CLC making use of its full range of regulatory powers to ensure proportionate regulation

20 October, 2022

The Council for Licensed Conveyancers (CLC) is making greater use of its enforcement powers as it looks to ensure it is a proportionate regulator, chief executive Sheila Kumar has said.

Meanwhile, CLC chair Dame Janet Paraskeva says it will step up efforts to encourage firms and lawyers from other parts of the legal profession to switch to CLC regulation.

The pair were speaking as the CLC’s consultation on refreshed ethical principles and the CLC’s new strategic objectives closed and a new consultation on Continuing Professional Development was launched. Those consultations are on the CLC website.

Ms Kumar says that the post-lockdown conveyancing boom did not lead to a growth in compliance failures. “We were very clear with our advice that firms should not take on more work than they could cope with, and the message seems to have got through,” she says.

“At the same time, we are working on ensuring that, when we do have to take regulatory action – and we’re talking about a small number of such actions relative to the number of firms and set in the context of the huge number of transactions CLC lawyers handle – we use the most appropriate of the range of regulatory interventions available to us.”

The first step in most regulatory matters – except where immediate action is required, in response to actual harm having already occurred or there being an immediate threat to clients – is what the CLC calls ‘assisted compliance’, meaning the CLC works with the firm to bring it back into line within a reasonable timeframe.  

Ms Kumar says that this timeframe is not infinite and requires a firm commitment by the practices to put things right. Years of experience of the assisted compliance approach has led in some cases for shorter timelines to be set for firms to achieve compliance. “In the past, there has sometimes been a tendency to go from assisted compliance to full-on enforcement, meaning it could take too long to ensure compliance. We are now making more use of the other powers we have, such as warning letters and Enforcement Determination Decisions, to speed up the process where firms are not moving quickly enough. It’s a much more calibrated approach that delivers the result that we need more quickly and proportionately.”

She adds that the CLC has intensified its monitoring and inspection of firms, with its regulatory supervision managers in regular contact with them to head off any potential problems, now supported by a new cadre of more junior regulatory supervision officers to deal with lower-level compliance work.

The CLC has been working for some years to encourage firms run by solicitors and legal executives to join its community and Dame Janet says that progress had been slow because of issues such as run-off cover and lender panels, as well as Covid. But these have now been resolved and the number is picking up.

“It’s about choice,” Dame Janet says. “We are not expecting a great rush but we are starting to see a slow and steady increase in switchers. We know the business of conveyancing. We know probate. If that’s what people need regulated, then we are best placed to provide it. We are also seeing a healthy pipeline of future conveyancers, with some 300 students now studying for the qualification.”

Further, a review of the CLC’s business processes has allowed it to deliver regulation more cost-effectively. As a result, the CLC has been able to reduce regulatory fee rates hugely in recent years. Practice fees have been cut by more than half and Compensation Fund contributions by around half, depending on practice turnover, thereby demonstrating the CLC’s commitment to effective and proportionate regulation and keeping the financial burden on the regulated community as low as possible.

On other issues:

• Dame Janet called on licensed conveyancers to form a stronger representative voice and leadership to promote the profession in ways that the regulator cannot.
• She pledged that the CLC would continue to lead the way in adapting regulation to a world of consumer choice and digital technology – it was the first regulator, for example, to introduce a secure badge scheme and works with a wide range of technology providers, such as those providing third-party managed accounts.
• The CLC will remain focused on mental health challenges in practice and tell those it regulates to “shout if you’re under pressure”. Sheila Kumar says: “We know things can go wrong and we would much rather people tell us than try to sweep it under the carpet. That is where our assisted compliance approach can really be beneficial.”
• Though the diversity of the licensed conveyancer community is good – a recent graduation ceremony for students was “full of excitement of people breaking into a profession that they thought was for someone else”, Dame Janet recalls – there is still work needed in improving representation of women and Black and minority ethnic lawyers in particular at senior levels, in common with many other professions.
• Former Council member Teresa Perchard is assembling a Consumer Reference Group on behalf of the CLC to add to its consumer insight and provide comment and advice on policy and practice.

The CLC has also been sharing the lessons from the Simplify security incident last year. Sheila Kumar says: “We had people on the ground at Simplify from the start and kept up constant communication to ensure clients’ interests were served. We remain comfortable that allowing the firm to sort out the problem was a better solution than the CLC stepping in – it was not a problem that we could have resolved any more quickly and, indeed, an intervention would have slowed down the recovery process and would not have been in the consumer interest.

“What the incident has done is shine a light on the vulnerabilities of any system, however good. We have issued advice to firms in our recent Risk Agenda and will continue to spread the word of what firms need to do to minimise the risk and consequences of such attacks.”