Mortgage fraud inquiry delays SRA’s draft conveyancing strategy further
Mortgage fraud: lack of robust risk management systems
The Solicitors Regulation Authority (SRA) is to review efforts to combat mortgage fraud, a move that will push back final approval of its draft conveyancing strategy to 2014 – more than two years later than first planned.
The SRA’s draft supervision and enforcement strategy for conveyancing was published in April 2011 and was scheduled to be published in final form this year, after being put back from late 2011. Yesterday the SRA announced it was “revisiting” the draft strategy, beginning with “a comprehensive review of current practices” – including possibly limiting the role of client account – that will run to the end of 2013.
A spokesman for the authority explained the new delay: “The SRA’s initial draft strategy has evolved considerably since April 2011 and so while it was published at the time, there are still a number of factors – with the mortgage fraud work a prime example – that need to be taken into consideration before the strategy is formally approved.”
He added that although the review would run throughout 2013, “any information deemed useful to the profession will of course be published as and when it becomes available”.
The SRA said the review was deemed necessary because of work carried out in conjunction with the insurance industry into risks arising from “a small number of individuals and firms involved in property-related fraud and money laundering”. Consequently, the SRA has “decided to undertake further work to help firms address any lack of robust risk management systems within firms carrying out conveyancing work”, it announced.
SRA executive director for policy, Richard Collins, said it was necessary to focus resources on conveyancing, to “assist firms in managing their own risks and compliance” as well as “to identify and prevent dishonest behaviour”.
The review would help inform the SRA of the sort of mortgage fraud risks firms faced and how to “guard against risks and reduce the number of firms and clients who fall victim to such scams”, he continued.
An SRA statement said a key element of the review will be examination of whether the conveyancing process could be altered to limit the holding of client money by firms, thus “enhancing the safety of client funds and protecting the profession against criminal elements”.
The question of the holding of client money was originally due to form part of a major thematic review during 2011, as reported by Legal Futures in December 2010.
The 2013 review will involve the SRA partnering with a number of organisations, including the Law Society, the Council of Mortgage Lenders and the Land Registry, as well as an examination of practices overseas. SRA officials have already visited 100 law firms to assess conveyancing risks, feedback from which is being analysed, the statement said.
Tags: conveyancing, mortgage fraud, Solicitors Regulation Authority