Veyo report released by Law Society

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Extract from Legal Futures

Law Society has made available a summary put together by OC&C of five core principles which should be observed for all future commercial ventures:

  • Understand risks and plan accordingly. This included understanding customer needs based on robust evidence and avoiding “single large investments”;
  • Establish clear and robust governance structures. This included ensuring that those providing governance have the appropriate skills and are “not just purely representing the Law Society’s interests”;
  • Install a capable team with the required skills;
  • Execute effectively and communication regularly. This included ensuring greater transparency to the society’s council and to members; and
  • Follow a clear process for product development.

Rob Hailstone, who runs the Bold Legal Group and has been one of the most outspoken critics of Veyo, said there were still a number of unanswered questions, such as how the market had in fact changed so as to justify the end of Veyo, adding: “There must be something to show for £7m plus – why can’t the source code be obtained from Mastek?”

He continued: “The findings from this fiasco should not just end up producing a pretty standard ‘guidance for commercial ventures’; it should be a wake-up call for the Law Society generally about how it conducts and runs its business (including CQS)…

SRA Handbook, Version 16 Authorisation and Consumer credit

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The sixteenth version of the Handbook was published on 1 April 2016, and all the changes in this version came into effect on that date.

Authorisation

  • Rule 4.2 removed. This means that a body’s application for authorisation will no longer need to include a statement of the reserved legal activities that the body intends to carry on.
  • Simplified rule 4.3 so that it states that the SRA may grant an application for authorisation in relation to one or more reserved activity.
  • Rule 22.1(a)(iii) removed. This means that SRA will no longer have the power to revoke or suspend authorisation of a body which has ceased to carry on the reserved legal activities for which it was authorised.

Consumer credit

Until 1 April 2016, SRA operated transitional arrangements for the purposes of regulating consumer credit activities. The transitional arrangements have now come to an end and the Handbook now provides for firms authorised by the SRA to carry out some consumer credit activities under SRA regulation, where the activities are central to the delivery of legal services.

The changes to the Handbook:

  • ensure that firms can continue, under SRA regulation, to undertake the consumer credit activities in line with the scope of Part 20 of FSMA, and
  • provide a defined list of distinct and specialist consumer credit services that are prohibited under SRA regulation or where certain restrictions apply.

The main changes are found in: the SRA Code of Conduct 2011, the SRA Financial Services (Scope) Rules 2001, the SRA Financial Services (Conduct of Business) Rules 2001 and the SRA Handbook Glossary 2012.

Changes to the Handbook are complemented by an online toolkit which provides resources to help SRA-authorised firms understand the regulatory requirements and deliver consumer credit services in a compliant way.

BSB given go ahead to license ABS’s

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BSB won approval yesterday to regulate ABS’s ( alternative business structures) in a move that will heighten competition among legal profession regulators for lawyer business.

The Bar Standards Board announced that the overall regulator in England and Wales, the Legal Services Board, had approved its application. The final remaining step is a formal order from the lord chancellor.

BSB-licensed ABS’s will allow lawyers and non-lawyers jointly to own and manage businesses that provide reserved legal activities. It advances the present position where BSB-regulated “entities” can include lawyer partners, regardless of whether they are barristers, solicitors or legal executives.

Oliver Hanmer, the board’s director of supervision, said that the LSB’s authorisation was a “testament to our desire to encourage innovation and competition and to improve access to justice within the legal services market”.

Flood Re to come into effect from 4th April 2016

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The Law Society has published a very helpful note concerning the introduction of Flood Re.

Flood Re, a new scheme designed jointly by government and insurers that intends to provide people living in flood-prone areas with lower insurance premiums, will come into effect on 4 April 2016.

The introduction of Flood Re is intended to ensure homeowners whose properties are at high flood risk can obtain affordable flood insurance with cover at a set price. However, certain categories of properties will beexcluded from the scheme, including many leasehold flats, small and medium-sized businesses, buy-to-let properties and all properties built after 1 January 2009. The Flood Re regulations set out in some detail those properties that will not be covered by the Flood Re Scheme.

LeO to adopt ADR model

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Complaints watchdog to move to alternative dispute model

Alternative dispute resolution methods should be used more widely to resolve arguments between clients and their lawyers, the legal profession complaints watchdog has said.

