Bridging Finance News

By Dawn Murden

Following the recent closure of well-known law firm, Norman Saville & Co, by the Solicitors Regulation Authority (SRA), another solicitor has spoken out to warn brokers about the dangers of choosing the wrong conveyancing partner.

Goldsmith Williams’ – a law firm specialising in conveyancing, remortgages, road traffic accidents, and wills – has said the action by the SRA should serve as an important reminder to all mortgage brokers.

The firm urged brokers to choose their conveyancing partners carefully, as law firms, like any type of service providers, can be vulnerable to being closed down or going out of business.

Norman Saville & Co, which also traded as UKconvey, was closed down by The Solicitors Regulation Authority last month, and Russell-Cooke Solicitors have been appointed to safeguard their client’s files and money.

Norman Saville & Co had offices in London and Birmingham and was “intervened into” by the SRA on 5 July 2010.

On 13 July 2010 the principals of the firm, Kiran Nahar and Farhat Malik-Masud, issued proceedings to challenge the intervention and those proceedings are currently ongoing.

The firm once claimed to be the UK’s number one property conveyancing solicitor boasting its ‘no completion, no fee’ deal. It apparently received a new instruction every 12 minutes. Eddie Goldsmith, a senior partner at Goldsmith Williams, said: “Mortgage brokers should check any firm they recommend to clients because if that firm subsequently goes out of business, it may have a negative impact on the broker’s own reputation.

“If a broker has no experience of using a specific law firm or conveyancing specialist they should take some obvious precautions, such as checking the firm’s reputation with other brokers or estate agents and also establishing its credentials.”

He added: “A quick internet search will often reveal any significant dissatisfaction with a firm.”

Speaking of which, Norman and Saville’s website now contains a message from the SRA, and at the time of writing the UKconvey website link is broken.

Information has been posted on the directory website, solicitorsfromhell.co.uk, containing a link to the Norman Saville website and a short summary on the firm’s closure.

The site allows users to post complaints against solicitors, and the latest post reads “They have taken large sums for coneyancing amongst other cases and jeopardised many deals”.

By Stephanie Baxter

Business is  booming at top London property developer Capital and Counties (CapCo), who this week reported half year profits and is set to embark on a billion-pound redevelopment of its Earls Court Exhibition Centre.

The centre is best known by brokers as the original home of the annual Mortgage Business Expo, although last year (post-crunch) saw the event consigned to the smaller, sister site of Kensington Olympia.

CapCo, which branched off from shopping centre developers Capital Shopping Centres PLC – formerly Liberty International –revealed this week its plans to launch a new residential project on the site of the Earls Court Exhibition Centre after the 2012 Olympics.

The developer has been working with a range of public bodies, including adjoining land owner Transport for London, to prepare the project.

Although the redevelopment scheme is still in the planning stage, CapCo remains confident that the recent appointment of architects Terry Farrell and Partners as master planner for the  project has moved the process along swiftly.

CapCo is hoping a joint vision for the site – based upon Sir Terry Farrell’s master plan principles – will be decided in the autumn.

The project, which will take more than a decade to complete and will see the current Earls Court Exhibition Centre torn down, is predicted to cost billions of pounds.

CapCo hopes to have a planning application ready by  2011 for the development of the Earls Court site, which is now recognised as an Opportunity Area given its location and excellent public transport links.

The £340 million Earls Court & Olympia Exhibition business, which accounts for about a quarter of CapCo’s portfolio, has been affected by the economic downturn with a turnover decrease of 15 per cent for the first half of the year.

By Stephanie Baxter

An estate agent in Essex has been banned from using a prize promotions advert, after the Advertising Standards Agency ruled that  it breached the Code.

However, the ASA has been unable to get in contact with Churchills Estate Agents Ltd, who did not respond to their enquiries.

The case against Churchills Estate Agents was decided last  week by the advertising watchdog, which upheld the complaint made by a member of public.

The disgruntled viewer challenged whether the ad was in breach of the Code of Practice because it  failed to give the terms and conditions of the prize promotion.

Churchills’ press ad stated: “by appointing Churchills as your trusted Estate Agent in the sale of your property you will also give yourself an excellent opportunity of winning a beautiful car worth £7,000 plus! … for further details about how simple it is to win a car, please contact your local branch as below.”

ASA judged that the ad breached the clauses 34.1 and 35.9 of the Code by not stating the closing date, how customers could take part in the promotion and how to determine if they were eligible.

Churchills Estate Agents Ltd also breached clause 2.6 of the Code that required them to respond promptly to ASA’s enquiry. ASA said it was “concerned” by the estate agents’ lack of response and apparent disregard for the Code and reminded them of their responsibility to respond swiftly to enquiries.

An ASA representative said: “Most businesses do respond to our enquiries and take it seriously, so it is concerning that Churchills didn’t respond.”

“We’ve notified both parties of the decision and we hope that Churchills will ensure their future promotions stick to the T’s and C’s of the Code.”

