SDT should not have proceeded against conveyancing solicitors

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The present SDT rejected the SRA’s core contention that there were individual and cumulative signs of potential fraud which should have been obvious to a conveyancer of Ms Egoh’s experience.

“At first sight there was a considerable array of unusual features in this matter and the [SRA] relied on their cumulative effect…

“However having examined the factors based on all the evidence which was now before it… the tribunal did not find it proved on the evidence to the required standard that [Ms Egoh] had facilitated or acquiesced in a conveyancing transaction that bore the hallmarks of fraud and accordingly the associated allegation that she failed to act with integrity and/or acted in a way likely to undermine the public trust fell away.

“By way of example, the text of the undertaking given by [Ms Egoh] looked less than candid: but on inspection it was simply the document that she was asked to sign.

“The actions of Mr M, the solicitor who had sent the mortgage money without any of the actions a conveyancing solicitor would expect of the solicitor to a mortgage lender in such a matter, and who then on request simply removed the search supposed to protect those mortgage advances (and that it was the wrong search anyway), were so utterly extraordinary that no solicitor could be expected to contemplate the possibility that the moneys were actually mortgage advances.”

The tribunal said it “entirely understood” the SRA’s initial suspicions about the two solicitors, but continued: “However, it considered the actions of Mr M were so extraordinary that it was entirely understandable that the [Ms Egoh] would not realise that there was a problem.

“She was a transactional lawyer trying to get through a transaction. The tribunal considered that once Mr M’s case was determined, it was clear what he had done: there was then no reason [for the SRA] to proceed with the other allegations.”

The SDT also rejected the allegation that Ms Egoh had not co-operated with the SRA.

The pair were, however, found guilty of a “technical breach” of the accounts rules because the payments were improper as they were from monies which as a matter of fact did not belong to the firm’s clients, and they admitted that they allowed their client account to be used as a banking facility.

Sanctioning them, the SDT said Ms Egoh had undertaken numerous transactions “without difficulty or complaint or sanction”, while Mr Khalique had “an unblemished record and was not alleged to be personally responsible for the actions in question”.

Law Society welcomes LSB review of risks of switching regulator

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Law Society welcomes LSB review of risks of switching regulator

5 August 2016

The Legal Services Board (LSB) has announced that it will be conducting research to assess the risks for clients if firms switch regulator, and whether there are unintended consequences of this practice.

This announcement follows warnings from the Law Society and other stakeholders of the risks to client protections inherent in proposals put forward by the Solicitors Regulation Authority (SRA) on removing barriers to solicitors’ firms switching regulator.

Law Society chief executive Catherine Dixon commented:

‘The Law Society’s response to the SRA’s consultation on switching regulators highlighted the disparity in client protections required by the different legal services regulators, and therefore the risk to vital client protections. We therefore welcome the LSB’s research to examine these issues in depth.

‘The LSB will also be looking into a number of other concerns that we raised about the mechanics of switching regulators, such as the extent to which new regulators scrutinise an individual’s or firm’s regulatory history. We will be watching the progress of this review with great interest.’

Reasons Land Registry reject applications

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“Land Registry only rejects applications that have no prospect of being completed as they stand and also in cases where identity confirmation is required and has not been given or is incomplete and where a previously cancelled application has been re-lodged without the reasons for cancellation having been addressed.

“Very few applications are rejected out of the overall intake of registration applications received. About 0.85% of applications are rejected currently. That works out to approximately 165 applications every working day.

“From 1st July 2015 to 30th June 2016, Land Registry rejected a total of 41,850 applications. The following table shows a breakdown of the reasons for rejection based on the rejection letter templates used.”

