LSB wants to scrap SRA and itself!

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Legal Services Board Chairman, Sir Michael Pitt, said:

“The paper we are publishing today sets out the LSB’s vision for a future regulatory framework for legal services in England and Wales.

We believe that further legislative reform would help address current challenges and make the step change needed to improve outcomes for consumers, citizens and practitioners.

There is a need to tackle the tensions inherent in the existing framework. A new legal framework will help secure the important public interest outcomes that the legal sector delivers, such as maintaining the rule of law and ensuring access to justice. It will also strengthen the contribution the legal sector makes to the reputation of the UK as a great place to do business

Any new legislative framework should take a risk-based approach to regulation and focus on the activities undertaken by providers. It must also be fully independent of the professions and Government.

The existing arrangements are confusing and complex. We believe that a single regulator, covering the whole legal services sector and accountable to Parliament, would be best placed to deliver improvement, deregulate, save cost and act strategically.

I look forward to discussing these proposals with the Government and interested parties.”

Law Society produce template for SRA consultation

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The SRA consultation on new separate codes of conduct for solicitors and firms, which will give more freedom for solicitors to deliver legal services outside regulated firms, and a separate consultation aimed at simplifying the accounts rules will both close on 21 September.

‘The changes proposed by the SRA have huge implications for the solicitor profession and for clients. It is vital the profession has its say on these proposals,’ said Law Society chief executive Catherine Dixon.

‘Our template is designed to make that process easier, and maximise the number of solicitors contributing to this important consultation,’ she added.

‘We know solicitors from all over the country are gravely concerned about the SRA proposals as they fear that the reputation and standing of solicitors will be tarnished if these changes go ahead, resulting in two tiers of solicitors and vital client protections lost depending on where the solicitor is working.

‘Each solicitor will have their own experiences and draw their own conclusions on these proposals. A comprehensive response from the profession can only help improve the final decision.’

Law Society urges profession to give views on ‘dramatic’ change

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Law Society urges profession to give views on ‘dramatic’ change

The Solicitors Regulation Authority’s proposed reforms to the SRA handbook and accounts rules risk ‘weakening client protection’ and ‘damaging the reputation of the solicitor profession both at home and abroad’, the Law Society has warned.

The Society has urged solicitors to give feedback on the changes, and has released guidance, case studies and a template submission to help solicitors.

SRA attacks The Law Society as technical regulator

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Responding to the interim report from the Competition and Markets Authority legal services study, the Solicitors Regulation Authority (SRA) said: “Those who represent a party cannot also regulate it. Measures that regulators could take to open up the market to competition are resisted by their representative arms, who naturally seek to protect the interests of their members.”

The comments are thinly veiled criticisms of the current structure, which retains the Law Society as the technical regulator of the profession, albeit delegating its authority to the SRA.

The society and the SRA are battling over the future shape of regulation. In its comments yesterday, the authority said that the current situation “leads to public confidence and trust in regulated providers being undermined”.

It went on to claim that complete separation for the SRA “would free up the professional bodies to become the voice of their members, without the restrictions of also acting as the regulator. It would also allow more flexibility for law firms and solicitors to decide how specific industry bodies, such as the Association of Personal Injury Lawyers or the City of London Law Society, can work alongside professional bodies to best meet their needs”.

The SRA maintained that “public polling shows that independent regulation would boost trust in solicitors”.

Conveyancing sees 24% rise in Q2

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Conveyancing transactions rose by a healthy 24 per cent in the second quarter of this year, according to a report from Search Acumen, which monitors the sector. Researchers attributed the rise to reforms to stamp duty and land tax. From the beginning of April, the government levied a stamp duty surcharge on second homes, a move that appears to have triggered a rush to buy before the deadline.

Whatever is causing the boom, conveyancing law firms are benefiting, say the researchers. Firms at the top of the market completed more than 3,500 transactions during the quarter. That was a rise of 17 per cent over the first quarter of this year. More impressively, the most recent transaction rate was more than 40 per cent above last year’s second-quarter rate.

