In the light of the growing risk posed to property by flooding, the Law Society has issued new guidance to all of those involved in transactions where property likely to be affected by flooding is involved.

Although the note begins with the caveat that “Solicitors are not qualified to give advice on flood risk or interpret technical flood reports”, nevertheless the general tenor of the note is such that it is clear that property solicitors who do not raise flooding issues with clients, and who do not help their clients to investigate issues relating to flooding, may be negligent in not having done so.

The note states that firms should encourage clients, “prior to their entering into a contract, to make sure that insurance can be obtained for the property on acceptable terms” and that they should liaise with clients in relation to which, if any, flood searches or other investigations, may be appropriate.

In the light of this, all firms are advised to make themselves aware of the contents of this note and to consider what procedures, if any, they are to adopt within the firm to ensure that issues of this sort are considered.

For more information go to the Flood Risk Practice Note on the Law Society web site.

The Solicitors Regulation Authority (SRA) has issued a statement hoping to clarify it stance on the referral fee ban affecting firms carrying out personal injury work.

The ban, which came into force on 1 April as part of the Legal Aid Sentencing and Punishment of Offenders Act 2012, prohibits the payment of referrals in personal injury cases and was introduced amid concerns as to the high cost of civil litigation, rising insurance premiums, increasing numbers of claims and the perception of a “compensation culture”, where people are encouraged to claim for minor or even fictitious injuries.

Speaking at the Manchester Law Society Personal Injury Conference on Tuesday 21 May, Agnieszka Scott, SRA Director of Policy, reiterated the enforcement stance the Authority has taken.

She said that the SRA is:

“… actively engaging with all firms that want to remain compliant and we’d urge anyone with queries to get in touch to discuss their concerns. As we laid out in our enforcement strategy, while there’s no transitional period for the ban, we were never going to take a heavy-handed approach.

“We said we would show understanding to those firms that wanted to comply, and that’s the approach we are taking. We will be having less understanding conversations with those firms that show no willingness to comply.

“There is also a need for understanding our position too. We are fully committed to helping firms remain compliant and therefore engaging with them on adjustments to their business model.

“But by the same score, the Outcomes dealing with the referral fee ban carry no more or less weight than any other Outcomes in the Code of Conduct. Our approach to enforcement and compliance, including any sanctions in the light of proven wrong-doing, remain the same.”

Firms who want further information should go to the referral fee guidance on the SRA web site.

Justice secretary Chris Grayling’s decision not to make will writing a reserved activity has been met with disappointment from many parts of the legal and consumer sectors.

In a statement issued by the Ministry of Justice statement, Mr Grayling rejected the LSB’s claim that consumers are being harmed by the lack of “reserved legal activity” status and that further efforts should be made to see if alternative measures can be made more effective before resorting to reservation.

Among the suggestions put forward were more targeted guidance for the legal profession and the strengthening of existing regulation of authorised persons. This, combined with voluntary regulation schemes and codes of practice for non-authorised providers would be a better solution.

Amongst those expressing regret at the decision were the Council of Licensed Conveyancers.

Chair of the Council for Licensed Conveyancers, Anna Bradley said:

“Consumers expect very high standards of protection when it comes to will writing services. Anyone writing a will wants the peace of mind that comes from knowing their wishes will be carried out faithfully and that requires a well written will. We will seek to work with will writers to provide those standards of consumer protection through voluntary but rigorous arrangements. We believe this is in line with our responsibilities under the Legal Services Act.”

Solicitors who do not hold a practising certificate but who wish to remain on the roll are being reminded that the deadline for applications is Tuesday 18 June 2013.

The Solicitors Regulation Authority (SRA) have revealed that so far 26% of the estimated total of over 38,000 eligible individuals have either begun, or completed, the online process, but that time is running out for those who have not.

The fee for 2013 will be £20 and payment will be taken by credit/debit card as part of the application process. Solicitors whose names have been on the roll for 50 years or more do not have to pay a fee under regulation 6 of the Keeping of the Roll Regulations (2011).

The SRA contacted those solicitors without a practising certificate who had not yet activated their mySRA account in March and were asked to so as a matter of urgency so that the SRA’s contact details for them could be updated. However the exercise revealed that some solicitors had not updated their contact details resulting in returned post and bounced emails. A list of those who could not be contacted can be found on the SRA’s website at www.sra.org.uk/kr.

