Of all the occasions when you might expect a breach of rules leading to a fine from a regulator to be uncovered, an internal firm training session might not be one of them.
However, this is exactly what occurred at an Exeter-based law firm. The firm will now pay a fine of £16,200 to the Solicitors Regulation Authority after it was identified that third parties were making payments into one of the law firm’s accounts without receiving services in return.
In total, the firm held more than £1 million in the account in relation to building work being carried out by a client. However, the law firm was not providing any significant legal services, even though their bank accounts were being used in this way. This essentially meant that the law firm was unintentionally providing a banking service.
The fine was reduced by 40% from the original sum of £27,000 in recognition of the firm’s co-operation. The firm was also required to pay £1,350 in costs.
Other mitigating factors in this case included:
- There were no money laundering concerns
- The client did not suffer any financial loss
- The issue was reported to the regulator at the earliest opportunity
- The firm took immediate steps to ensure the practice did not continue
- The firm has made improvements to its systems and controls to ensure future compliance