Peter Rodd looks at the plans for the Conveyancing Quality Scheme, the effect of coronavirus, and what scheme member firms should be focusing on now
On 1 May 2019, the new Conveyancing Quality Scheme (CQS) Core Practice Management Standards (CPMS) came into effect. The new Conveyancing Protocol came into effect on 19 August. Both were first published in 2011, and neither had been updated since. Given the work currently being carried out by the Home Buying and Selling Group and the various changes being suggested, both documents will become ‘living documents’, and further changes will follow as the conveyancing process evolves.
The CQS also announced that 300 firms would receive an on-site assessment in 2020. Two different pilot schemes were trialled in late 2019. The results were evaluated, and a final form of assessment produced. A series of regional meetings was then planned for senior reporting officers / heads of conveyancing in member firms, to explain how the assessments would work in practice. The arrival of coronavirus (COVID-19) and the collapse of the conveyancing market have meant that all plans for both face-to-face meetings and assessments are now on hold.
Inevitably, perhaps, there had already been some speculation about the purpose of the assessments, with some organisations promoting their services by warning about the dire consequences of failing an assessment. However, most firms which were assessed in 2019 gave positive feedback about the experience. Areas of non-compliance with either the protocol or CPMS were highlighted, giving the firms the opportunity of putting in place corrective actions, thereby raising the quality of their conveyancing and reducing the risk associated with it.
The immediate focus for CQS firms must be on the safety of their staff, while trying where possible to assist clients whose transactions have been put on hold. The focus of the CQS and the Law Society is on providing assistance to those firms in whatever way they can.
The Law Society and other organisations have now worked together to draft a COVID-19 clause and accompanying guidance to help firms with clients who had exchanged contracts but could not complete because of the virus. The Law Society has also been involved in facilitating the reopening of the property market and find solutions to possible ‘pinch points’, such as the UK Finance Mortgage Lenders’ Handbook ID requirements necessitating paper documentation. Further guidance has followed, offering specific advice for solicitors and other conveyancers.
It is difficult to assess what the property market looks like at the present time. Many firms progressed transactions as far as possible, to enable quick exchange and completion when the market reopened. There is now a buzz of activity as firms try to get those transactions completed, but what the market will be like thereafter is difficult to assess, and after the pent-up demand has evaporated, the market could be quiet for some time.
It is difficult to think ahead, but planning for the future is essential. The lack of new work may provide an opportunity to ensure that your firm is compliant with the new CPMS. Could staff who have not yet taken the compulsory CQS annual training do so now, especially if they continue to be furloughed?
Now is also a time to think about anti-money laundering (AML) risks. The Solicitors Regulation Authority (SRA) has reported concerns about firms’ AML policies, particularly the firm-wide risk assessment required by regulation 18 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. In our pilot assessments, we found that many firms only had a generic risk assessment, and therefore did not comply with the legislation. ‘Buying in’ a precedent policy is a good starting point, but the policy must then be adapted to reflect your firm’s work and the AML risks associated with it.
Conveyancing is regarded as a high-risk category of work for AML, but not all transactions are high risk. Some may be very low risk; others – such as overseas clients buying for cash from jurisdictions where there may be suspicions of money laundering – are at the other end of the spectrum. Risks can be associated with both clients and the nature of the transaction. What sort of transactions and clients does your firm routinely deal with? How does your policy provide for transactions that fall outside that norm or clients who do not fit the usual profile? The Law Society has published a useful reminder of AML risks.
The quality of individual file risk assessments also varied. Some were very lengthy; many others were of a ‘tick-box’ style.
A lengthy assessment is not necessarily a good one, nor a ‘tick-box’ style unsatisfactory: what matters is that the assessment shows that the fee-earner has obtained and considered all the relevant information, and reached a reasonable conclusion.