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Transferring to CLC Regulation

 

The Council for Licensed Conveyancers (CLC) regulates specialist Conveyancing and Probate Lawyers in England and Wales. The CLC was established by the Administration of Justice Act (1985) which enabled the regulation of what is known as a Recognised Body (RB): a practice that must be wholly owned by the regulated lawyers (Authorised Person/s as they are now defined in the Legal Services Act (2007)) who will operate and manage the business and deliver the regulated services direct to the public.

 

The CLC is also subject to the Legal Services Act 2007 which opened up the ownership of practices to non-lawyers (subject to certain checks and tests) and led to the creation of Alternative Business Structures (ABS). The CLC’s regulated community is made up of RBs and ABSs and covers a broad range of practice sizes from Sole Practitioners (SPs) up to large practices with multi-million-pound turnovers.

 

The CLC’s authority as a Professional Body AML Supervisor (PBS) has been ratified by His Majesty’s Treasury in Schedule 1 of the Money Laundering Regulations (MLRs) which are the primary pieces of legislation in the United Kingdom in respect of AML.

 

CLC Practices operate within a range of business models (such as sole principals, partnerships, LLPs and limited companies). Some practices provide specialist services within a wider group structure, providing for example, a combination of legal, financial and/or professional services.

 

Our approach to regulation is designed to meet the needs of a diverse commercial market. This is why we encourage prospective practice applicants to start discussions about their current or intended business arrangements with us at an early stage. Our focus is on the ability of the owners and managers to provide compliant legal services and manage the risks associated to the legal services they provide.

 

Each CLC practice is assigned a Regulatory Supervision Manager (RSM) or Regulatory Supervision Officer (RSO). The RSO/RSM is the main point of contact for the practice whether that is to address questions around the code of conduct or to self-report issues. This point of contact encourages an open relationship between the CLC and the practices we regulate. Practices are encouraged to seek guidance and discuss compliance issues at an early stage, which prevents more serious problems from manifesting at a later stage and provides an early insight into potential weaknesses in a practice’s controls.

 

Our approach involves significant close monitoring of practices, and the CLC uses a number of supervisory and enforcement tools, both proactive and reactive. The CLC’s approach commences from when a business first applies to the CLC for regulation, when a desk top inspection of the policies and procedures is conducted; and continues throughout the period of regulation, and beyond into de-regulation at the point of closure/wind-up. New practices will undergo a period of enhanced monitoring on being onboarded, that involves review of financial documentations and an initial meeting with the practice with the RSM/RSO.

 

The CLC also routinely publishes a range of guidance and resources on breach reporting and making suspicious activity reports (SARs) in its AML Toolkit. The CLC also reviews the quality of SARs during inspections and will be undertaking a thematic review.

 

The CLC’s regulation of specialist conveyancing and probate lawyers delivers high standards of consumer protection and supports innovation in the delivery of legal services. We ask firms to discuss their plans with us and the CLC participating insurers at an early stage. This is just as important for established firms looking to move to a new regulator, as for start-ups just entering the market.

 

Types of Transitions

 

1. The ‘Switch’ Model (from SRA/CILEx to CLC Regulation)

Where an SRA/CILEx regulated practice delivering Conveyancing and/or Probate services moves its entire business to CLC Regulation. The firm agrees a ‘switch day’ with each regulator. Firms seek to ‘switch’ their lender accounts on the date of switch.

2. The ‘Hive-Off’ Model

An SRA/CILEx regulated practice sets up a CLC regulated practice to deliver Conveyancing and/or Probate services. The SRA/CILEx regulated practice continues to deliver other legal services such as family law, litigation, and company commercial services.

The SRA/CILEx regulated practice may either:

(i) run down its conveyancing services over a transition period; or

(ii) continue to deliver some (or all) its current conveyancing services. Firms seek to hold both an SRA/CILEx and CLC account with Lenders for a ‘transitional’ period to manage the operational transfer

3. A New CLC Business

When the current SRA/CILEx regulated business intends to cease trading.

 

Switch and Hive Off Applications take on average up to three months (90 days) to process. Applications with Adverse Information (pertaining to the practice or its Beneficial, Owners, Officers and Managers (BOOMs)) will be considered complex and can take longer to process.

For more information regarding Licensing Application Fees please click here.

For more information regarding the Annual Regulatory Fees please click here.

Frequently Asked Questions

No. Each business is unique and will have different drivers for seeking to change its legal regulator. The outcome may also be different. Many firms look to incorporate corporate, finance and governance changes. However, two standard business models have emerged:

  1. The Switch Model
  2. The Hive-Off Model

 

The Hive-Off model has been adopted:

  1. as part of a wider succession or reward programme to expand the group structure;
  2. to accommodate new investment, ownership and/or governance structures;
  3. to provide a business/delivery/reward model that is complementary but different to that offered by the original firm; and
  4. to house the conveyancing and probate functions in a separate entity under specialist regulation with the CLC – whilst retaining a group structure by association of name/branding of the financial or legal services.

 

Conveyancing (sometimes referred to as Reserved Instrument Activities) and Probate activities (which can include). The CLC also regulates Will writing and some other non-reserved activities such as, tax and estate planning. CLC practices may only deliver those legal services which the CLC has expressly licensed them to provide. Please let us know if you wish to provide any other services.

 

Yes. However, one individual (preferably at board level) should be is a specialist conveyancing or probate lawyer (SRA/CILEx/CLC) and depending on the body type, may be required to become a CLC lawyer. We will discuss this with you.

 

The CLC is looking to regulate well managed practices with motivated managers and dedicated staff. You will need to identify the risks to the business and to have policies and processes which appropriately mitigate those risks.

 

All CLC practices must obtain PII from an insurer which has entered a Participating Insurers Agreement (PIA) with the CLC.

Those insurers are listed on the here.

 

Yes, provided they sign up to the CLC’s Participating Insurers Agreement.

 

This will depend on the nature of the past legal services that the firm has provided and the extent to which a CLC Participating Insurer is willing to provide cover. Your past claims history together with the types of work that your practice has provided will also be relevant. Early discussions with a CLC PII Broker will help you to understand the PII cover options available to your firm.

For PII Brokers please click here.

 

This is not a problem for most practices. It is very important that you speak to Lenders and panel managers to let them know that your practice is switching regulators or intending to hive off its conveyancing services into a new CLC regulated practice and keep them informed of progress. Each Lender has their own panel requirements, and you will still need to comply with those requirements to retain any existing memberships.

 

Claire Richardson leads the CLC’s Licensing Team on licensing@clc-uk.org or 0203 859 0904.

 

You can start talking to us about switching or hiving off immediately. Though you should plan for four to six months to complete the end to end process.

The first step, which is at no cost to you, is for you to tell us about your practice. We will ask you to provide some standard information about the business for us to review. We will agree with you the overall approach to changing regulator and the timescale for the application to help you manage the changes you are aiming to achieve.

 

No. It will help you and us to have a conversation with you about your practice before you complete any forms. We also suggest that you take up our offer for us to meet you and your colleagues at your offices. This provides an invaluable opportunity for the key decision makers in the firm to be involved early on in the process.

 

The most straightforward way to ensure the process is completed in a timely way is to be prepared and ensure that all relevant information is provided to us in the formats requested; and that all key personnel making applications are primed to completed the application process and screening requirements promptly.

 

Application

Our Licensing Team, headed by Claire Richardson, Director of Authorisations and New Business, will be very happy to discuss your plans in confidence, explore whether regulation by the CLC is right for your firm and support you through the transfer process.

For information on How to Apply and the Application Stages please click here:

Application Stages

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