Quarter of conveyancing firms hit by negligence claims

A quarter of conveyancing firms have been hit by negligence claims in the past two years and a similar proportion have experienced an attempt at fraud or money-laundering at some point, a report for the SRA's regulatory risk committee has found.

More than half of the 100 practices visited by the SRA regarded property-related fraud and money-laundering as their biggest regulatory risk.

Conveyancers said the most common 'warning signs' were identity issues, international connections, unusual financial arrangements and client behaviour.

A third of firms admitted that they did not know how they would decide whether to report a suspicion to the Serious Organised Crime Agency, with three quarters saying more training in this area would be useful.

The impact of the recession on conveyancing was highlighted by the eight out of ten firms which had lost clients and the 40 per cent saying they had made redundancies or cut costs as a result.

SRA staff visited firms in the spring and summer last year.

"Approximately half of firms had service complaints from clients about their conveyancing work in the last two years and a quarter had professional negligence claims relating to conveyancing work over this period," SRA researchers said.

"These figures suggest service levels could be improved and lessons learnt. Two thirds of firms stated that they pass on lessons learned from complaints and negligence claims to the rest of the firm. Ideally, this should be standard practise across all firms."

Most of the firms involved in the survey were members of at least one lender panel.

Removal from lender panels was seen as the biggest general risk to conveyancing departments while the recession was seen as the biggest threat to firms as a whole.

One in three firms had referral arrangements, mainly with estate agents, but very few relied on a single referrer for more than 10 per cent of their instructions.