As we approach the end of another year, we thought it was a good time to reflect on everything that has gone on in 2017. From new Money Laundering Regulations to the Criminal Finance Act, it has certainly been an important year for compliance people. Read Jon’s blog here.
If you are not up to date with your money laundering procedures, now is the time to sit up and take note. One of the SRA’s requirements as the supervising body is to check up on firms, and it has now confirmed it will be doing just that, see further information below.
Research by the SRA indicates that not all firms are providing information about the right to refer to LeO to clients who complain. The research has also indicated that most clients would find it useful to have information about the firm’s complaints history readily available. This of course is all adding ammunition to their argument for ever-increasing transparency, particularly on price and quality, and compelling firms to make this data public. They are already considering the sanctions to put in place for failing to comply.
An appropriate time to remind you that the SRA “Looking to the future” consultations close on 20 December.
Wishing you all a Merry Christmas and a Happy New Year.
Jon and the team
2017 in review – a compliance yearbook
What better way to start the last newsletter of the year than with a roundup of all the important events that have come up in the compliance world. Read all about it here.
SRA will be checking your AML arrangements in January
We’ve been going on about what you need to be doing to comply with the 2017 Money Laundering Regulations since they came into force on the 26th June this year. They put positive obligations on both you, the regulated, and the regulator (the SRA is the ‘supervising body’). The SRA has announced that it will be sending out a questionnaire early in 2018. You may have already received advance notice of the questions.
Why it matters
This survey, which opens on 22 January will be mandatory – the deadline for responses is 5 February 2018. Since most firms will have received advance notice, there is no excuse for failing to respond. At this stage they are just looking for information about AML role holders and “Managers, beneficial owners, officers of your firm”. Non-solicitors will be subject to additional background checks.
Not all firms are subject to the Money Laundering Regulations. Litigation and legal advice (e.g. commercial, employment) sit outside.
If you are not up to speed with the Money Laundering Regulations 2017 and/or have not reviewed your money laundering procedures post June 2017, now is the time to do so. It would make a sensible NY resolution. Our blog is a good starting point, and you will want to be familiar with the draft guidance from the Law Society.
We would not be surprised if 2018 sees a follow-up survey asking for information about AML procedures in place.
Are solicitors really failing to tell complainers about the Legal Ombudsman?
Research commissioned by the SRA has found that two thirds of clients who make a complaint are not told that they can escalate their complaint to LeO if they are not satisfied with the firm’s response. The research also reveals that the majority of clients said that they would like to have access to the firm’s complaints data. The SRA has already indicated that firms could face disciplinary action if they do not abide with future requirements to publish data about complaints.
Why it matters
There are two main points here. Firstly, if so many firms are failing to tell clients that they can go to LeO if they are not satisfied with the first tier complaint handling, this is clearly a widespread compliance issue. Outcome 1.10 is explicit on this. It is worth checking to see whether your past complaints included the correct signposting, and that future complaints do.
The second point is that this research is plainly further self-serving justification for the ‘transparency’ agenda that the SRA, LSB and CMA are so desperate to push through. If, as appears to be the case, the research sample was ‘dissatisfied’ clients, this calls into question the value of its conclusions. I am no scientist, but it is self evident that this would skew the results. The fact that only a third of clients rated a successful outcome as a top priority (with two thirds citing regular communication as the most important factor) speaks volumes, doesn’t it?
Cyber-attacks still making news
This week Anthony Gold Solicitors became the latest firm to suffer a cyber-attack. Around 16,000 fake emails were sent out purporting to be from the law firm’s address.
Why it matters
Those that have received the offending emails have commented on how realistic they look – attackers are certainly honing their craft. Others have said that the firm was slow to act once the emails had been sent. So what should firms be doing? We would suggest two main things – firstly making sure that staff are aware of the different possible cyber attacks and what steps they can take to avoid inadvertently allowing hackers to access the system. Have you looked at the government’s Cyber Essentials programme? Secondly, making sure that there is a disaster plan in place to respond effectively if a breach does happen. This should cover everything from IT recovery to PR response.
A cyber vulnerability audit would be a very good place to start.
Insurer’s fraud warning
One of the UK’s biggest insurers, Allianz, has warned the legal profession that it will be looking into allegations of fraud made against solicitors as well as policyholders. This comes following the case of Lesley Dee Layton, who was struck off the roll after admitting that she had dishonestly instructed a colleague to copy her client’s signature onto a witness statement. Allianz, acting for the Defendant in this matter, discovered the fake signature after sending the document for forensic analysis.
Allianz’ fraud manager, Nick Kelsall, told Legal Futures that ‘Allianz will rigorously defend all types of fraud and will use the law to punish fraudsters in order to protect our customers’ .
SRA and Law Society news
- SRA ‘Anti-Money-laundering regulations’ 7 December 2017
- Law Society ‘National Risk Assessment’13 December 2017
- Law Society ‘Money Laundering Regulations 2017 and policy update’ 13 December 2017
- Law Society ‘UK Sanctions Regime’ 13 December 2017
- Law Society ‘Our campaign for the reintroduction of legal aid for early advice’ 13 December 2017
- Stephen John Acres was struck off for plundering a bed-bound client’s assets when acting as her power of attorney.
- Nicholas Marray was struck off following a conviction for perverting the course of public justice.
- 80 year old former partner of Cook Taylor Solicitors, Alan Thompson, was rebuked and agreed to remove himself from the roll for failing as a partner to ensure compliance with the accounts rules and effective management of the firm.
- Paralegal Carole Hart was banned from working in the profession following a conviction of theft in May 2017, to which she pleaded guilty,
- Paralegal Sophie Harris, a former employee of Hugh James, was banned from working in the profession following signing her bank account application with the Hugh James certification stamp and in the name of an assistant at Hugh James, who later confirmed ha had not signed the document.