The Solicitors Regulation Authority has published a draft supervision and enforcement strategy, setting out how it plans to work with conveyancing firms to combat fraud and money laundering.

The strategy forms part of a package of measures designed to address problems in this area of practice, and builds on the regulator’s work over the past two years, which has focused on risks posed by a small number of firms engaged in property-related fraud and money laundering.

The SRA said conveyancing accounts for a high proportion of claims on professional indemnity insurance (PII) and the compensation fund, and an ‘unacceptable’ volume of complaints against the profession.

It said those claims are mainly due to fraud and dishonesty, either deliberately on the part firms, or as a result of weak risk management and compliance systems that lead them to become involved in dishonest transactions.

The SRA will also undertake a major thematic review of the regulation of conveyancing and the holding of client money during 2011. Samantha Barrass, the SRA's executive director for supervision, risk and standards, said there was a direct correlation between the downturn in the economy and the housing market, and the increase in claims.

‘These statistics highlight the need for us to continue to target our regulatory resources on conveyancing, both to assist firms in managing their own risks and compliance, and to identify and prevent dishonest behaviour within a small number of firms,’ she said.

Barrass said the SRA’s primary aim is to ensure firms establish good compliance and risk management systems, and where they did not exist, the regulator would work with firms to enable them to put matters right themselves.

‘Only if that approach fails, or we identify serious breaches that are putting clients at immediate risk, would we move towards enforcement action,’ she said.

The draft can be read on the SRA website.