12 December 2012
Last updated at 13:58
News
Judgement in Nationwide V Davisons Case
Today 12th December 2012 the Court of Appeal has released the judgment in the case of Nationwide Building Society v Davisons. Davisons were conned into sending money to a fake branch office of a solicitors practice and have faced lengthy litigation. The fake office appeared on the Find a Solicitor website.
If conveyancers can’t rely on the Find a Solicitor site how can they verify where they are sending purchase funds?
This is the latest in a series of cases that have illustrated that the checks carried out prior to transferring the money in a property transaction are incredibly sparse.
The facts highlight that just because a firm is registered on the SRA website this is not an assurance that they are legitimate.
In this case a solicitor called Mr Gill established a properly authorised practice known as Rothschild at Pitman Building, Corporation Street, Birmingham. Unfortunately, in October 2008 someone pretending to be Mr Gill notified the SRA of an intention to open a branch office of the Rothschild practice in Small Heath, Birmingham.
The SRA did not recognise that the source email address was not the same as that previously used by the practice and included the supposed new office on the Find a Solicitor websites from the end of October 2008.
This branch office subsequently defrauded Davisons Solicitors who believed they were interacting with a legitimate entity. This fraud led to Nationwide Building Society seeking damages of £185,620.00, from Davisons.
This case is just one of a number of cases in recent years where fraudsters have either impersonated a firm or set up an entirely bogus firm which has not been picked up prior to the transaction.
Davisons have, after lengthy litigation, been able to demonstrate that on the facts they acted both honestly and reasonably .
Since this issue arose the SRA have issued a Bogus Firm warning notice informing conveyancers not to rely on the Find a Solicitor site to determine that a solicitors practice is genuine or legitimate. This warning will make make it significantly harder for conveyancers to demonstrate that they have was acted reasonably if they are subject to a complex identity theft fraud in the future.
Lawyer Checker Service Launched
A new service called Lawyer Checker allows firms to combat the increasing risk of vendor conveyancer fraud by checking the previous use of the client account number to which they are sending funds. This helps conveyancers avoid the distraction and impact of a professional indemnity claim on their insurance, lender panel status and brand.
For a fixed price, conveyancers will be able to run a check on the client account purported to be a legitimate vendor’s solicitor to help verify that the firm is legitimate.
Firms are exposing themselves to significant financial risk and potential brand damage by not thoroughly checking where they are sending money prior to transaction.
Lawyer Checker offers a quick and easy way for them to reduce that risk.
To use the service, a firm will need to enter the other firms client account details and Lawyer Checker will instantly assess whether the client account has a track record of previous use in the conveyancing market or whether it presents a potential risk. Where a potential risk is highlighted, other checks are performed to provide the conveyancer with information to help them determine whether they should accept the undertaking offered to them.
Chris Harris from Lawyer Checker explained...
“Nationwide v Davisons highlights how easy it is for good quality firms to be defrauded by criminals. Since the case the SRA have issued a warning notice about Bogus Law firms indicating that firms should not rely on the Find a Solicitor website to validate a firm of solicitors. If the facts were repeated today it would be harder for Davisons to demonstrate that they had acted reasonably.”
Karen James Head of Residential Property at Ramsdens Solicitors says of the service...
“When we first started a pilot with Lawyer Checker I admit that I thought I wouldn’t see the benefit and might only use it if a lender or regulator forced me to. Within a few weeks of the start of the pilot one particular case stood out and made me realise the value. Lawyer Checker identified that we were about to send £270,000 to a firm that had only just opened and was a phoenix from a firm that had previously been intervened by the SRA. There was no way that I wanted to be one of the first conveyancers to rely on an undertaking from partners who have recently emerged from an intervention. Without Lawyer Checker we wouldn’t have spotted this issue. I would encourage all firms to try Lawyer Checker and see the value for themselves.”
Tracey Carr, Financial Crime Manager – Mortgage Fraud, Santander commented...
“We have done a lot of work to reduce fraud but vendor conveyancer fraud remains an area of growing concern. That is why I welcome initiatives like Lawyer Checker that help our panel firms manage the risk associated with transmitting our money to vendor conveyancers. All conveyancers should reassess the checks they make before they send money to organisations offering undertakings.”
About Lawyer Checker
Lawyer Checker is an online service that helps conveyancers avoid fraud by checking that the sort code and account number of the client account to which they are sending purchase funds.
Since July Lawyer Checker has conducted over 6,500 searches and identified a number of cases where our client conveyancers have chosen not to accept the undertaking offered.
Lawyer Checker is available from the leading search specialists PSG.
To find out more about the product click here.
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