The Legal Ombudsman’s office announced that it “will be reviewing our options later this year” in relation to ADR”. In a strategy paperreleased in the past few days, it said that this year it would consider dusting off its application to become an official approved entity under the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations. The ombudsman’s office postponed its application in 2015.

Land Registry portal changes

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Land Registry progress-of-your-applications-online-from-14-march/

When Application Enquiry launches, customers will be able to find secure, accurate information about applications with a user-friendly search; and find more detail than ever before including the:

  • progress status, such as: received, priority protected, in progress or delayed
  • reason an application has been delayed where applicable
  • full priority period for Official Searches.

Customers will also be able to save these as a pdf

Run-off cover to end in 2020

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SRA confirms 2020 end of post run-off insurance cover

9 March 2016

SRA have confirmed that there will be no extension to arrangements providing insurance cover for closed firms beyond the current six-year run-off period.

Any practice that has shut since September 2000 without a successor currently enjoys additional professional insurance cover through the old Solicitors Indemnity Fund (SIF) for any claim made after the six-year run-off has ended. This arrangement is scheduled to end in 2020.

We have been asked to increase the cover for a further three years to 2023, but our Board has decided at its March meeting not to change the current arrangements. Extension would be contrary to existing policy aims, and SIF might not have sufficient funds to cover the additional claims.

Views on the issue were sought last summer, but there was no consensus on the best way forward. Respondents did say that a quick decision was needed, however.

Paul Philip, SRA Chief Executive, said: “We consulted on reducing the amount of run-off cover because many see it as a barrier to closing down, and that’s still something we want to look at. Extending cover through SIF would be contrary to that aim and would be suggesting that six years run off cover is not enough.

“Taking this decision does not change anything, the extra cover will still end in 2020. But this provides clarity for those that wanted to know what we might do.”

No Handbook changes need to be made because of the Board’s decision.

Mortgage Credit Directive

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Implementation

The UK is required to implement the MCD requirements by 21 March 2016. This requires the UK government to make changes to mortgage regulation in order to meet the requirements set out in the MCD.

Under the Financial Services and Markets Act 2000 (FSMA), the Financial Conduct Authority (FCA), the independent regulator, has the authority to put in place, supervise and enforce a range of rules to ensure that firms act responsibly in their mortgage activities.

Amendments to CML Handbook

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Amendments to the CML handbook

As of 1 February 2016, an amendment has been made to clause 10 of the Council of Mortgage Lenders’ (CML) Handbook.

The amendment adds the wording in bold below into clause 10.2:

10.2 We shall treat the submission by you of the certificate of title as confirmation that the borrower has chosen to proceed with our mortgage offer and as a request for us to release the mortgage advance to you. Check part 2 to see if the mortgage advance will be paid electronically or by cheque and the minimum number of days notice we require.

The CML says:

‘The amendment is designed to reflect the introduction of a requirement, as the result of the Mortgage Credit Directive, for mortgage customers to have a ‘reflection period’, of at least seven days before accepting a mortgage offer. Recital 23 and Article 14(6) of the directive set this out. The customer can bring that reflection period to an end earlier, by accepting the mortgage offer.

‘The wording intends to clarify that, in cases where the mortgage lender does not already require a formal acceptance from the borrower, that the current practice of the conduct of borrower in drawing down the loan, acts as acceptance of the mortgage offer, and creates the contract. This in turn, in cases where the draw-down happens before the end of the reflection period, confirms that the customer has brought the reflection period to an end by their conduct, which Recital 23 expressly allows for.

‘Lenders will explain the concept of the reflection period in information provided to prospective borrowers, for example, in the mortgage illustration, mortgage offer and mortgage terms and conditions. Many lenders are either allowing a 10 day reflection period (to account for postage time) or aligning the reflection period with the existing offer expiry date (which can be up to six months).’

ICO and Safe Harbor update and new Privacy Shield

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The European Commission announced the EU-US Privacy Shield. The Shield is intended to replace the Safe Harbor framework, previously recognised as providing adequate protection for personal data transferred from the EU to Safe Harbor member companies in the USA.

It is too early to say whether the new Shield provides adequate protection for personal data passed from the EU to the USA. The Article 29 Working Party will provide an opinion to the European Commission about the Shield, as envisioned under Article 30(1)(b) of the Data Protection Directive. It will also continue its work in assessing whether other transfer tools, such as standard contractual clauses (SCCs) and binding corporate rules (BCRs) can act as effective safeguards for personal data transferred to the USA.

See ICO Blog