauds and our powers over them are relatively limited."

The guidance note suggests that any firm that thinks its identity might have been stolen should contact the Red Alert Line on 0845 850 0999 or 01926 439673, or e-mail redalert@sra.org.uk. 

Suggestions of issues to look for include: 

  • inconsistent telephone or fax numbers with those usually used by the firm;
  • telephone calls being diverted to a call-back service; 
  • a firm apparently based in serviced offices

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