Replacing stolen funds intended for housing deposits was one of the top reasons the Solicitors Regulation Authority had to make grants from the Compensation Fund to pay consumers last year.
Published today by the SRA, financial statements from the year ending October 2016 indicate that it granted around £10.3 million from the Fund, a fall from the previous year where £17.9 million was paid out.
Administered by the SRA, the fund is discretionary, and compensates charities, small businesses and members of the public should they suffer financial difficulties when their money has been misappropriated or stolen due to a legal issue.
Most of the payments made last year relate to interventions – this is where, to protect clients’ interests, the SRA will take possession of a firm’s files and any client monies.
Fraud within the conveyancing sector has become more prominent during the past year, with numerous cases being highlighted in mainstream media. Although these instances draw consumer attention to the risks of email interception and identity theft, the amount granted to replace stolen housing deposits (£1 million) suggests that more needs to be done to protect consumers.
Whilst replacing stolen deposits was one of the main reasons for compensating consumers, misappropriated inheritances came top, with £4 million being paid out.
Collected annually is a levy for the fund, paid by the profession and law firms as part of the yearly practising fee collection. This amount can differ year by year, indicating the changing risks within legal services and how this impacts the predicted amount and scale of claims.
Commenting on the importance of the Compensation Fund was Paul Philip. The Chief Executive of the SRA stated:
“The Compensation Fund is there to meet real hardship, providing valuable protection for the public when a solicitor is dishonest or does not properly account for clients’ money and there is no other means of redress. We monitor the market closely so that we can be confident that the fund can meet the demands made upon it.”
More information on the Compensation Fund can be accessed here: www.sra.org.uk/consumers/problems/solicitor-owes-money.page
