Claims against solicitors over mortgage fraud shoot up to £173m

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By Legal Futures

17 November 2011


Mortgage fraud: number of claims more than doubles in a year

New figures from the Solicitors Regulation Authority (SRA) indicate that the long-predicted wave of claims against solicitors over mortgage fraud is fast becoming a reality.

There are now 770 open claims against the Solicitors Compensation Fund relating to mortgage fraud, worth a massive £173m, compared to 323 a year ago, when they were worth £103m.

However, 280 of the mortgage claims are currently held in abeyance pending potential insurance settlements, while the SRA has previously said it is trying to establish how many claims are from lenders just trying to preserve their position at this stage.

The overall value of claims against the fund continues to rise – it is now £214m, 27% higher than 12 months earlier – even though the actual number of claims (1,732) has fallen.

The other main types of claims include general client money (461 claims worth £17m), unredeemed mortgages (42 claims worth £11m) and probate – specifically balances due to estates (102 claims worth £4.2m).

Generally, however, the SRA pays out far less than the value of claims submitted across the piece – over the past year it has closd claims totalling £87m but only paid out £22m – a 26% payout rate.

Meanwhile, separate figures from the Law Society show that as of 2 November, it had received 1,443 applications from firms to join the Conveyancing Quality Scheme (CQS). So far 768 have been accredited and 21 rejected.

CQS is being promoted as part of a wider online campaign to highlight the society’s various accreditation schemes. The figures show that since September, adverts have been displayed to over 15 million people searching for assorted legal services, with nearly 30,000 users clicking through to look for local accredited solicitors via the www.lawsocietyapproved.com website. Once on the site, one in two request the contact details for a qualified specialist.

Conveyancing adverts have also been placed within the Google content network, so they are displayed with relevant online articles on sites including the Daily Telegraph, This is Money and Zoopla.

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Independent regulation gives confidence to consumers, providers, investors and society as a whole that legal services work in the public interest and support the rule of law. The Legal Services Act 2007 does not require all approved regulators to be structurally separate from representative bodies. Instead, the Legal Services Board is required by the Act to produce internal governance rules (IGR) which apply the principle of regulatory independence in legal service regulation. We are currently running a consultation on the IGR which continues until 9 February.

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