Compliance is a significant and continually evolving challenge faced by legal professionals. The Law Society’s Conveyancing Quality Scheme (CQS) aims to minimise a firm’s risk of claims by putting compliance at the forefront and helping them to protect their reputation. In February this year, The Law Society released an update to the CQS Core Practice Management Standards (CPMS) which accredited firms must be able to meet from 1st May 2022.
In the update, there is now a requirement to check compliance with mortgage lenders’ Part 2 instructions. It states:
6.4 Practices must have a policy for dealing with lenders which must: contain a procedure to ensure that Part 2 of the UK Finance Handbook is checked by a fee earner to ascertain the lender’s standard requirements, as well as those specific to a transaction, and for verifying that all of those requirements have been satisfied, prior to exchange and recording on the file that the check has been carried out.
Quite rightly, this is to ensure no changes have occurred during the conveyance that could delay the submission of the Certificate of Title. However, it is an example of additional due diligence required to protect clients and satisfy regulators.
The good news is that technology can help legal firms adhere to the growing number of compliance requirements. At Dye & Durham, we have various solutions to ease the burden of compliance and help legal professionals manage their vast workloads more easily, ensuring compliance, demonstrating due diligence and protecting PI insurance against claims at the same time.
One simple example is our cost-effective Lender Handbook Tracker, which is supplied by Navro. The product produces a PDF report which can be updated up to five times, enabling legal teams to see any changes that may affect the transaction clearly and concisely. The report can be run against any lender listed by UK Finance, with the database refreshing four times a day.
Crucially, the UK Finance Mortgage Lenders Handbook does not keep records or databases of when the Part 2 changes are made. Therefore, the Lender Handbook Tracker solution now offers a convenient, concise summary and audit trail of any Part 2 changes that have occurred since instruction.
AML, digital ID and source of funds
Conveyancers are a prime target for cybercriminals as they regularly deal with significant sums of money relating to property transactions. Therefore, this is a particular area where conveyancing firms must comply with regulations and demonstrate due diligence. For example, On 10th January 2020, changes to the Government’s Money Laundering Regulations came into force, updating the UK’s AML regime to incorporate international standards set by the Financial Action Task Force (FATF) and to transpose the EU’s 5th Money Laundering Directive.
These rules are of particular relevance to identity verification during the onboarding process, which has been made even more challenging in recent times due to hybrid or remote working.
To assist firms, we have recently enhanced our poweredbypie/PSG ordering platform to offer Know Your Client (KYC), Anti Money Laundering (AML), Source-of-Funds (SoF) and ID Checks through a new integration with Thirdfort, smoothing the process for conveyancers to onboard new clients and helping to prevent fraud.
The seamless integration will enable clients to conduct KYC, AML and SoF checks within one platform alongside their search orders, removing the need to download or integrate any additional software and ensuring legal clients can meet their fraud and money laundering regulations.
Thirdfort’s proprietary risk engine identifies fraud and money laundering risks faster, smoother, and more accurately than manual verification. It is powered by best-in-class KYC and AML services alongside Open Banking and transaction-specific data. In March, Thirdfort also became an affiliate partner of the Law Society to help its 150,000+ members tackle surging fraud and money laundering risks.
Cyber fraud
Legal teams are also under an obligation to adhere to the SRA Code of Conduct for Solicitors (SCCS) 4.2 – safeguard client money and assets.
One of the main risks of identity fraud in relation to safeguarding client money and assets is where criminals impersonate other law firms to receive the funds transacted on a property. A recent case reported by the Law Society Gazette in October 2021 details how £640K was handed over to criminals when emails between the buyer and the buyer’s solicitor were intercepted. “They created an email account made to look like that of the solicitor to request payment. Payment details were provided on headed paper via the spoofed email, and the amount requested was exactly what the buyer had expected to pay. Most of the money was never recovered.”
For law firms, the repercussions of cyber fraud can be devastating for both client and the business, so we also aim to help legal professionals embed a risk and compliance culture within their practices. Although nothing is 100% guaranteed, defence strategies can be implemented to safeguard every transaction. Lawyer Checker is a good example of a solution which helps mitigate risk.
Lawyer Checker checks the law firm’s account details against our unique database to determine whether those details have a track record of successful usage within conveyancing. Lawyer Checker is a web-based solution and can be accessed securely from any location 24/7 at the click of a mouse, supplying an audit trail for law firms as well as ensuring due diligence in relation to the SCCS.
Lawyer Checker’s unique algorithm checks details against ten different databases in real-time. It checks SRA scam alerts and safeguards transactions against human error and typos while also providing the most up to date information. All frequent and infrequent AES results are processed through the latest NatWest tracker to check bank account details. We have verified over 4000 accounts and reported back on incorrect details. We also have a dedicated research team who are highly skilled in providing enhanced further investigation when necessary.
Lawyer Checker’s reports are low cost and can be attributed as a disbursement and include two searches – one completed at the start of the conveyancing process, plus a further check just before the funds are transferred. Lawyer Checker’s unique algorithm ensures there have been no new alerts in the interim. This is key with protracted transaction times to ensure the search is fully updated, making it easy and cost-effective to mitigate the risk of fraud during the conveyance.
Both poweredbypie and, more widely, all of Dye & Durham’s UK solutions, are dedicated to supporting conveyancing teams’ compliance obligations through a range of products and services. We understand the continued and ever-evolving burden of compliance and have harnessed technology to help automate processes and mitigate risk.
poweredbypie, a Dye & Durham company has put together an on-demand training course which is now free to view here. The course, delivered by Ian Quayle, CEO, IQ Legal Training, in association with Navro, is designed to help legal professionals navigate the recent changes to the Conveyancing Quality Scheme (CQS).
For further information, or to find out more about our full range of solutions designed to help legal firms improve their processes and achieve greater efficiencies please see: https://dyedurhamuk.com/about-us
By Jeremy Dorkins, UK Director of Customer Success at poweredbypie, a Dye & Durham Company
This article was submitted to be published by poweredbypie as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.
