The Messenger June 2016

Regulatory Affairs Committee Update
At the start of this month’s
update, you may be interested
to know that we
have two new readers –
my mum and sister - who
were shown last month’s
edition by an avid reader
of the column (you know
who you are)! They had no
idea what I was going on
about but in true supportive
family style, they said
they thought it was interesting.
I can’t guarantee
“interesting” but at least I
hope that it makes a bit
more sense to you!
So, what has been going on
in the past month?
The Regulators
The Legal Services Board
(LSB) has issued its overview
report on regulatory standards
and performance reviews
of the eight legal
regulators and has strongly
criticised the Solicitors Regulation
Authority (SRA) over
failures in its enforcement
work. Being a Libran and
therefore well balanced (my
mum and sister and others
who know me may beg to
differ!), I will add that the
LSB also welcomed the
“substantial progress” they
had made since the first set
of reports in 2012.
In relation to enforcement
work, the LSB commented
that it “generated a significant
amount of public interest
and media attention”
and referred to the public
criticism the SRA has received
recently from the
SDT in relation to its case
preparation, the drafting of
its allegations and the quality
of the evidence presented
(if you want to see
one of the latest where the
SDT said it was “appalled
and dismayed” at the approach
adopted by the SRA,
have a look at the case of
McDonald). My Compli
team are regularly coming
across cases of poor case
preparation, drafting and illthought
out allegations
when we act for firms/individuals
being disciplined
and it is hoped that now
that the LSB has raised this,
it will be looked at internally
by the SRA and improvements
made. Again, doing
my Libran balancing act,
when I mentioned the SDT
criticism of the SRA to Paul
Philip at a recent MLS Council
meeting, he was not so
complimentary of the SDT
either!
You might also be interested
to hear that the LSB in
its report has also called for
the civil standard of proof to
be used in the SDT. That to
me would be dangerous
and I hope the SDT continues
to fight hard against
this.
The LSB has also warned
about the risk that the overhaul
of the Handbook “may
be too much” for firms and
the regulator to cope with.
As I have mentioned in previous
updates, the SRA will
be issuing a consultation
later this year on reducing
the size of the Handbook
significantly. I know that
many of you feel that there
was a certain comfort with
the prescriptive rule book
but those days have of
course now gone. However,
as my colleague Martina
said to me recently “Whilst
over the years I have heard
many solicitors complain
about the regulator I have
not heard them actually say
that the Code of Conduct
took up too much space on
the bookshelf. The assumption
lawyers want less rules
is a little perverse. They are
lawyers after all!” My fear is
that the focus on Principles
with little else will mean
that what firms/individuals
can/cannot do will be even
more vague and create
more uncertainty. The consultation
will soon be upon
us so you need to start
thinking about this now and
how it might impact on you.
Your views are really important
so do please email me
or Fran with any views.
For those who are thinking
they’ve had enough, “regulator
shopping” might have
just been made that bit easier
with the Council for Licensed
Conveyancers
announcing its plans to
move its PII requirements
entirely to the open market
(In case you’re interested
the CLC received a “satisfactory”
grade in all areas from
the LSB and was praised for
its “good corporate governance
processes”). It is proposed
that run-off cover
would be included in the
minimum terms and conditions
with insurers being
obliged to provide six years
of run-off cover for a firm
which closes at no additional
cost at the time of closure.
Coupled with an
announcement by the SRA
that it is consulting on a
change to its rules which
would remove the run-off
requirement where a firm
switches to another approved
regulator, this could
make moving much easier
for certain firms.
Recent caselaw for conveyancers/AML
warning
Anyone involved in conveyancing
or responsible for
managing Anti-Money
Laundering risks should
take heed of the recent findings
of the High Court in the
case of Purrunsing v A'Court
& Co (a firm) & Anor [2016]
EWHC 789 (Ch) (14 April
2016) which held the conveyancers
on both sides of a
fraudulent property transaction
liable for loss suffered
by the buyer.
The court found that the
seller’s solicitor had failed to
The deadline for the July
edition of the Messenger
is 9th June 2016
perform its anti-money
laundering obligations in
accordance with reasonable
practice in the circumstances
and that failure had
increased the loss by fraud.
There are a number of lessons
for all conveyancers to
learn from this so if you are
unsure whether your client
take-on procedures are robust
and effective enough
or your teams need proper
training to recognise red
flags, my Compli team can
carry out a review for you or
help with training so do get
in touch.
And whilst on fraud, a recent
Law Society report reveals
that more than one in
five law firms have been targeted
by scammers in past
year with money being successfully
stolen from client
account in 8% of such cases.
Again, make sure your staff
receive training on this to
avoid being the victim of
such scams.
Summer Parties
What’s this got to do with
regulation I hear you ask?
Well, lets go back to the regulator
disciplinary theme
(the Bar this time), where its
Tribunal fined a barrister
£1800 recently for pestering
3 women at a chambers
summer party finding that
he failed to act with integrity
and behaved in a
way likely to diminish the
trust and confidence the
public places in a barrister
or in the profession. So I will
end on this note of caution -
As summer party season approaches,
be careful that
that magic drink doesn’t get
you a regulatory sanction!
Michelle Garlick
Chair
Manchester Law Society
Regulatory Affairs
Committee
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