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Council for Licensed Conveyancers vs Solicitors Regulation Authority: Which is best for conveyancers?

Conveyancing is an ever growing area of work which constantly evolves in relation to regulatory requirements and applicable legislation, such as Money Laundering Regulations and the UK Sanctions Regime. Our team works with both SRA and CLC Regulated firms, and it has been fascinating over the years identifying the differences between the two.

Compliance Conveyancing Legal Sector

Posted 02/02/2023

The differences between CLC and SRA regulation

We often get asked, “what is the difference between SRA Standards and Regulations and CLC Regulations when it comes to conveyancing and “which is the best one?”. Although there are a number of differences one thing to highlight is that both regulators have similar expectations in relation to the Client care requirements and acting in the best interests of clients. A lot of the SRA’s Standards and Regulations are also covered by the CLC Handbook, this is ensuring that a robust and consistent level of service is provided to all clients regardless of which law firm they choose (whether SRA or CLC regulated) and that no compliance elements are missed.  

The main difference which is also possibly the biggest attraction to the CLC is the less onerous ability to act for both sides in the transaction.

Under SRA Regulations there are very few extenuating circumstances whereby it is acceptable for the firm to act for both clients in the same transaction. Often this is due to the risk of conflicts of interest that can easily arise when trying to act in the best interest of each client, however, the Law Society provide clear guidance which states that the exception for conflicts does not apply to a property purchase. Although the clients will have a common interest, they also have different ones as one is buying and one is selling.

For CLC regulated firms, their guidance allows for the firm to act for both parties in a transaction and this is outlined in the CLC’s Conflict of Interest Code, providing there is informed and written consent and the individuals are represented by different authorised persons/parties at the firm. If a conveyancing firm is regulated by the CLC, you will find that the department should be set up in a way which allows for this to be a regular occurrence or standard practice almost. You may often find that this increases the traffic of clients towards a firm as they can potentially communicate more quickly internally and essentially progress matters more expeditiously.

That being said, working for both parties within the same transaction can often lead to some circumstances whereby there is an inequality of influence or disproportionate bargaining power. This would then lead to the firm being unable to continue to act for both sides. So this could be a high risk of the firm losing clients and also a financial loss as the CLC Handbook states “If a conflict arises which was or should have been foreseen, you do not charge either Client a fee for the work undertaken (other than for disbursements properly incurred).” The SRA mitigate the risk of this loss by allowing for firms to only act for one party in the transaction.

Do CLC-regulated firms need the Conveyancing Quality Scheme (CQS)?

The CLC includes some elements of the CQS requirements already within their Handbook, for example, the requirement to check the other sides conveyancers. They outline this within their guidance, so the regulators take into account the higher level of service as a standard. As the CLC accounts for this, there is no need for firms to become accredited (with CQS for example) to get onto the lender panels. Each lender panel has their own acceptance terms and therefore the firm should consider this prior to application.

Which regulator is best for conveyancers?

So, how do we answer our clients when we are asked which is best? We would not say there is a “better” regulator, as both are very clear on their expectations of their firms and conduct regular reviews to ensure that they are complying with the regulatory obligations. It is very much a case of thinking about what would suit your firm best?

There are a few things to consider which we thought may be useful below:

  • Proportion of work for the firm - Is conveyancing a large volume of revenue for the firm? If so, what would the risk be now changing to a new regulator? Does the firm plan to expand the conveyancing department and would the other regulator allow them more flexibility to do so? This should be documented within the firm’s business plan.
  • Cost – There is differing costs for membership of each regulator. Therefore, the firm needs to consider what the cost outlay would be to switch to a different regulator. This would include additional training for staff to ensure compliance and a solid understanding of what is required of them. The firm should also seek to discuss this with their existing PII to see if they can amend the cover.
  • Risk – What risks does it pose to the firm? Does it impact the firm wide risk assessment? How would it be managed internally and what issues could arise? Does this fall within the firm’s risk appetite?
  • Research – The firms should research and review the pros and cons of each regulatory body in relation to the impact this would have on their firm. It is so important to make the risk assessment for yourselves and make an informed decision based on this.

There are clearly pros and cons of both regulations which you can use to argue the case towards your firm choosing either of them for your conveyancing needs. However, it should be noted that actually the expectations of both regulators are high and equally provide for exemplary service to your clients.