Defective application, 23,090
Identity information not supplied for all parties by conveyancer, 10,087
Defective application fees retained can be credited when resubmitted, 4,841
eDRS – multi title application – incorrect or missing title, 802
Defective application – Prescribed Clauses Lease, 498
UN1 or AN1 lodged but interest can only be protected by a restriction, 426
Fee not paid after telephone request, 413
Identity information not supplied for all parties by layperson, 408
No evidence of identity lodged by layperson, 390
RX4 (withdrawal) lodged instead of RX3 (cancellation), 198
Rejected application – notification to applicant, 94
Identity information on application form not completed by layperson, 90
Transfer Poor Or No Plan, 88
Rejected application – notification to registered proprietor 81
Section B of identity form not completed by conveyancer or citizen, 78
No evidence of identity lodged by conveyancer, 56
Defective application – Prescribed clauses lease, variation/incorporated document, 55
Forms – old version used after 9 Feb 2009, 23
New forms – wrong forms used, 20
Rejection letter – commonhold, 20
Caution application lodged after 13 October 2003, 19
Application or enquiry received on or after 13/10/2003, 15
EX1 application rejected – unsatisfactory grounds for exemption, 15
Plan based on OS map preferred, 11
Forms – old version of AP1, FR1 or DS2 used after 9 November 2008, 10
Rejected application – notification to charge, 10
Rejected application –– to person entitled to be notified, 4
Rejected application – notification to superior lessor, 3
Identity information on application form not completed by conveyancer, 2
Telecommunication agreement not being registered or noted as a lease, 2
Forms – Bulk application – old version of AP1, FR1 or DS2 used after 9 Nov 2008, 1

 

 

SRA responds to ABS consultation

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Paul Philip, SRA Chief Executive, said: “We welcome the Ministry of Justice’s proposals to remove unnecessary restrictions for ABS wanting to enter the legal services market. All the evidence suggests ABS are good for competition and improving choice, while posing no greater regulatory risk. Research shows that they are more innovative than traditional firms, being up to 15 per cent more likely to introduce a new legal service.

“With the backdrop of the uncertainty of Brexit, these type of reforms are vital to make sure our legal services market is as open and competitive as possible. Stripping back unnecessary bureaucracy will not only help our economy grow and attract international investment, but also benefit the public through making legal services more accessible and affordable.

“By moving away from an onerous one-size-fits-all approach to approving ABS, we can be much more targeted. This will help us encourage innovation, while still making sure the public is protected.”

Checking Title report whose responsibility is it?

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Property nightmare raises worries over conveyancing standards – The Times

Several homeowners in Cumbria are facing a legal quagmire after it emerged that they are likely to be living in flats that they have not technically bought.

Chris Meyer, a Carlisle businessman, unearthed the problem when he decided to move from his three-bedroom flat to a bigger house.

His tale of woe has highlighted what lawyers describe as increasing problems over residential conveyancing matters in the wake of the 2008 financial crisis.

Mr Meyer was on the verge of completing the deal for what he described as his dream home after finally selling his flat, which had been on the market for three years. That was until the solicitor for the prospective buyer of his flat contacted him to say that due to an administrative gaffe, he and several of his neighbours had unwittingly been living in the wrong flats.

In Mr Meyer’s case, the lawyer informed him that technically his flat was owned by his next-door neighbour. As many as 10 of the 15 flats in the building are understood to be affected, with lawyers saying that none of the properties can be sold without written agreement of all the parties involved.

Burnetts, the Carlisle law firm that acted for Mr Meyer when he bought the flat, strongly denied that it acted negligently and said it was its client’s responsibility to check the relevant documents. Nick Gutteridge, the firm’s managing partner, said: “Responsibility for checking the title report was with Mr Meyer. Although this is not a situation of our making, we have gone above and beyond in helping Mr Meyer to rectify the issue, including liaising with other property owners and their lenders.”

The details of the Carlisle conundrum will have to be chewed over by the lawyers involved, but on a separate note, Rob Hailstone, an independent solicitor specialising in property, pointed out that incidents of residential conveyancing negligence are on the rise owing to the fact that “there just aren’t as many good property lawyers as there used to be”.

He blamed the 2008 financial crisis and the downturn in the property market for the dearth of experts. “Many firms made conveyancers redundant and have not rebuilt those practices since,” he said.

Another problem is that lawyers now act remotely. “Conveyancing specialists used to visit properties before the deal was closed to check that the records were accurate,” Mr Hailstone said. “Most don’t do that any more.”

BSB highlights progress made in its Annual Report 2015-16

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The BSB has published its latest annual report, which summarises its achievements during the 2015-16 business year and during the course of its last three-year strategic plan which concluded on 31 March 2016.