Completed applications and payment have to be made by the notified deadline, otherwise individuals’ names may be removed from the roll of solicitors.

Anyone wishing to request restoration to the roll of solicitors, will also need to do this via mySRA. User guides and a series of frequently asked questions are available on the website for assistance in making an application.

The Solicitors Regulation Authority (SRA) has indicated that it will take tough action against failing firms that do not take steps to wind down efficiently. Sanctions could include putting conditions on the practising certificates of those responsible.

The message came at a conference on compliance where SRA director Samantha Barass stated that an increasing numbers of firms are at risk of collapsing due to financial instability with about 150 currently experiencing ‘very significant financial difficulty’. She pledged to take a ‘hard line’ on compliance officers and other senior individuals responsible who fail to try to combat these risks.

It is vital that firms take practice closure seriously. Steps need to be taken to ensure that financial risk is managed, clients are protected and the reputation of the profession is not damaged. This includes ensuring that client funds are kept safe, making arrangements for active matters to be transferred and ensuring that professional indemnity runoff cover is put in place.

It is vital that firms recognise the importance of early engagement and full co-operation with the SRA and to act quickly, removing or suspending individuals who have failed to act with integrity. Firms in insolvency must wind down ‘responsibly’, taking proactive steps to deal appropriately with archived files and seek arrangements for the transfer of live files to other firms.

The Lawyers Defence Group has an expertise in assisting firms with the issues surrounding closure and can help them to ensure that they deal with all aspects in an orderly manner. We can advise on the actual steps to be taken, provide practical assistance during the closure process, liaise with the SRA to prevent their active involvement – or worse still an intervention – and help to ensure that at the end of the day those involved are in the best position that it is possible to be.

For more information either email help [Email address: help #AT# lawyersdefencegroup.org.uk - replace #AT# with @ ] or phone us 0333 888 4070.

It has been announced by the SRA that its Chief Executive, Antony Townsend, will be stepping down later in the year.

Townsend, who joined the SRA in 2006, was formerly Chief Executive at the General Dental Council. He saw the SRA through the “separation” of regulatory powers from the Law Society and was instrumental in pushing forward the concept of outcomes focused regulation.

Antony said:

“I have headed up the SRA from its inception. The pace of change has been relentless; the challenges have been formidable.

“The SRA now has a firm basis upon which to develop and mature its new approach to regulation. I have concluded that after seven years it is a good time for me to move on, so I will leave once my successor has been appointed.

“I want to pay particular thanks to my exceptional colleagues, who have worked tirelessly in often difficult circumstances, and to the present and past Board members who have been an invaluable source of support.”

The 1st of April saw the launch of the seventh version of the SRA Handbook. The new version contains a number of important changes, not least in relation to referral fees.

Full details of the changes can be found on the SRA web site, and in particular in the handbook itself. However, in brief they include:

• Amendemts to the SRA Code of Conduct and Glossary to take account of the ban on referral fees in personal injury cases;
• The removal of some unnecessary regulations and the simplification of some processes as part of the SRA’s “Red Tape Initiative”. These mainly involve changes to SRA Authorisation Rules, SRA Practice Framework Rules, SRA Practising Regulations, SRA Training Regulations and the SRA Glossary;
• Changes to take account of the fact that the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have now became the statutory regulators of financial services business in place of the Financial Services Authority (FSA);

Further details of the changes can be found on the SRA web site at www.sra.org.uk/solicitors/handbook/release-notes/release-notes-v7.page

Tough new Conduct Rules for claims management companies (CMCs) have been announced.

Responding to concerns from consumer that bad practice by some CMCs continues to plague the industry, the Regulator is set to introduce a number of changes. This will includes an end to verbal contracts between consumers and CMCs and a requirement that a written contract must be entered into before a fee can be taken.

The new rules, which come into force in summer mean that:

• CMCs must agree contracts in writing with their clients, before any fees can be taken;
• CMCs must refer to their regulatory status as being regulated by the claims management regulator – rather than the MoJ which till now could be misconstrued as MoJ and government endorsement; and
• CMCs must inform clients if they are suspended or restrictions imposed on their business within 14 days of the enforcement action being taken.

