A law firm which failed to follow its internal processes and transferred the proceeds of a property sale to a third party has been fined for misconduct.
The Solicitors Regulation Authority (SRA) said Morgan Wiseman in Luton also failed to question why the money was not going to the client.
According to a regulatory settlement agreement published yesterday, the firm was instructed in August 2020 to act on behalf of a company by one of its shareholders over the sale at auction of a property.
The shareholder gave the firm express authority to transfer the net proceeds to ‘Mr S’, whose bank was in the United Arab Emirates. The file did not show that the fee-earner sought to understand the reason for this.
The following month, the firm transferred £102,605 to Mr S, even though “there was no proper reason connected with the underlying legal transaction for the transfer”, the SRA said.
The fee-earner had instructed the firm’s accounts department to make the transfer with a note saying that the funds were “to go out to client in acc details I’ve sent you” – even though he knew the funds were not going to the client.
Morgan Wiseman’s procedures did not permit proceeds of sale to be paid to a person other than the client.
The accounts department failed to pick up on the difference between the name of the client and Mr S, while the director authorising the transfer was unaware of it.
The firm admitted failing to verify that there was a proper reason for the transfer of the funds and that, as a result, it provided a banking facility.
The SRA said Morgan Wiseman has amended its client payment processes in response “and the risk of repetition is low”.
In deciding that a fine was the appropriate sanction, the SRA said the conduct was “not intentional and happened because of an oversight by the firm’s accounts team. Once discovered, the firm took steps to mitigate the oversight”.
Though there was potential for the client to suffer “moderate loss”, no actual loss or harm was caused. The SRA said: “The approach taken to the regulations was concerning and a deterrent is needed.”
It set the fine at £2,500 and ordered Morgan Wiseman to pay costs of £1,350 as well.