BSB Chair Sir Andrew Burns said: “We are well on our way to becoming the fully modern and efficient regulator that we said we wanted to be at the start of the strategic period in 2013.

“Over the course of the past three years, we have transformed nearly every aspect of the way we regulate the Bar. We have become more outcomes-focussed and risk-based in everything that we do. This helps us prioritise our work while maximising value for money.”

The BSB’s key achievements in 2015-16 were:

  • The publication of a Risk Outlook – an important document which provides an overview of the biggest risks in the legal services market and which sets out the BSB’s regulatory priorities;
  • Improving our dialogue with the Bar, consumers and other key stakeholders and  holding a number of events throughout the year to seek their views on a wide range of topics, such as the future of Bar training;
  • Publishing the new Professional Statement, which describes the skills, knowledge and attributes expected of barristers at the point of authorisation;
  • Piloting an improved, more flexible Continuing Professional Development (CPD) regime for barristers in preparation for its roll-out in 2017;
  • Undertaking a major piece of research into women’s experiences at the Bar;
  • Beginning a review of immigration advice and services;
  • Commissioning research into Youth Court advocacy standards and adopting the resulting recommendations; and
  • The Legal Services Board (LSB) recommending that we should  begin authorising Alternative Business Structures (ABSs) – a recommendation which the Lord Chancellor has now approved.

During the period of its last strategic plan, the BSB reduced the overall cost of regulation by two per cent.

Read the full BSB Annual Report 2015-16 here.

ENDS

Online courts for claims up to £25,000

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Online courts could hear thousands of cases
An online court should be created to hear civil claims valued at up to £25,000, the judge tasked with overhauling the courts system has recommended.

The controversial proposal, released in a report yesterday, from Lord Justice Briggs (pictured), triggered warnings from lawyers that most claimants would be channelled into a “second tier” system where they would be forced to pursue complicated actions without legal advice.

However, according to the final report of his structure review of the civil courts, Lord Justice Briggs, a Court of Appeal judge, enthusiastically backed the pilot online court programmes, which could ultimately hear tens of thousands of case annually. “The online court project offers a radically new and different procedural and cultural approach to the resolution of civil disputes,” he said.

The Times reported that the judge claimed that moving lower grade civil claims to an online dispute system “may pave the way for fundamental changes in the conduct of civil litigation over much wider ground than is currently contemplated by its first stage ambition, to resolve money claims up to £25,000 subject to substantial exclusions.”

His suggestions have already stirred concern at the Bar Council, which represents barristers in England and Wales. “Any moves towards an online court for claims of up to £25,000 must avoid the risk of entrenching a system of two-tier justice,” said Chantal-Aimee Doerries, QC, the council’s chairwoman.

The Bar fears that “individuals opting to use a lawyerless online court process could easily find themselves in litigation with big organisations which can afford to hire their own legal teams”.

David Greene, a former president of the London Solicitor Litigation Association and senior partner at the law firm Edwin Coe, said: “It is vital that we all have confidence in the online court, its functioning and development. The marriage between IT and the court process has not always been a happy one and so the recognition by Briggs of piloting with smaller claims is all important”.

SRA hits back over handbook

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SRA hits back over criticism of handbook rewrite

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14 July 2016

Paul Philip

Philip: no evidence of “detriment” in the CMA report

The chief executive and chair of the Solicitors Regulation Authority (SRA) have hit back over criticism of their plans for a comprehensive rewrite of the handbook.

Among the changes would be a move to allow solicitors to practise from unregulated firms for the first time, which the Law Society argued earlier this week would pave the way for a two-tier profession and leave consumers unprotected.

Paul Philip, chief executive of the SRA, said at a press briefing after yesterday’s board meeting that some solicitors would welcome the freedoms the rewrite would bring.

“Others believe the system is not broken and does not need to be fixed. The main problem in the market is that the vast majority of people cannot afford to use solicitors. What are the drivers of that cost? Regulation and indemnity insurance.

“We believe that by allowing solicitors to work outside an authorised entity, it will make a contribution to improving access to legal services and enforcement of civil rights.

“Consumers will need to understand what protections they have, and what they don’t have, on legal privilege and indemnity insurance.”

