A law firm which was duped into paying away the £333,532 proceeds of a property sale after failing to confirm a client’s email changing their bank details – which turned out to be faked – has been rebuked by the Solicitors Regulation Authority (SRA).
Surrey firm Perry Hay & Co was able to recover all but £48,503 of it afterwards, with the balance made up by its professional indemnity insurer.
A regulatory settlement agreement published yesterday by the SRA recorded that the firm acted for a married couple, Mr and Mrs L, on the sale of a property.
Two days before completion, it emailed Mr L, asking him to provide his bank account details, which he did by return.
Later that day, Perry Hay received a further email purportedly from Mr L. This asked the firm to ignore the previous bank details. The following day another email provided new details. The firm replied asking the sender to confirm the name of the bank and the account holder; they replied that the account was in the name of Mr L and was held with Barclays Bank.
The firm transferred the proceeds the following day, having not contacted Mr L by any alternative means of communication to check the instructions.
It emerged soon after that Mr L’s email account had been compromised and the money had been paid into a third party’s bank account.
The firm reported it to the police, the bank and its insurers, but not the SRA, although it recorded the incident in its register of breaches.
Perry Hay was able to recover two tranches of money – £271,201 two weeks after completion, and a further £13,827 two months later. Its insurer replaced the outstanding money nine months after the loss.
As part of the agreement, the firm admitted breaches of the SRA principles and the accounts rules, including the failure to report the matter to the SRA.
In mitigation, Perry Hay said it has since taken steps designed to reduce the risk of repetition. “This included a review of its procedures and the engagement of third parties to provide training to its staff and assess the security of its IT systems.”
The agreement said: “The SRA considers this outcome to be proportionate and in the public interest. The outcome recognises the loss and inconvenience to Mr and Mrs L caused by the conduct of the firm.”
Perry Hay also agreed to pay the SRA costs of £1,350.