A law firm which specialises in the recovery of unpaid parking fines has itself been fined £15,000 for delays in investigating unallocated payments totalling nearly £130,000 at one point.
John Davies, principal of Warrington-based Gladstones Solicitors, said the firm received payments from motorists of £600,000 per month on average and had donated £35,600 in unallocated payments which could not be traced to the Royal National Institute of Blind People this time last year.
In an agreed outcome approved by the Solicitors Disciplinary Tribunal, the Solicitors Regulation Authority (SRA) said the solicitor became sole director of Gladstones in May 2017 and is sole shareholder in the firm, which has 40 staff.
It handles bulk debt recovery work on behalf of parking operators from unpaid tickets: between 1 March 2017 and 30 June 2020, Gladstones received nearly 330,000 referrals of debt from 64 operators.
The SRA launched an investigation in July 2020, following complaints from third-party debtors as well as qualified accountants’ reports.
From February 2017, unallocated payments from debtors were recorded on a suspense ledger. By the end of June 2020, the firm held over £128,600 in respect of 1,242 unallocated payments.
Most of them were made using the firm’s automated payments telephone line.
“The firm did investigate each and every payment when they were received in order to allocate them to the correct file,” the SRA explained.
“However, in cases where the incorrect reference number had been provided by the debtor, because of staffing problems at the firm, the entry was left on the suspense ledger instead of returning the payment to the debtor and, in some instances, for a lengthy period.”
The delay in dealing with unallocated payments led to a risk of the firm issuing county court judgments on behalf of its clients against debtors who had settled their debts.
The average unpaid parking charge notice was for £160. Having received debt referrals from its clients, Gladstones would send letters before claim to debtors, warning them that if the claim was not paid within 30 days, they would commence proceedings.
Payments were made by bank transfer or by telephone using the automated payment line. Debtors had to key in a 10-digit reference number, but the automated system “did not have the functionality” to validate reference numbers, so payments could be accepted with incorrect reference numbers.
Galdstones told the SRA in September 2020 that it had been working to clear the suspense ledger: money was refunded directly to debtors’ payment cards and the balance reduced to £63,100 by the end of that year.
The £35,600 paid to charity came from cards that had expired. Mr Davies said he would reimburse any payer who subsequently came forward.
Mr Davies accepted that there was “going to be a fair number of people” who potentially had county court judgments they knew nothing about, which might only be revealed during credit checks.
However, the solicitor said the firm would take “remedial action”, and has been setting aside CCJs at its own expense.
In mitigation, he said the firm had implemented new systems and now processed unallocated payments within three weeks. Its most recent accountant’s report was unqualified.
Gladstones was fined £15,000 and ordered to pay £15,000 in costs.