Mr Philip said that nowhere in last week’s report by the Competition and Markets Authority (CMA) was there any evidence of detriment to consumers by using the unregulated sector.

He denied that the SRA was diluting the solicitor brand by changing regulatory arrangements to open up the market and improve competition.

“Everything we’re doing is to maintain high professional standards for solicitors. Are we reducing the solicitor brand? Absolutely not.”

Mr Philip described the handbook rewrite as “radical” and said the Law Society’s views would be considered, along with the others.

He added that he did not believe allowing solicitors to practise in unregulated firms was “such a big leap”. He said the question was whether the change helped members of the public to access advice from a properly trained solicitor with high standards rather than an unregulated adviser who was not even a professional.

Enid Rowlands, chair of the SRA, said the regulator did not share the view that nothing was broken; the CMA reports had highlighted areas where services were not being delivered.

“We need competition to ensure services are reliable and accessible. A 400-page rulebook is likely to dampen competition and reduce the scope of services. A more principles-based approach will make competition more likely. Small businesses and individuals need help for a whole range of reasons, but they don’t access it.”

Both Mr Philip and Ms Rowlands cited the CMA report’s backing for the legal regulators to be fully separated from their representative bodies.

Mr Philip said that, given the referendum, it was natural that the government’s attention was “elsewhere”, but it had launched a consultation on reforming the rules for alternative business structures last week and separation was the “second half” of the Treasury ‘better deal for consumers’ proposals.

Earlier the SRA board approved a reduction in this year’s practising certificate fee for solicitors from £320 to £290. The SRA set compensation fund contributions at £32 for individuals and £548 for firms.

However, the PC fee depends on a decision by the Law Society council today on the net funding requirement for the Law Society group. It will then need the approval of the Legal Services Board.

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ICAEW to add litigation as regulator

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Accountants bid to regulate reserved legal services

One of the three organisations for chartered accountants in England and Wales is pitching to be approved as a regulator of reserved legal services, it emerged yesterday.

The Institute of Chartered Accountants has applied to the Legal Services Board to become an approved regulator and licensing authority for five activities, three of which are limited to tax advice. Those three tax fields involve the conduct of litigation, rights of audience and reserved instrument activities. The other fields are notarial services and the administration of oaths. The institute is already an approved regulator and licensing authority for probate work.

If the board gives the application the green light, the market for legal services regulation will become a bit more crowded. The board already oversees nine groups, including bigger players such as the Solicitors Regulation Authority and the Bar Standards Board, and regulators of legal executives, licensed conveyancers and trademark attorneys.

Duncan Wiggetts, the institute’s executive director, said: “As an experienced regulator I am confident the Institute of Chartered Accountants will ensure its members and firms provide excellent reserved legal services to the public.”

Insurance cover not appropriate

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Row over insurance cover in liberalised regulation regime

Law firms could be left in an insurance gap and clients out of pocket in cases of negligence if plans to drop barriers to lawyers switching regulators are given the green light, the solicitors’ trade union said on Friday.

In yet another round of sniping in the war of words between the Law Society and the Solicitors Regulation Authority, the arcane role of run-off insurance cover for law firms was put in the spotlight.

The SRA has proposed that lawyers should be allowed as much flexibility as possible in choosing which authorised regulator should oversee them. The Law Society has said that it supports in principle the authority’s aim “to encourage a competitive market by removing unnecessary barriers”.

However, the organisation’s chief executive, Catherine Dixon, warned that switching regulator “must not be at the expense of client protection. We are concerned that the SRA’s proposals could leave existing and past clients of firms that switch regulator without appropriate cover.” Dixon added: “We cannot be confident that other regulators’ professional indemnity insurance requirements can appropriately accommodate an unknown number of solicitor firms coming under their umbrella.

“We will therefore be requesting that any changes to the regulatory framework which enables solicitors to change regulator ensures that PII arrangements protect our clients’ interests.”

An SRA spokesman said that the authority had raised client protection issues in its recent consultation on proposals for switching regulators. “Our aim as always is to strike the right balance on removing unnecessary restrictions on firms without reducing the protections in place for users of legal services.”