Calling all COLPs and COFAs. Breach of Trust – Could you be held liable?
PSG introduce Lawyer Checker, a simple and cost effective service to reduce risk of fraud.
On Wednesday 12th December the Court of Appeal judgement in the Nationwide Building Society V Davisons case once again highlighted that the theft of the identity of a vendor’s solicitor or conveyancer remains a serious issue for firms, lenders and clients alike.
For many criminals intent on targeting conveyancing as a vulnerable and lucrative area in which to operate, this is becoming the preferred manner in which to do so.
The judgement follows lengthy litigation after Davisons were conned into sending money to a fake branch office of a legitimate solicitors firm.
The fake office appeared on the Find a Solicitor website. This is the latest in a series of cases that have illustrated that the checks carried out prior to transferring the money in a property transaction are increasingly insufficient.
The facts highlight that registration with the SRA is not a guarantee of legitimacy.
Since this issue arose the SRA have issued a Bogus Firm warning notice informing conveyancers not to rely on the Find a Solicitor site to determine that a solicitors practice is genuine or legitimate.
This warning will make it significantly harder for conveyancers to demonstrate that they have acted reasonably if they are subject to an identity theft fraud in the future.
What can a firm do to reduce the risk?
A new service, available through PSG; Lawyer Checker allows firms to combat the increasing risk of vendor conveyancer fraud by checking the previous use of the client account number to which they are sending funds.
This helps conveyancers avoid the distraction and impact of a professional indemnity claim on their insurance, lender panel status and brand.
For a fixed price, conveyancers will be able to run a check on the client account purported to be a legitimate vendor’s solicitor to help verify that the firm is legitimate.
Firms are exposing themselves to significant financial risk and potential brand damage by not thoroughly checking where they are sending money prior to a transaction.
Lawyer Checker offers a quick and easy way for them to reduce that risk.
Chris Harris, Director, Lawyer Checker comments: “Nationwide v Davisons highlights how easy it is for good quality firms to be defrauded by criminals. Since the original facts the SRA have issued a warning notice about Bogus Law firms indicating that firms should not rely on the Find a Solicitor website to validate a firm of solicitors.
“If the facts were repeated today it would be harder for Davisons to demonstrate that they had acted reasonably.”
Karen James, Head of Residential Property, Ramsdens Solicitors said: “When we first started a pilot with Lawyer Checker I admit that I thought I wouldn’t see the benefit and might only use it if a lender or regulator forced me to.
“Within a few weeks of the start of the pilot one particular case stood out and made me realise the value. Lawyer Checker identified that we were about to send £270,000 to a firm that had only just opened and was a phoenix from a firm that had previously been intervened by the SRA.
“There was no way that I wanted to be one of the first conveyancers to rely on an undertaking from partners who have recently emerged from an intervention.
“Without Lawyer Checker we wouldn’t have spotted this issue. I would encourage all firms to try Lawyer Checker and see the value for themselves.”
Tracey Carr, Financial Crime Manager — Mortgage Fraud, Santander said: “We have done a lot of work to reduce fraud but vendor conveyancer fraud remains an area of growing concern.
“That is why I welcome initiatives like Lawyer Checker that help our panel firms manage the risk associated with transmitting our money to vendor conveyancers.
“All conveyancers should reassess the checks they make before they send money to organisations offering undertakings.”
About Lawyer Checker
Lawyer Checker is an online service that helps conveyancers avoid fraud by checking that the sort code and account number of the client account to which they are sending purchase funds.
Since July, Lawyer Checker has conducted over 7000 searches and identified a number of cases where client conveyancers have chosen not to accept the undertaking offered.
Lawyer Checker has two levels of service.
Account Screen £5.00 + Vat. This service provides;
- Immediate response
- Checks client account details against historical database of previous transactions
- Identifies the frequency of use of that account number
- Recommends additional manual searches for your team to complete if the Account Screen result highlights concerns
- Safeguards against genuine human error
Account & Entity Screen £10.00 + Vat. This service provides;
- Enhanced due diligence
- Immediate response, plus further research conducted by the Lawyer Checker team into the firm within four working hours where the account is not frequently recognised
- Comprehensive database checks to verify entity including: Checks on roll of solicitors/conveyancers, Companies House information, ICO Data Protection Register, Land Registry Transfers of Value list, FSA Registers-Sort code look-up, Google street views
- Safeguards against genuine human error
For more information on Lawyer Checker visit www.psgconnect.co.uk or contact you local PSG Office.