As part of the industry wide crackdown, the Regulator has – from April 1 – also banned inducement advertising by CMCs. No longer will companies be able to target consumers through advertisements which offer vulnerable individuals a cash incentive for signing up to use their services.

Head of Claims Management Regulation, Kevin Rousell said:

‘Time and time again we see examples of consumers who have inadvertently agreed to a contract with a CMC without a written contract in place.

‘I want people to have time to think through their arrangement and be happy and clear about exactly what the deal is before they part with any money.

‘These new rules will root out poor practice and ensure consumers are better protected by making contract terms much clearer.

‘Enforcing new rules will help to drive malpractice out of the industry and improve the reputation for the vast majority of CMCs that do follow the rules.’

The Regulator is focused on improving consumer protection and ensuring all CMCs are complying with the rules. The CMR industry is continuously evolving and the rules must be constantly monitored.

The Legal Services Board has published its first assessments of the performance of regulators in the legal services sector emphasising the importance the LSB attaches to improving regulatory performance in the coming year.

The assessments have focused on five of the regulatory bodies operating in the sector:

• the Costs Lawyer Standards Board (CLSB) which has been delegated regulatory responsibility by the Association of Law Costs Draftsmen (trading as the Association of Costs Lawyers – ACL);
• ILEX Professional Standards (IPS) which has been delegated regulatory responsibility by the Chartered Institute of Legal Executives (CILEX);
• the Intellectual Property Regulation Board (IPReg) which has been delegated regulatory responsibility by the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys;
• the Council for Licensed Conveyancers (CLC); and
• the Master of the Faculties (the Faculty Office).

with a further report due in early 2013 into the remaining two. They represent a baseline from which future regulatory performance will be judged.

The LSB has concluded that there is a wide range of competence, both across the different regulators and within each of them individually.

Some regulators have demonstrated:

• a clear understanding of the need to adopt an approach to regulation that delivers an outcomes-focused code,
• clear risk assessment,
• active supervision against those risks, and
• robust enforcement when that is justified,

nevertheless a sustained drive to implementation is still needed.

The highest quality submissions, those of the Council for Licensed Conveyancers and the Intellectual Property Regulatory Board, were notably challenging and self-reflective and commanded confidence, not least because they were underpinned by external review of their assessments.

However, the report concluded that more needs to be done to address common failings including:

• a general lack of understanding of the needs of consumers who use legal services;
• a lack of consumer engagement, and
• a failure to seek to identify the different risks in the different segments of the markets in which they regulate.

Chairman of the Legal Services Board, David Edmonds, said:

“Our vision for legal services regulation is one which imposes the lowest possible regulatory demands on legal services providers, consistent with safeguarding consumers, the rule of law the professional principles and the wider regulatory objectives. That means fewer rules, but better intelligence and targeted intervention.

“This challenging vision demands a more sophisticated approach to the regulation of legal services.

….

“A number of regulators are making significant progress. However substantial work will be required for each one to achieve their ambitions and significant improvement in consumer understanding and engagement will be required across the board if regulators are indeed to show that they can meet successfully the challenges that they face.”

The full regulatory assessment report can be found on the LSB web site at www.legalservicesboard.org.uk/Projects/pdf/regulatory_standards_assessment_of_five_of_seven_regulators.pdf

The Council for Licensed Conveyancers has issued a consultation requesting responses as to whether, based on the evidence available, a ban on referrals is justified.

The Council takes the view that:

1. The current lack of evidence of consumer detriment makes a ban on referral arrangements/fees unjustifiable;
2. It would be in the consumer interest for increased disclosure requirements to be placed on firms. This should help ensure the consumer can make an informed choice as to whether or not they use the referee;
3. Whilst all referral arrangements should be in written form, there is little to be gained from requiring these individual agreements to be published.

The consultation will last 12 weeks and will end on Friday 1st March 2013. A summary of the responses received will be published within 4 weeks of the consultation’s end.

Further details of the consultation can be found on the CLC web site at www.conveyancer.org.uk/pdf_files/consultations/2012_12_03_Consultation_Referral_Arrangements_%20Paper.pdf