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The Council for Licensed Conveyancers (CLC) has issued its first approval for a law firm to use a third-party managed account (TPMA) for its client funds.
Digital property exchange PEXA, which owns Bolton-based Amity Law and will be its TPMA provider, told Legal Futures that it also plans to provide a TPMA for Optima Legal, regulated by the Solicitors Regulation Authority.
The move follows approval by the Financial Conduct Authority of PEXA’s application to become an authorised payment institution.
“It means that PEXA can handle client funds on behalf of Amity, enabling it to automate the settlement of funds and lodgement of title almost instantly for any transactions that use Amity as the conveyancer,” a PEXA spokeswoman said said.
“This is a process which PEXA has already proven is possible following the completion of the first-ever fully digital purchase transaction in June, paving the way for the industry to establish greater security and certainty for all.”
PEXA processes around 90% of conveyancing completions in Australia. It launched in the UK [1] in early 2022, buying Optima Legal [2] in September that year.
It acquired Amity Law as part of its £31m purchase [3] of property company Smoove in October 2023.
Sarah Ryan, head of legal practice and finance and administration at Amity, said: “Having PEXA on board as a TPMA is a game changer. It reduces the risk of fraud for us and creates a safer, more transparent and more certain completion process to remove some of the angst borrowers currently feel.”
Jason Hinrichsen, director of finance and operations at the CLC, added: “The CLC is committed to fostering a regulatory environment that encourages innovation, delivers quality outcomes, and safeguards consumers from harm.
“TPMAs can deliver added security, transparency and efficiency to the home buying and selling process and we hope to see more practices adopt them.”
Optima Legal, an alternative business structure and remortgage specialist owned by PEXA, acts in around a fifth of UK remortages.
The spokeswoman said: “We have already integrated the PEXA technology into Optima and this is the logical next step, to deliver PEXA-enabled remortgage transactions through Optima Legal.”
Law firms regulated by the SRA do not need the regulator’s approval to use a TPMA, but they are required to inform it that they are using one – the SRA is eyeing TPMAs as an eventual replacement for client accounts, while last month the government said they could in time reduce the risk of law firms’ client accounts being used by criminals [4] for money laundering.
PEXA also has PEXA Pay, the seventh net settlement payment scheme to clear through the Bank of England – this enables the settlement of funds to happen almost simultaneously with the lodgement of title with HM Land Registry when certain conditions are met.
It currently operates for remortgages but will soon be extended to cover sale and purchase transactions.
Joe Pepper, UK CEO of PEXA, described the TPMA move as “a hugely significant step” towards this. “It sets the precedent for the rest of the market to follow, showing the robustness of our systems and controls and giving firms further confidence we operate with the highest standards of security and compliance.”