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December 12th, 2017

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News in Brief:

Since our Autumn edition of Legal Compliance Matters, just a few key things that you should be aware of:

Changes in Legislation re charging for card payments

New rules which will come into effect on 13 January 2018 will mean consumers cannot be penalised for choosing to pay by card, either online or in person. Under the current rules companies should only charge what it costs to process a debit or credit card payment – they shouldn’t make a profit on these surcharges. But consumers do currently still face hefty charges, with fees typically around 2% and on some smaller transactions accounting for as much as 20% of the bill.

How the rules are changing

The new rules will mean ALL surcharges are banned. So there will be no charges for paying by debit or credit card, including American Express and linked ways of paying such as PayPal or Apple Pay. The rules will apply to any UK company which is selling to UK consumers. It’s worth noting the new rules won’t just apply to the UK, companies across the EU will also be banned from charging these extra fees.

Why are the rules changing?

The new rules stem from the EU Payment Services Directive, which lays out the changes EU governments must make by 13 January 2018. This mean the new rules will be put into UK law – and so will continue to exist even after Brexit.

Clearly, this will impact all law firms who are surcharging card payments, so firms need to plan for this now.

Autumn Update to the Risk Outlook 2017 / 2018

The SRA released the Autumn Update to the Risk Outlook on 21st November 2017 and reading it is a must. A few highlights in relation to the key priority risks include:

Standards of Service – the SRA have advised that they will soon be publishing independent research regarding the effectiveness of solicitors’ first tier complaints handling procedures and processes – so one to keep an eye out for.

Under this priority risk, they also highlight their concerns with services provided by solicitors in relation to mis-sold PPI, road traffic PI and holiday sickness claims as well as improper referrals from CMC’s. The SRA issued a warning notice on 6th September 2017 re Holiday Sickness Claims which you can read here

A case which came before the SDT is also referenced where it was concluded that the conduct of the solicitor fell seriously short of the professional standards required and the solicitor was struck off and fined after charging excessive fees. For further information on the judgment, click here

Information Security: unsurprisingly, this remains a key priority risk in 2017 / 2018 and is likely to remain so for some time. The Autumn Update mentioned GDPR coming into effect in May next year and confirms that the ICO have updated the guidance for firms on their website as well as launching an advice line for SME’s.

Under this risk, the SRA also highlight the importance of taking reasonable steps to protect client information and reference a case in September of this year where the SDT approved fines of £15,001 (solicitor) and £20,000 (firm) for disclosing personal information about a client. To read the Gazette article, click here

Investment Schemes – these were the new priority risk in the Outlook this year and the Autumn Update highlights the Warning Notice that was released by the SRA in June 2017, click here to read and also highlights a case where the SDT issued fines of £50,000 to the firm and £10,000 to each of the individuals involved where it is said that the firm allowed their client account to be used as a banking facility during the course of acting in a complex transaction which they did not fully understand. The case is an interesting one and the full judgment can be read here

Finally, under the key priority risk of Independence and Integrity, it is worth reading the warning notice that the SRA issued on 21st September 2017 about individual’s duties regarding not acting in tax avoidance schemes, which can be read here

and also the likely consequences as evidenced by the judgment in June 2017 where a solicitor was struck off the roll for various breaches which included the facilitation of tax avoidance schemes. Again, the full judgment can be read here (http://www.solicitorstribunal.org.uk/sites/default/files-sdt/11563.2016.Chan_.pdf)
There is much more important information in the Autumn Update to the Risk Outlook, so if you haven’t read it and members of staff within your firm haven’t read it – it is important to do so and to circulate it – click here

Remember, reading and keeping up to date contributes towards your continuing competence and learning needs.

Updated guidance on how to comply with the EU Directive on Consumer ADR

The Law Society have this week released updated guidance on how to comply with the EU Directive on Consumer ADR which will apply to you if you consent to use an ADR provider to resolve complaints following your first-tier complaints handling process being exhausted.

The update relates to a list of approved ADR providers on the European Commission’s website, approved by the Chartered Trading Standards Institute. See link: https://ec.europa.eu/consumers/odr/main/index.cfm?event=main.adr.show

If you do not consent to the use of ADR, if required, at the end of your first-tier complaints handling process – you must still advise clients that alternative complaints bodies exist but you may inform the clients that you do not consent to the use of such bodies and, therefore, if a client wishes to pursue the matter, then they must do so through the Legal Ombudsman.

And finally:

Legal Affinity Group Draft AML Guidelines:

You will all be aware that the Legal Affinity Group have released their draft “Overarching Guidance” following the introduction into UK law of 4MLD. In case you haven’t read it – here’s the link: http://www.lawsociety.org.uk/policy-campaigns/articles/draft-anti-money-laundering-guidance/ to enable you to download it.

No firm date of when HM Treasury will approve it.