The Solicitors Regulation Authority is conducting a review of the current practices of conveyancing firms to reduce the risk of mortgage fraud.
Following the review, which is due to run until the end of 2013, the regulator will update its draft supervision and enforcement strategy for conveyancing, a first draft of which was originally published in April 2011.
The SRA’s main focus will be on areas which can lead to financial loss, such as the holding of client money and the use of undertakings. One area under consideration is whether it would be possible to amend elements of the underlying conveyancing process in order to reduce the extent to which firms need to hold client money and to enhance the safety of client funds.
Visits to 100 firms to look at the risks they face during conveyancing work have been completed by the SRA. It will work with the Law Society, the Council of Mortgage Lenders and the Land Registry during the review period.
SRA executive director for policy Richard Collins says: “It is clear that we need to continue to target resources on conveyancing – both to assist firms in managing their own risks and compliance and to identify and prevent dishonest behaviour either by third parties seeking to use solicitors’ firms for fraudulent transactions or by a small proportion of firms themselves.
“As a public interest regulator, we need to ensure firms take seriously the risks in this area and establish good compliance and risk management systems so as to demonstrate an effective degree of internal control. In order to help firms do this, we are undertaking a review that will give us a better information on the risks they face when conducting conveyancing work to ensure that the transaction they are dealing with is genuine and above board. We will aim to identify best practice to guard against risks and reduce the number of firms and clients who fall victim to such scams.”