If you hadn’t already noticed, residential conveyancing transactions have become the latest hot spot for criminals. This has been going on for several years, but over recent months we have seen several high profile cases make it into the mainstream media and of course conveyancers everywhere should now be looking for solutions to protect their clients and themselves against criminals looking to exploit loop holes.
Criminals are clever and they don’t just go away if they don’t succeed. Where one opportunity becomes closed to them, they will morph into something else and they are constantly testing the system in every area to develop methods of duping someone out of serious cash.
Unfortunately, residential property transactions are awash with money and have become an obvious target. Conveyancers are right in the thick of the action and more than ever, need to act as gatekeepers. For many years now, lenders have been in the front line against the criminals as they have seen countless fraudulent mortgage applications rack up huge losses. Not unexpectedly, most lenders are much tighter in their procedures now and it has become significantly harder for the criminals, hence they have moved their focus onto conveyancers and in particular transactions without mortgages.
Creating a fake law firm has been high on the list of frauds, but new systems such as the Lender Exchange by Decision First have led to a marked reduction in this area. Gaining access to and remaining on lender panels is a real problem for many firms. It is my view that the blame should lay fairly and squarely at Law Societies’ door for not tackling this problem far earlier. Eventually we’ve seen lenders take the matter into their own hands, first the HSBC panel debacle, then the creation of Lender Exchange at the behest of Lloyds & Santander. The major banks’ losses were too great for them to stand idly by and I wouldn’t expect things to become any easier anytime soon.
Now though, the problem of fake identities has come to the fore and yet again there is no strong leadership from the Law Society. I have spoken to dozens of law firms this year and in almost every case they have a different attitude to risk and a different procedure for checking a clients’ identity. This often depends upon which CPD course their COLP and COFA offices have attended and the attitude to risk of the partners. Surely this cannot be right and with such diversity of opinion, it is only a matter of time before the criminals find the weaker links and commit yet another crime, which leads to severe distress for both conveyancers and clients.
This blog is the first in a two-part series.