Kumar: Assisted compliance
The Council for Licensed Conveyancers (CLC) has received “too many complaints” about some of the practices it regulates breaching undertakings.
The issue has been added to its annual risk agenda, noting that “the property transfer system will break if conveyancers do not adhere to undertakings”.
While neither the CLC nor its disciplinary committees have power to direct the specific performance of an undertaking or the payment of compensation to a third party, the regulator said the breach of an undertaking may lead to disciplinary proceedings.
The risk agenda warned: “The CLC is escalating its activity on this issue and tracking practices where we are seeing repeated or systemic breaches.”
Conflicts of interest were another issue. CLC-regulated practices are allowed to act for more than one party to a transaction with informed written consent, although each party must be represented by different fee-earners operating as though they were members of different entities.
The fee-earner does not need to be a licensed conveyancer or other authorised person, but their direct supervisor does.
The risk agenda said: “There is obviously a heightened risk of conflict of interest in such situations and the CLC requires that people of an appropriate level of seniority handle the matters to ensure they recognise any conflict that may arise.
“However, we have seen examples of unauthorised individuals with inadequate supervision handling such transactions. This is not acceptable.
“If the nature of a practice’s structure means it cannot meet the requirements for acting for both sides in a transaction, then they must not take on the second client.”
It recorded that a CLC adjudication panel last year reprimanded and fined a licensed conveyancer who failed to inform clients in three matters that she had been asked to act for another party in the transaction – and she was the sole conveyancer in the practice, meaning she would personally be undertaking the work.
She believed she was acting in both clients’ interests by doing so as the transactions would proceed more quickly. The panel found there was “no way” in which the potential conflict could be surmounted in such a situation.
On anti-money laundering, and particularly checking the source of a client’s funds, the CLC said that, while some other regulators advised a risk-based approach, the higher risk associated with conveyancing meant practices must undertake source of funds checks on every transaction.
The risk agenda also outlined concerns that conveyancers were often not undertaking matter-based risk assessments because they did not perceive a transaction to be risky.
“In the conveyancing sector, which has been assessed as high risk in the National Risk Assessment of 2020, this is not good enough – you have to show you have considered the risk and then used that assessment to decide what level of client due diligence you will undertake.”
It added: “The CLC is concerned that matter-based risk assessments are too often not being done or not comprehensive enough. We are now looking to move to disciplinary action for practices where we have identified a pattern of failure.”
CLC chief executive Sheila Kumar said the risk agenda exemplified its approach of ‘assisted compliance’, “working with practices to identify and address risks before they crystallise as harms”.
Meanwhile, the CLC has joined the other main legal regulators and representative bodies on a new digital property market steering group that aims to accelerate the development of e-conveyancing.
HM Land Registry said the job of modernising the process has proved “more challenging than envisaged” when the enabling legislation, the Land Registration Act 2002, was introduced and it was one that “no single institution can achieve on its own”.
The founding legal members are the Law Society, Solicitors Regulation Authority, Society of Licensed Conveyancers, CLC, Chartered Institute of Legal Executives, CILEx Regulation, and the Conveyancing Association.
The non-legal members are the Royal Institution of Chartered Surveyors, Council of Property Search Organisations, estate agency body Propertymark, Building Societies Association and UK Finance, in addition to HMLR.
The group’s stated vision is to ensure that “everyone involved in buying, leasing and selling land and property to experience a secure and modern market that is transparent, customer-friendly and business-friendly at all stages”.
It goes on: “Through collaboration, innovation and a focus on emerging digital technologies we will build on existing progress across the home buying and selling system to get a better result for the customer: simpler, faster, more certain and less stressful.”
There are four working groups focusing on upfront information, a digital identity scheme, data initiatives, and a joint conference on the digital property market next month.
Leave a Comment