The FSA has fined the former finance director of Northern Rock, David Jones, £320,000 for publishing false mortgage arrears figures in the bank’s 2006 annual accounts.

He has also been prohibited from performing any function in relation to any regulated activity.

Jones’s misconduct started in mid January 2007 when he agreed, along with David Baker – the former Northern Rock Deputy CEO – to allow false mortgage arrears figures to appear in explanatory text published with the 2006 annual accounts.

It has emerged that reporting correct figures would have either increased arrears by over 50% or possessions figures by approximately 300%.

For nearly a year, Jones was responsible for the continued misreporting of arrears and possessions figures on a monthly basis to Northern Rock’s assets & liabilities committee (ALCO) and, on a quarterly basis, to the Council of Mortgage Lenders (CML).

From 2005, Northern Rock staff were under pressure to report arrears figures at half the CML average. To achieve this, a series of improper actions were taken which were outside the bank’s stated policy.

For example, cases where a possession order had been made against a property, but where physical possession had not yet been taken (pending possessions cases) were excluded from all arrears and possessions figures.

Although Jones was not involved in the actions that gave rise to their existence, by January 2007 1,917 such cases had been omitted.

Jones was the lender’s finance director (designate) between 10 January 2007 and 1 February 2007. During this time, David Baker informed him of the existence of the pending possessions and asked whether they impacted the firm’s stated provisions for bad debts. Jones assured himself that the provisions were correct and agreed not to reveal the pending possession cases.

As finance director from 1 February 2007 to 22 February 2008, Jones was responsible for the debt management unit (DMU) and the credit management information unit (CMIU) at Northern Rock. Amongst other things, these units were responsible for reporting arrears.

Margaret Cole, FSA director of enforcement and financial crime, said: “Even though other senior directors within the firm were involved in the misreporting of arrears and possessions figures, as a senior director himself and as an FSA authorised person, Jones had a duty to reveal the true position to the public and to important internal committees. He had numerous opportunities to put things right, but failed to do so.

“This is a message to all FSA approved persons, that they must take their individual responsibilities seriously at all times, or suffer the consequences.”

Jones received a 20% discount for settling in Stage 2 of the FSA’s executive settlement procedures. Were it not for this discount, Jones would have been fined £400,000.

Consumer credit providers could be about to see some huge changes, as the Treasury reveals it may move the regulation of the industry from the Office of Fair Trading (OFT) to a brand new body.

The proposed changes to the UK’s financial regulation system were publicised in the Treasury’s consultation paper, released yesterday,  which outlines the coalition government’s aim to restore trust and confidence in the sector.

In consultations over a major reshuffle of the system, the Treasury will look at whether the responsibility for consumer credit, which is currently regulated by the OFT, should be moved to a new body called the Consumer Protection and Markets Authority (CPMA).

The CPMA, described by the Treasury as a “strong consumer champion”, will have a dedicated focus on the importance of proper conduct to ensure greater clarity and confidence in the financial markets.

The conduct regulator, which will focus on the  two aspects of consumer protection and market integrity, will be responsible for a wide range of firms from small high street businesses to wide-scale investment banks.

This is part of the Treasury’s aim to bring consumer credit under a single regime, after it admitted  that the overlap of the FSA and OFT can cause ‘confusion and irregularities’.

Over 16,000 firms are jointly regulated by the two bodies, while the FSA is responsible for 29,000 and the OFT has 99,000 firms under its arm.

Kevin Still, debt expert and director of debt solutions provider, EuroDebt, owned by The Pentagon Group, said: “There is a high degree of overlap, but many businesses have diversified to offer a wider range of services which not only includes the provision of consumer credit, but also a range of ancillary and specialist services.”

Mr Still added: “The Pentagon Group, which incorporates Atlantic Finance Management, is jointly regulated because it offers debt solution services, and also Accident, Sickness and Unemployment insurance to indebted customers wishing to protect their income.”

The Treasury’s paper also reveals that the FSA will eventually be broken up and replaced by the CPMA and another new body, the Prudential Regulation Authority (PRA), which will both be overseen by the Bank of England.

The Treasury said that the FSA has too much work on its hands, being entirely responsible for all financial regulation. It currently deals with both prudential health and conduct of business regulation, which require very different approaches.

The Bank of England will also be given the tools to carry out more responsibility through a Financial Policy Committee which will be in charge of macro-prudential regulation.

In a speech at the London Stock Exchange yesterday, Financial Secretary to the Treasury, Mark Hoban, reiterated the need for strong regulation to act as the “bedrock that prevents the ground from caving in.”

He said: “The Coalition Government is delivering on its commitment to reform the financial system, to avoid repeating the mistakes of the recent financial crisis and to ensure that taxpayers are protected.

“Today is a crucial milestone in our program of reform.”

The Treasury is welcoming input from people involved in the financial services industry before the consultation closes on 18 October.