The report pointed to a slight rise over the last year in the number of solicitors’ practices offering residential conveyancing services – up from 4,177 to 4,281

Buy to Let investors to pay income tax rather than CGT

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Ministers’ ‘back door’ amendments penalise buy-to-let investors 

Ministers have sneaked amendments to proposed legislation on buy-to-let properties through the back door, lawyers’ leaders complained yesterday.

They claim that the move will create uncertainty as investors will be forced to pay income tax rather than a capital gains tax on investment properties.

Law Society chiefs said that significant amendments to the Finance Bill were “slipped in at committee stage” and that doing so “set a disturbing precedent of avoiding proper consultation and scrutiny”. Catherine Dixon, the society’s chief executive, complained: “By introducing a significant change in this way, the government is denying the public the chance to consider and comment on these proposals.

“The way these changes were introduced, in particular without consultation on the draft legislation before it was added to the bill at such a late stage, starts to feel like legislation by stealth.”

In comments to the government on the Finance Bill’s land transactions clauses the society said: “The average buy-to-let investor will have assumed that it will be taxed at capital gains tax rates on ultimate disposal of the property.

“If the government’s intention were to change this, then the society’s view is that this should have been subject to proper consultation on the principle, policy and the draft legislation. If the government’s intention is not to change this, then the society considers that the terms of the legislation should be amended to reflect that.”

SRA fines ABS £7,500 plus costs for emails made up from client

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Currently, the SRA has the power to fine firms and individuals up to a maximum of £2,000, with any regulatory breach that requires a higher penalty sent to the Solicitors Disciplinary Tribunal.

The limit on fines for ABSs is currently £50m for individuals and £250m for firms.

A decision published on the SRA’s website states that Borley worked in the property department at Morecrofts, Liverpool, between June 2009 and November 2014 when the firm reported him to the SRA.

During his employment, Borley was found to have created two emails which were purportedly from a client.

‘These emails had the potential to cause loss to this client as they purported to give instructions to the firm to use part of the funds held for this client to settle sums due on other matters that were unconnected with this client,’ the decision states.

‘It was found that Mr Borley took steps to conceal his actions and that his conduct misled the firm’s finance partner.’

’It was found that Mr Borley’s conduct was dishonest and that his actions also breached principles 2 and 6 of the SRA principles. Borley was given a written rebuke and ordered to pay a financial penalty of £7,500. He was also ordered to pay the SRA’s costs of £1,350 in investigating the matter. The decision states that Borley’s current practising details are unknown.

The SRA made a section 43 order (control of non-qualified staff), saying it would be undesirable for Borley to be involved in a legal practice in any of the ways described in its decision, except in accordance with the regulator’s permission.

HM Land Registry ‘Private and Confidential’ changes

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As of 30th August 2016, Land Registry will be changing the way they manage post labelled “Private & Confidential”.

Postal correspondence relating to applications that feature the labels “Private”, “Confidential” or “Private & confidential” will either be returned to the sender or be put through an inspection process. This may therefore greatly affect the priority of any application and it will not be deemed as received under rule 15 of the Land Registry Registration Rules 2003.

The policies of Land Registry relating to “Private & confidential” post state that:

  • under sections 66 and 67 of the Land Registration Act 2002, any person may inspect and make copies of, or apply for an official copy of, any document referred to in the register or otherwise kept by the registrar which relates to an application to him
  • other correspondence not relating to applications may be subject to access requests under the Freedom of Information Act 2000
  • in the interest of natural justice, and pursuant to section 73(5) of the Land Registration Act 2002, Land Registry is obliged to share documents, including correspondence, when there is a dispute.

The amended Direction under section 100(4) of the Land Registry Act 2002 features details of these new procedures and will come into effect on 30th August. This will replace a previous version from 12th April 2016.

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.’