Financial Eye attended the conference at the London Headquarters of the Licensed Conveyancers regulator along with a good showing of professionals.
Key areas of discussion were:
- A Review of activities during 2016 and Key focus areas for 2017
- The role of the Regulatory Supervision Manager
- Accounts Code Changes
- Professional Indemnity Insurance
- Changes to CPD
- Price and quality transparency
Review of 2016
- Introduction of the new logo and shield, have you signed up?
- 70 onsite visits, mixture of reasons between monitoring, inspection and enforcement.
- Important to work with supervisors and hit deadlines.
- Annual regulatory return + report and accounts are very important for CLC desk based monitoring.
- Need for early notification of problems.
- Disciplinary findings are now published on website.
- Working with Financial Institutions. Where is the risk and what are the problems and appropriate actions.
- The move to the Participating Insurers Agreement which has largely positive feedback, but there is a desire to attract new entrants to the market.
- Significant reductions in CLC cost base, resulting in 20% reduction in fees which the CLC want to be sustainable.
- CLC outsourced Education to professional 3rd Party providers.
Plans for 2017
- Review of regulatory arrangements (risk-based, proportionate, using intelligence and market insight)
- Focus on the consumer based on Competition & Markets Authority (CMA) report (improve transparency {price, quality of service}, independence
- Improvements to the conveyancing process with the Government and the CA and others in the property sector
- Maintaining regime of 70 monitoring and inspection visits
- Increased Compliance support
- Tackling fraud and CyberCrime
Regulatory Supervision Manager Role
- 240 practices between 2 managers
- Co-operation, co-operation, co-operation
- Interaction either directly or via your risk managers like Financial Eye
Fraud and CyberCrime
213 days is the average length of time for cyber gestation and detection
Basic measures of mitigation and prevention – Take Five https://takefive-stopfraud.org.uk
Support tools such as LawGuard. Financial Eye recommends to all firms that they undertake a Cyber Risk Assessment such as offered by LawGuard as a free online portal http://financialeye.net/our-services/lawguard
Accounts Code Changes
Basic principle of the Code is to keep Client money separate and safe. Objectives of the code are Consumer protection, Flexibility, Clarity and a reduction of the regulatory burden.
Misuse of client money can be mitigated through proper Handling, Recording, Reconciliation, Independent review (the Accountants Report or risk managers such as Financial Eye) and Monitoring by the regulator.
Proposals for key changes to the Accounts Code are in 3 areas:
- Simplify Accounts Code:
- Appoint a Manager responsible for accounting compliance, which would appear to be an extension to the role of the HOFA
- Remove duplication
- Remove prescriptive requirements
- Too specific towards conveyancing (not probate)
- Accountants Report
- Reduce prescriptive requirements
- Increase reliance on judgement of accountants
- Is it appropriately focussed
- Assessment of business viability?
- Aged balances
- Practices to self-certify balances up to £50 before write-off
- Over £50 to be paid to CLC
Consultation on proposed changes will be opening in January 2017 and will run to April 2017. The CLC would like to have this in force in January 2018.
Professional Indemnity Insurance
The CLC has been working with both Howdens and Willis to give feedback on the new arrangements for PII which came into effect from 1st July 2016, the annual PII renewal date for CLC regulated firms. Key feedback is:
- Firms need to fill out the Proposal form properly and completely otherwise insurers will not quote
- Firms should enter the process early to give them a chance to test the market fully
- Firms should look beyond just price. You should be looking for good support for claims and for brokers who offer proper Risk Management support and guidance
At Financial Eye, we are the Risk Management partner for Hera Indemnity, the specialist broker for law firms http://www.heraindemnity.co.uk/professional_indemnity.php
Changes to CPD
Key problem currently is that it is a tick-box exercise and not geared to individual needs. It is therefore proposed that the regime is revised as follows:
- No fixed hours requirement
- Identify own needs, but CLC will guide on certain topics which will be compulsory (AML, cyber)
- Evaluate your own CPD program
- CLC to monitor and sample CPD records
Consultation began in December 2016, closes March 2017 with a go-live at June 2018.
Price and quality transparency
The CLC are investigating the views of its membership on transparency. Focus in this area has been driven by consumer expectation, by the Legal Services Consumer Panel (part of LSB) and by the CMA.
The CLC is looking at ways to improve price transparency, which could include:
- Mandating firms for to publish price information (the SRA are already moving with a similar proposal)
- Require firms to use an accredited quote generator
- CLC providing a quote generator
- Accredited comparison website
- CLC providing a comparison website
There was an open debate and a genuine concern from the room that price comparison will just drive down market price and is not the right way of choosing a service rather than a product.
A point was also raised about Panel Managers who charge fees in the middle, how does this sit with Price Transparency.
A further question was raised as to how would comparison sites work with CLC vs SRA firms.
Price transparency is not enough for consumers to make an informed choice. Should firms make public information on quality such as:
- complaints data (only 38 in last 12 months)
- publish first tier complaints data
- Legal Ombudsman
- disciplinary information on the “find a solicitor” page
- Consumer feedback (only 2/3 of firms run client satisfaction surveys)
If you have any questions on any of the subjects above please get in touch with the experts