The impact of the 2019 changes to the Conveyancing Quality Scheme (CQS)

This is our first guest blog, and we have invited the fantastic Tracy Thompson of Tracy Thompson Associates to help us understand key areas around the new Law Society Conveyancing Quality Scheme (CQS)

Tracy has a vast amount of experience when it comes the CQS scheme and is Lead Assessor for England and Wales Law Society.

1. Tracy, can you tell us how many assessments have there been in the two years since the changes, and how much detail are you looking at, as an inspector? Do you actually visit the firms, to look at their files and interview their staff?

A number of law firms were selected as part of the pilot during November 2019 and February 2020. Following the pilot there was always going to be a period of review. However, due to the Covid-19 pandemic, the CQS assessments are currently suspended with The Law Society dedicating their efforts to supporting practices through these difficult times. Once the Covid-19 restrictions are lifted and The Law Society feel it appropriate, the onsite CQS assessment regime will commence. The Law Society CQS office will be putting out regular communications to CQS accredited firms to keep them abreast of the timescales.

When a firm is selected for an onsite assessment, we do actually visit the premises to review all aspects of the firm’s compliance with the CQS Scheme Rules. We include reviews of CQS policies, procedures and central records and we also carry out interviews with relevant conveyancing staff and undertake reviews of sale and purchase files.

2. Are any firms failing the inspections?

It is really important for CQS accredited practices to understand that there is no pass or fail in relation to the CQS assessment. If a firm is unable to demonstrate compliance with any particular requirement of the CQS standard, they would have a non-compliance assigned to that particular area of issue and they would have an opportunity to complete a corrective action to remedy the non-compliance. There are two types of non-compliance: Major and Minor. The difference being the amount of time allowed to complete the corrective action(s).  For a minor non-compliance, the law firm has up 21 days to perform the corrective action and provide the required evidence. For a major non-compliance, the firm has 3 months.

3. What are the ramifications for firms that fail, and how serious do the failures have to be in order for their CQS accreditation to be removed? Has that happened to any firms yet?

If the outcome of the firm’s assessment is a non-compliance, they will have the opportunity to perform the corrective action(s) and should do so within the specified timeframes of 21 days or 3 months. Firms should ensure they engage with the process and if they have any difficulties in the first instance, engage with The Law Society CQS office. External CQS consultancy assistance may be required by some firms who need assistance to undertake the corrective actions if they don’t have the time or internal skills to assign to the task.

If a practice is unable to subsequently demonstrate compliance with the CQS standard it is possible that (subject to any appeals process being effected) the practice could have their CQS accreditation suspended or even revoked. However, The Law Society are keen to encourage CQS practices to improve, and are seeking to provide robust guidance to assist practices in their efforts to meet the requirements of the standard regardless of their assessment status.

4. CQS requires accredited firms to have certain policies in place to govern their behaviours, and with the updates that came into force in May 2019, some new policies were also required for accredited firms (Stamp Duty policy; Property and Mortgage Fraud Policy, Leasehold Policy, Reporting Matters to Lenders Policy, and an HMLR Property Alert Service policy).

How far would a CQS inspector go to see whether the body of the firm’s policy is being carried out on the coal face within a firm, on every matter?

The CQS Scheme Rules requires practices to comply with the Core Practice Management Standard (CPMS) and The Conveyancing Protocols. When a CQS assessor is reviewing the firm’s compliance with the standard we will review the firm’s policies and procedures, check these meet the CPMS requirements, and then ascertain that the documented policies and procedures are actually being followed in practice and that there is evidence of that.  

I always explain the assessment as a 3-tier process to demonstrate compliance;

1 – ‘Say as you do’ – Ensure all required policies and procedures are fully documented.

2 – ‘Do as you say’ – Make sure that those policies and procedures are actually followed in practice. 1 & 2 should be aligned.

3 – ‘Provide Evidence’ – Firms should always ensure there is evidence of an action being performed. To state ‘I would have done it’ is not evidence.

As part of the assessment process in addition to the documentation review we will carry out a number of interviews and file reviews and this will be governed by the time allocated for the assessment.

5. Are there any proposed changes planned to CQS policy and procedure?

Yes – there was always going to be a period of reflection following the assessment pilot in 2019/2020. During the last 12 months The Law Society have been working on updating the CPMS and Scheme Rules. Further communications from The Law Society CQS office will be forthcoming in this regard in the coming months.

6. Are there recurring issues that you see that you could give our readers some advice about how to deal with?

There have been some issues identified in certain key areas where firms have struggled to demonstrate compliance with the standard;

• Anti-Money Laundering
• SDLT
• Leasehold Requirements
• Dealing with mortgage lenders
• Service standards including costs information and managing client expectations.

The Law Society CQS office recently held a short webinar to help guide practices through these areas so this may be a good starting point for CQS accredited firms who need additional guidance.

https://players.brightcove.net/5546369619001/default_default/index.html?videoId=6199968726001

CQS is not prescriptive. How a firm meets the requirements of the CMPS is a matter for the firm to decide whilst taking a risk-based approach. The firm should ensure the core objective of each required policy/procedure is met, the firm’s stance meets any legislative and/or regulatory requirements, and is logical, sensible and proportionate to the size and nature of the practice.

7. How many inspections are planned – what is the target?

The CQS scheme rules will incorporate the assessment regime and all CQS accredited practices are able to be selected for an assessment at some point during their 3-year CQS accreditation cycle. Selections for assessment will be made by The Law Society on both a proactive and reactive basis.

8. What advice would you give to any firms reading this who are facing the prospect of a CQS inspection?

Don’t wait until you receive notification that you have been selected for an assessment to act. Take the opportunity now to undertake a full review of all your policy and procedures and cross reference with the CPMS and ensure they are fully documented. Make sure these are reflective of what happens in practice and there is evidence.

Understand the terminology. A ‘must’ is compulsory for all CQS accredited firms. A ‘should’ is optional, however it should be documented as to the reason for not opting to adopt the relevant part of the CPMS, and the SRO should be prepared to justify their decision to the assessor.

If you need external help to ensure your policies and procedures meet the requirements of the CPMS, consult a compliance expert who deals with CQS. Be very careful if you are considering ‘borrowing’ policies from other firms. You are unlikely to be following the same operational procedures, and you could easily be caught out if the policy is not compliant with the CPMS

If you require further assistance information around your current CQS accreditation or you are looking to apply for the new CQS Scheme, you can contact Tracy at her website – www.tracythompsonassociates.co.uk or at tt@tracythompsonassosicates.co.uk