2018 - CQS Audits to Return?
CQS Accredited firms may know by now that the Law Society had a complaint about their CQS scheme marketing upheld against them by the Advertising Standards Agency in 2017 – see http://www.bbc.co.uk/news/uk-42074154.
And while we’re sure some people may have found that amusing, the potential response in 2018 may be significantly less so.
Because the Law Society had a choice to make over this. Do they do nothing after carrying out the remedial activity required of them by the ASA? Or do they do something about repairing the potential poor publicity brand damage that the scheme may now be subject to?
And if the latter, what would that involve?
Well, for those solicitors firms that joined the scheme in its infancy, they may recall that the Law Society talked about auditing firms, with two levels of audit. One was a desktop audit, where an auditor would ring a member firm and go through audit points on the telephone, while the second was an “on-site” audit.
The “on-site” audit did send shivers of dread down the spines of many an accredited firm’s conveyancers, after all, who actually wants to be audited?
Unfortunately, the probability is, that to save face, the Law Society will instigate on-site audits upon member firms this year so that it can demonstrate that the standard is effective and more importantly to them, desirable.
And that the various Lender Panels have confidence in it…
So, what can firms do to prepare for audit?
Here are some non-exhaustive tips;
1. Check client care and terms of business letters for all residential sales and purchases. What you’re looking for is;
a. Clear name and status of fee earner and supervisor
b. Clear cost estimate, including VAT where relevant
c. Clear “abortive costs” wording – the Law Society like to see % charges based on the status of the matter if it doesn’t proceed to completion
d. A clause explaining the firm’s membership of the CQS scheme
2. If the firm is acting for a buyer and seller, clear information provided to both regarding the way the matter will be conducted, and its risks, and signed permission from the clients to proceed
3. Clear identification of the source of all funds where purchases are not subject to a full mortgage, including where deposits may be paid by other parties such as parents or grandparents
4. A clear risk assessment on the file
5. Clear Money Laundering Due Diligence and Enhanced Due Diligence where needed
6. Definitive identification evidence of any conveyancer on the other side of the transaction
7. Office Manual Procedures regarding risk
8. Up to date Money laundering and Mortgage Fraud Policies and Procedures, including the annual review of Money Laundering Risks faced by the firm and completed by the Money Laundering Reporting Officer
9. Procedures to prevent Cybercrime
10. All requirements of CQS authorised personnel within the firm are met
11. File Reviews are carried out for all CQS fee earners within the firm, with at least one Sale, one Purchase and one Closed File Review per quarter, with corrective actions closed out where identified.
There are other things that would be included in an audit, however, the preceding list would be considered to be the basic requirements.
Given the complacency that firms may have been lulled into by the lack of auditing, some of these may well be a shock to the system, however in firms with well managed conveyancing departments, none of these criteria should really be a problem.
In any event, if you’re reading this and consider the potential for an audit to be too high for comfort, now may be a good time to start going through your processes, procedures, systems and policies to make sure that an on-site visit by a CQS auditor isn’t the painful experience it could be.
Because losing CQS accreditation would lead to losing Panel Membership…
If you’d like a “pre-audit” for CQS, then cpm21 can help. Simply contact one of our consultants for a no-obligation chat.